Pros and Cons of Affiliate Marketing in 2021

A recent study from Forrester Consulting estimated that the US affiliate marketing industry will grow to $6.8 billion by end of 2020. Huge numbers of brands grow their businesses by developing an affiliate program, with countless affiliates looking for promising offers. Affiliate marketing requires time and effort, though, so you need to be sure it is the right path for you.

Entrepreneurs have various online businesses available to them, including e-commerce, SEM consulting, info product creation, blogging, and other alternatives. In order to find out if affiliate marketing is right for you, it is important to look at the pros and cons.

Pros

For the right type of marketer, becoming an affiliate will suit their approach and lifestyle. The following benefits will appeal to many who are looking to build an income online.

Affordable

Starting an online business might be cheaper than developing a brick-and-mortar company, but there are still many costs involved. Affiliate marketing can remove most of these costs, such as product development, customer support, and marketing expenses. While there are still plenty of costs involved with affiliate marketing, it can be considerably more affordable.

Diverse

Successful affiliates often operate in multiple spaces, allowing a diverse approach to promotion. You may, for example, be promoting a number of products within the fitness industry, but decide to work with a real estate offer. Affiliate marketing can offer this kind of flexibility, satisfying those who don’t want to be restricted.

No Inventory

Producing, holding, and shipping stock is a major expense for retailers. An affiliate might want to follow this path at some point, but are not ready for the cost and complexity of dealing with inventory. Becoming an affiliate lets you master the marketing and traffic part of the business first.

Track Results

A vital factor in online marketing is the ability to track results. Without effective tracking, working out what you are doing right is difficult. Most affiliates will let you add a pixel to their page, so you can accurately track your traffic sources. You can also run email marketing campaigns and use tracking to see what resonates with audiences.

Get Help from Vendors

The best vendors will work hard to encourage affiliates. A group of motivated affiliates can provide a great deal of sales, making it important to offer assistance. Many affiliates will have a separate area on their site for affiliate resources. These resources often include banners, graphics, free articles, lead magnets, and email sequences.

Cons

Affiliate marketing won’t be for everyone. There are a number of factors that won’t appeal to some marketers assessing the various online business opportunities.

No Control Over Pricing

Product owners have the ability to test different pricing models, working out an effective price that results in conversions. As an affiliate, though, you cannot control the price, so you are at the mercy of the vendor. This can cause difficulties when you are trying to make any paid advertising campaigns work to an optimal level.

Highly Competitive

The ease of getting started with affiliate marketing does mean there is a lot of competition. Even if you find a more obscure product, it probably won’t be long before other affiliates notice. Competition isn’t inherently bad, but it can lead to less experienced affiliates driving up advertising costs as they attempt to enter a market.

Easy to Copy Campaigns

Product development and branding are difficult to copy, but affiliates are operating without these factors. It is, however, relatively easy to copy an affiliate campaign if you believe it to be profitable. There are software tools that monitor SEO and paid ad networks, so other affiliates can get an idea of what is working. To avoid being directly copied, you usually need to add layers of complexity to your campaigns, such as capturing leads and using email marketing to nurture subscriber relationships.

Not All Vendors Are Helpful

While some vendors are extremely helpful and provide many resources, there are others who are not too interested in their affiliate program. Some of these businesses might have joined a marketplace with an affiliate program facility, but they are more focused on direct sales. Other vendors might have a great product that has been neglected as they focused on other projects.

Issues with Advertising Platforms

Some advertising networks can have a strained relationship with affiliates. Google has been strict with affiliates over the years, while there is always the potential of losing a Facebook account. In most cases, reading the terms of each site and sticking to them diligently will be enough. There is always, however, the possibility that you could lose a campaign or an account after manual reviews.

Conclusion

Online entrepreneurs are faced with a lot of choice when it comes to starting a business. Some businesses let you build a brand, selling products and services that represent you. Other options, such as affiliate marketing or e-commerce drop shipping, removes the product development phase.

While there are pros and cons to every endeavor, affiliate marketing will definitely appeal to many people. Whether as a primary business or a supplementary income stream, becoming an affiliate opens up numerous opportunities to start promoting immediately.

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