Pros and Cons of Affiliate Marketing

Affiliate marketing has been gaining tremendous momentum as one of the most effective advertising tools. With over 80% of merchants using affiliate marketing to further their business, the relevance of this online marketing practice is as clear as day. The reason behind the ever-rising popularity of affiliate marketing is quite simple. Affiliate marketers help companies to achieve sales targets and maximize their revenue earning potential.

Like any other business practice, technology, or innovation, affiliate marketing has got its share of positives and negatives. While the number of positives easily outnumber the negative aspects, it is important to craft a definitive strategy for affiliate marketing. A clear cut vision and well-defined objectives are necessary pre-requisites to achieve the desired results on the affiliate marketing front. We take you through both the pros and cons of affiliate marketing that will help you conceptualize a more result-oriented strategy. 

Pros of Affiliate Marketing: 

1) Low Entry Cost: Unlike other processes, the costs incurred to take the first steps into affiliate marketing is minimal. The resource requirement is meager, as you don’t require millions of dollars to take a plunge into this promising space. There are quite a few businesses that started with meager investments but went on to establish themselves as one of the most-sought-after affiliate marketers.

2) Colossal Potential: Although the resource requirement to start affiliate marketing is comparatively very low, the potential to gain profits is overwhelming. It is a billion-dollar industry, and the sky is the limit! Of course, it requires a perfect combination of skills and practice, but the rewards you earn in terms of money and recognition make it an ideal alternative to opt for. 

3) Flexible Payment Methods: Flexibility is one of the main characteristics of affiliate marketing, and depending upon the industry and clients, the method of payment tends to change. Usually, affiliate marketers are paid in one of these three methods: pay per sale, pay per click and pay per lead. These varieties of methods make it possible for the organizations and clients to negotiate flexibly and make a deal according to the convenience of both the stakeholders. 

4) Availability of Customers: The prime focus of affiliate marketing is to maintain the customer base and enhance customer engagement. The customers already exist in the form of web traffic; the affiliate marketer needs to lure them into buying the client’s product/services. 

5) Multiple Clients: Affiliate marketing provides you the freedom to work for multiple clients simultaneously, which might not be possible in the case of other processes/businesses. In fact, most of the companies and affiliate marketers work with multiple partners at any given point in time. It not only helps in multiplying the revenue for the businesses but also minimizes the risk of over-dependence on one particular client. The multiplicity of the clients also aids the business to grow rapidly. 

Cons of Affiliate Marketing:

Affiliate marketing is undoubtedly a propitious affair. But still comes with its own set of disadvanages. Therefore, before resorting to affiliate marketing, it is vital to be aware of the limitations related to this evolving discipline of brand promotion and sales. 

1) Exaggerated Commission: Few influential affiliate marketers sometimes charge a hefty amount of commission, which could prove to be super expensive for the brand. If your affiliate marketer asks for a percentage of the amount of sale as its commission, then it is definitely going to be a very costly affair. It will ultimately lead to the erosion of profits, making it difficult for the business to justify the costs associated with affiliate marketers. Therefore, it is imperative for organizations hiring an affiliate marketer to get a clear understanding of the cost structure and the incremental sales gains, to make a prudent business decision. 

2) Spotty Sales: It is very difficult to ascertain the exact number of customers buying your product due to a particular affiliate marketing campaign. Moreover, the sales and revenue generated by the affiliate marketers are not continuous and can be best described as spotty. To address this issue, you must follow spike sessions in your web traffic to get an accurate idea of affiliate marketing effectiveness. 

3) Fraud Practices: It is not uncommon to have many fraudsters dealing with organizations in the garb of affiliate marketers. They not only cheat their clients but also defraud customers by dropping cookies on customers’ systems without taking their consent. As an organization, you must conduct a meticulous check on the credentials of affiliate marketers before signing any contract with them.

Noticeably, affiliate marketing definitely has more pros than cons. In simple terms, the process of affiliate marketing requires accurate planning and execution. If it is conceptualized and implemented judiciously, then it has tremendous potential to give rich dividends to the organization.