As the digital age has evolved, online affiliate marketing has become a more utilised strategy in day to day marketing. In fact, according to Awin, 81 per cent of brands have adopted an affiliate marketing strategy because of its performance-based nature and its positive return on investment. But as with any marketing channel, there are advantages and disadvantages of using affiliate marketing — in this article, we’ll explore how it can benefit or potentially harm your marketing plan.
Pros of Affiliate Marketing
Work With Multiple Affiliates
There are no limits to how many affiliate networks you can work with. Forrester Research has found that 71 per cent of publishers belong to more than three affiliate networks. At the end of the day, publishers are only rewarded if they produce results for your business. There’s no incentive for your affiliates to not work hard!
Flexible Commission Models
There are diverse options for the commission in affiliate marketing campaigns. Publishers can earn money per click, per lead, or even per sale. By only paying for a sale you’ll only be spending money on guaranteed results. However, if you’re using affiliate links to simply increase your brand exposure, you can opt to pay your affiliates a commission per impression.
Minimal Investment To Start
Affiliate program solutions can come straight off of the shelf. Many companies charge a simple monthly fee and grant you instant access to a variety of publishers looking for another source of income. One advantage of affiliate marketing is that it’s a simple and cheap way for everyday content writers and social media users with large follower numbers to generate income. It can be as simple as giving a publisher a tracking link or you could supply some branded graphics and email templates to help them attract leads.
Reach New Loyal Customers
Because your affiliates will be openly endorsing your product or service to their followers, any customers that you gain through an affiliate can potentially be made into a repeat customer through trust. Any repeat online business you make through that customer will not be owed as commission to the affiliate, so in a sense, it’s like passive income!
Cons of Affiliate Marketing
Inconsistent Results
Many of your affiliates will be trying to produce traffic for numerous businesses, and sometimes on an infrequent basis. This can make it difficult to forecast the outcome of using affiliate marketing. You may also find that your affiliates are marketing your company’s products and services to the wrong kind of traffic and demographics. This can lead to a low conversion rate and higher bounce rates on your site.
Branding is at Risk
When you run an affiliate marketing program and partner with an affiliate, it’s important to do your due diligence on their marketing activities. If they have some unscrupulous tactics such as false advertising, spamming email lists, and not complying to GDPR for example, it is damaging to have your brand in partnership with that publisher.
You should bear in mind though, that affiliate networks do have guidelines that publishers must comply with, in order to become an affiliate, and can be punished for unethical advertising. This is a safeguard for your brand, but there is always a risk that a publisher could advocate your brand negligently.
Starting Your Program Can Be Costly
If you’re a small online business, starting your affiliate marketing program could be very expensive and time-consuming. You’d have to ensure your attribution model works efficiently, manage and recruit your affiliates, and also spend the time creating reporting and metrics for monitoring the channel. You would also need to work out for yourself which of your affiliates are performing well, and which ones are not.
It may be easier to sign up to an established affiliate network — although you’d have to pay a monthly subscription fee.
Prone to Fraud
Unfortunately, there are several people who have given affiliate marketing a bad name through fraudulent practices. Instead of earning money online ethically, many people have been caught producing and making money off of fake leads. eBay famously helped the FBI stop two scammers who’d made $28 million from their affiliate program.
There are numerous clever methods ‘affiliate marketers’ use to commit affiliate fraud, here are just some of them:
- Using bots or scripts to imitate user clicks on links and website visits
- Making transactions using stolen information like personal information or credit card details and then refunding or cancelling the purchases at a later date
- Cookie stuffing on website visitors, meaning if they later make an unrelated purchase on your site at a later date the sale will be attributed as an affiliate sale. This is the method the eBay scammers used
- Spamming bought email lists with your products or services
You should do your research before you bring an affiliate onboard. Have you checked their website to ensure there’s nothing suspicious on there, does their content relate to your business? Look at the affiliate’s social profiles. If they have a lot of followers compared to the number of engagements they get on their content it could indicate they have bought fake followers.
How Do Good Affiliate Networks Prevent These Downsides?
To avoid spending time and money creating your affiliate program and recruiting quality affiliates, an affiliate network will have both of these problems covered. Implementation with a network can be simple – often they will just need you to insert scripts on your site so that they can track the affiliates for you. They will also need to know your business objectives and information about the traffic you are currently generating so that they can help you select the right affiliates for your needs. You can often also select the service level, to fit around how much control and time you’d like to spend using the platform.
Many affiliate networks, large and small, have staff dedicated to regulatory compliance and brand reputation. These services help advertisers identify prospective and current affiliates that could be a regulatory or reputational risk to their business. Like quality control, they will help ensure that your brand is protected by carrying out risk assessments and due diligence on marketing activities.
To prevent spending thousands on affiliate network fraud, there are tools to help prevent e-commerce fraud. Some networks even have their own proprietary tools to prevent fraud for you. In order to safeguard yourself, it’s recommended you use your own.
The Verdict
Don’t let the thought of fraudulent activity and the lesser control over your brand put you off affiliate marketing. There are thousands of affiliates with expertise in search engine marketing and email marketing who can help attract new leads to your business. There’s a reason search interest for “affiliate marketing” grew by 30% in 2017.
As high street shopping and visiting physical stores declines, online marketing will increase. This means having an affiliate online presence promoting your products using content marketing can be a key avenue into your marketing funnel.
Are you looking for a financial services affiliate marketing network? If so, Leadtree Global can help you! If you’re a lender, broker or an affiliate marketer — get in touch!