Is Affiliate Marketing Really Profitable?

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Randy Duermyer is a former writer for The Balance Small Business and a home-based business owner with experience in digital marketing.

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Randy Duermyer

Updated January 17, 2020

Affiliate marketers are paid for referring new clients and customers to other businesses, products, or services, often through tracked links posted in blog posts, web pages, emails, or social media posts.

This relationship can take multiple forms. You may partner with a brand launching a specific product and receive a percentage of the revenue generated by your referrals. Or, if you work with websites like Amazon, you receive a percentage of whatever purchase a follower makes through your referral links, even if they don’t buy the product you were specifically recommending.

Affiliate marketing is a form of self-employment that has low initial overhead and doesn’t require a person to produce, stock, or ship product inventory.

Affiliate marketing is a logical and flexible sales model that creates multiple income streams. However, it is not an easy, get-rich-quick model of income.

• Research into products, web traffic patterns, and follower interests
• Consistent engagement with the products and brand networks that you choose to endorse
• Hours of maintaining a relationship with the readers or followers who purchase products through your affiliate links
• Understanding and using search engine optimization and social media marketing to consistently attract new followers and generate additional income

Affiliate marketing is a viable income option, but it does not work for every business. Making an income through affiliate marketing requires dedication and commitment over a long period of time.

Like any form of self-employment or business model, affiliate marketing has both advantages and disadvantages. Understanding these will help you decide whether affiliate marketing is a good fit for your financial and business goals.

The Balance/Melissa Ling

Affiliate marketing is ideal for bloggers, coaches, information entrepreneurs, and those who build and maintain their own digital properties such as YouTube channels. There are many aspects of affiliate marketing that make it a good home business model, including:

• Low overhead costs: Most affiliate programs are free to join, so your costs are usually related to your referral and marketing methods.
• No physical products: There is no need to create a product or service because you are choosing one that already exists. You don’t have to stock or ship products.
• Flexibility: You can work anytime and from anywhere as long as you have internet access.
• Supplemental income: There is passive income potential, depending on how you market your affiliate programs. It can be added to your current home business to create an additional income stream.

Like any business model, there are drawbacks and challenges to affiliate marketing as well, including:

• Time: It takes a commitment and experimenting over a length of time to generate the amount of traffic needed to result in income.
• Lost payments: Affiliate hijacking can occur in which you’re not given credit for your referral. Some companies fail to pay their affiliate marketers.
• Lack of control: You have no control over the businesses’ fulfillment of a given product or service. A bad affiliate referral can ruin your credibility with followers, so it’s crucial that you research and select quality businesses.
• Competition: Affiliate marketing is highly competitive. Many affiliates promote the same products and compete for the same traffic and customers. It can be difficult to get approved as an affiliate for popular companies or products.
• Lack of ownership: The customers belong to the merchant. Your stats will let you know how many sales were made of what product, but in most cases, you’ll have no information about who made the purchase. This can make it difficult to tap into recurring sales.

It can be difficult to earn a steady income from affiliate marketing, and even more difficult to stand out among other marketers promoting the same products. Once you’ve built up a website, blog, newsletter, or social media, there are steps you can take to become successful and generate a more reliable revenue stream.

1. Know your partners. Research each affiliate program you consider joining so that you will understand how and when you’ll be paid.
2. Build trust. Buy the products you intend to market so you can personally attest to the quality. You’ll be judged by the product or service you promote, so focus on the quality of your own brand and recommendations, not just the earning potential. Your followers will come to trust your recommendations and be more likely to buy from you.
3. Have a brand. Choose affiliate items that match your niche and the content of your blog. Don’t rely on SEO or social media alone to drive people to your website and affiliate referrals. Understand who your target market is, where you can find your audience, and how to entice users on your site.
4. Use variety. Mix and match affiliate ads so you don’t overwhelm your visitors (content-embedded affiliate links usually have the best click-through rates over image links.) Consider using a lead page and funnel system to market your affiliate business. Lure prospects to your email list with a free offer and include links to your affiliate product pages.
5. Know the legal requirements. Most visitors will probably understand that advertisements lead to your personal compensation, but if you write a review or use an in-text link as a recommendation, you must explicitly state that each purchase using that link can generate revenue for you. This isn’t just good business: it’s also required by law. If you don’t disclose affiliate or revenue-generating links, you could face legal and financial penalties.
6. Track your traffic and earnings. Monitor the success of your affiliate programs, particularly if you work with several different ones. Know which programs are the most successful and which products resonate with your followers so you can plan future campaigns.

Like any other type of home business, success in affiliate marketing depends on investing the time and effort to grow your business and build relationships with your customers and partner brands.

If you decide to pursue affiliate marketing, understand that it’s not a fast or automatic business model. But it is possible to earn a reliable and legal income as an affiliate marketer.

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