Affiliate marketing has emerged as one of the best business models out there. There are entrepreneurs whose businesses revolve around selling the products of another company. But, just like any business the pros and cons of affiliate marketing cannot be ignored.
At its core, the affiliate marketing industry connects consumers with the best products through the help of a middleman.
This middleman can be a blogger, YouTuber, TikToker, influencer, or any entity active on platforms with a significant number of online audience.
This type of business model has distinct advantages and challenges that anyone looking to enter the field needs to know and understand.
This article will discuss 5 pros and cons of affiliate marketing comprehensively, but before that, let’s understand its fundamental nature.
What is Affiliate Marketing?
Affiliate marketing is a digital advertising strategy where individuals or organizations promote products and services of another company through their platforms, in exchange for a commission on each sale.
The commission for promoting products or services of another company can range from a few percentage of the sale all the way to splitting the profit evenly between the promoter and the original product company.
How Does Affiliate Marketing Work?
You can be an affiliate marketer on almost all platforms, this is because to start you only need a specific link to the products or services pages.
To get this affiliate link you need to sign up for an affiliate program. It can be through an individual brand or an affiliate network where you can have more choices of products and services to promote.
Affiliate network examples include:
After signing up with an affiliate program, you can then use the links to promote and earn commission.
But, simply displaying this affiliate link in your platform of choice, will not guarantee an income stream.
You need to have a marketing strategy in place, this includes a proper description of where that link is going to take your audiences and a clear call to action to lead them to the product pages.
One example of affiliate marketing is bloggers who are reviewing products and then telling their audience to click on their links if they are interested in buying them, instead of going to the actual pages through search engines.
Another is influencers trying products or services and then sharing their experiences through their platforms such as YouTube and TikTok. Then viewers can easily click on their video description where they put the affiliate link.
In short, the affiliate marketing business is one of the best business models out there to scale and grow your earning potential, while also giving the possibility of generating passive income streams.
Pros of Affiliate Marketing
Let’s start with affiliate marketing’s advantages and why it’s one of the best businesses in the digital world.
1. Easy to Start
Unlike setting up a traditional business, where you need an inventory for products, rent a physical space, or deal with complex legal requirements.
An Affiliate business only needs partnerships with an affiliate marketing program and a digital platform. It could be a website, blog, or social media account, as long as it can attract an audience.
The ease of setting up, makes affiliate marketing one of the top choices for individuals looking to start an online business.
2. Low Start-Up Cost
Together with how easy it is to start, one of the major affiliate marketing pros is the low start-up cost.
Signing up and creating social media accounts, YouTube channels, and TikTok accounts where you can promote your affiliate link, does not need any initial investments.
Although creating a good but simple affiliate website might take a couple of hundred dollars, it still does not compare to how much other businesses such as SaaS platforms and e-commerce stores cost to start.
It also has a lower cost to maintain, unlike a brick-and-mortar business model, there’s no inventory to manage, no shipping fees, or even direct customer service requirements in affiliate marketing.
3. Global Reach
Another pro of affiliate marketing is its global reach. In the internet age, we can communicate from anywhere in the world, this allows the promotion and advertising of products and services to go beyond borders and reach more audiences than ever before.
Also, traditional businesses often face huge expenses when expanding globally. However, the affiliate marketing model only needs an effective marketing strategy that the target audience can resonate with.
With the help of social media marketing, content marketing, email marketing, paid advertising, and search engine optimization, affiliate networks can effectively increase visibility and drive international traffic to their product pages.
4. Million-Dollar Business Potential
One of the goals why people start a business is to generate revenue and create generational wealth for their family and loved ones, and affiliate marketing is one of those business models that can change your life financially.
Many affiliate marketers have turned their websites or blogs to earn six figures yearly. As they build it up and increase their content quantity, it can turn into an asset that has a sale value of over a million dollars.
A quantity approach affiliate marketing model is also utilized by a billion-dollar business such as Amazon or Rakuten. They have become the most recognized affiliate program globally, generating billions of sales for its partners.
Moreover, Saas affiliate marketing programs are a growing trend that is a testament to this million-dollar business potential. With the right affiliate strategy and partnership with multiple affiliate programs, companies can diversify their income stream and grow their businesses.
5. Work from Anywhere
Working from anywhere is one of the most sought-after benefits of the modern working environment and affiliate marketing can offer this freedom.
