Affiliate marketing; boiled down to its essence is the process of trading eyeballs for sales on other people’s sites. It’s not always sales – sometimes you get paid for an action (signing up to a newsletter, visiting a certain page, etc.) but it’s mostly about sales. It’s also one of the more popular revenue streams available, so let’s do the Pros and Cons.
- Low cost of entry. All you need is a website to start. Once you generate the traffic, you can get the links for the various affiliate sites to develop your sales.
- No inventory or customer service hassles
- Can be an extremely passive form of income – once the website is up, the processing of sales/etc is left up to the affiliated company, not yours
- Easy to enter / work with multiple websites with multiple industries, allowing you to experiment with profitability
- Can be mixed with other revenue streams like advertising very easily
- Extremely competitive marketplace partly due to the low cost of entry
- Can take a long time to develop sufficient traffic to generate decent revenue. As you are sending traffic away, you get approximately 50% of all visitors at best to the affiliated site. Those then convert at between 1-3%; so traffic must be significant.
- You are dependent on 3rd party sites, for both payments as well as the processing of the orders and overall conversion rates / usability of other sites
- As majority traffic is often generated directly from search engines / referrals (especially for smaller sized sites); you are most liable to Google algorithm changes