Affiliate marketers do not need an office to do their jobs, or be bound to a specific place. You can run your business from a beach in Bali, a cafe in Paris, or most of the time in the comforts of your home.
This is the beauty of new business models, just need an internet connection and you are good to go.
Cons of Affiliate Marketing
If you read all the benefits of affiliate marketing, you probably have already decided to take on this path. However, knowing the challenges you can encounter ahead will not hurt.
So here are the top 5 pitfalls of an affiliate marketing business.
1. Slow Income at the Beginning
Affiliate marketing is a billion-dollar industry, but that does not guarantee a high income right off the bat. For new affiliate marketers, one of the biggest problems is to drive traffic to their content where the affiliate link is present.
Also, keep in mind that not all traffic will click the link that you have, only a few percentages of your overall traffic will be interested enough to follow your call-to-action buttons or links.
The main advantages of this performance-based business depend on your ability to pull in audiences that will be interested enough to buy products or services you recommend.
In short, setting up is easy and low-cost but it will take some time before an affiliate marketing business generates significant profits unless you have a strong online presence already.
2. Needs to Attract a Specific Type of Audience
Yes, traffic is very important to affiliate marketing, but not all traffic is equal. Some can earn six figures a year with just a few thousand visitors per month, while others will need hundreds of thousands of page views to earn as much.
This is because different products or services will require affiliates to attract a specific type of audience that is interested in purchasing.
Additionally, content creation, whether in written form or through a video, will belong to a category based on the audience intent that it was created for. It can be informational, transactional, or something else.
The best content category that will bring in income is transactional also called commercial intent content. This is because the audiences they attract are market-ready or are already looking to purchase a product or service.
3. Uncertainty of Income Amount
Most businesses will have uncertainty of income, unlike a traditional 9-5 job.
This is also true for any affiliate marketing venture whether it is done using a website, blog, YouTube channel, or any other platforms.
There are many reasons why this could happen, one of them is the seasonality of products and services. For example, winter jackets and holiday gifts. People are only going to look to buy them closer to the season they need it.
So, it is important to note that while affiliate marketing can offer potentially high rewards it also brings in the risk of income inconsistency.
4. High Competition
Because of the advantages mentioned above, a lot of entrepreneurs were drawn to affiliate marketing. With higher earning potential, comes fiercer competition.
Affiliate marketing having low barriers to start a business with is both an advantage and a disadvantage.
Naturally, businesses that are easier to start will have a lot more people do it, especially if the cost of starting is very low compared to other business models.
So be prepared to face competition after deciding to do affiliate marketing.
5. Hard to Find the Right Products
Nowadays, every brand of products and services has an affiliate program. This makes it hard for affiliate marketers to decide which ones to choose, due to the number of choices they have to swift through.
Keep in mind that you can choose a popular product or service to promote but it will come with higher competition since other people will also market them.
But, if you choose no-name or low-quality brand products and services, people might have a negative experience with them, hurting your own digital branding strategy for promoting it.
The key is to find the balance of these qualities, authenticity and value delivery should be the priority when it comes to choosing a product or service.
Always prioritize your audience’ needs and preferences, and watch your business grow.
Is it worth it to be an affiliate marketer?
It is worth it to be an affiliate marketer because the pros outweigh its cons. Yes, it is not always smooth sailing, but with dedication and hard work, it is totally possible for anyone to grow a successful business with affiliate marketing.
Although challenges like high competition and slow income at the start of your affiliate journey can be daunting, the benefits that you can gain from it such as being able to work anytime at anywhere and the million-dollar earning potential will make the struggle justifiable.
Affiliate marketing, just like any business comes with its set of challenges and opportunities. However, its potential to change one’s life is undeniable.
In the words of Theodore Roosevelt, “Nothing worth having comes easy.” As you decide to take on the path of an affiliate marketing business model, keep in mind that every hurdle, hardship, or setback is just part of the process that is leading you toward your goals.
Stay committed and the rewards will soon catch up to you. Good luck! I hope this article helped you understand the pros and cons of affiliate marketing.
As a professional web and software developer, the author possesses a strong foundational background in Computer Science. This equips him with both academic rigor and practical insights into the world of web-based entrepreneurship. As the founder of this platform, webpreneurships.com, he stands at the intersection of technology and business.