Friday, June 08, 2007

The Pros and Cons of Affiliate Marketing

An affiliate marketer is basically a salesman who is paid by commission only. This can be a very profitable situation for a good salesperson, and a bad deal for a poor one. While we think of affiliate marketing in terms of the internet, it has actually been a viable sales model long before the internet was dreamed of. Many salespeople today work for commission only, car salesmen and realtors, just to name two.

The advantages of affiliate products are many. The largest advantage is the low capital costs to start. If you need to maintain an inventory, you will encounter large costs to purchase, store, pack and ship your products. All of these costs are borne by the provider. The affiliate only has to promote the product.

Second, if you choose the wrong product and it doesn't sell, your losses are only the cost of your promotion. If you are on the ball and identify your mistake early, you can cut your losses and move on to a more profitable product. The company who has purchased the inventory has a much larger loss, and a harder decision whether to dump the product and move on, or to continue to promote a bad product.

When selling digital information products the commissions are large, usually 50% or even more. Of course, you would make even more with your own product or with a good quality resale product; however, much of the work is done for you with an affiliate product. You can literally set up everything that you need to do in a weekend (or less) and begin driving traffic to the affiliate sales letter. You don't have to write the ebook or the sales page, and you still get 50% of the sales proceeds. And those dollars are usually pure profit because it cost you nothing to drive the traffic, or at best a small advertising fee. (You do need to keep a close watch on advertising costs.)

Affiliate marketing can be even more profitable it you choose a 2-tier commission provider. Many affiliate programs pay you commissions on all of your sales and a smaller commission on the sales of anyone who signs up under you. With this type of system you can make money even if you don't make a sale.

So, what are the disadvantages? After all I've said you might think that affiliate marketing is an easy way to make money, but that is not really true. Affiliate marketing is hard work. You must work to drive the targeted traffic to your sales page. Of course, you read of people making huge amounts of money in one weekend, but this is not the standard affiliate marketer. These "guru's" usually have an army of affiliates working under them to sell their product. You will be one of those affiliates in the beginning, not the guy at the top making the big money.

So why bother? Well, first affiliate marketing is an excellent way to enter the world of internet marketing. If you can sell someone else's product, then you can sell your own. In selling an affiliate product, you will learn how to promote, what works, and what doesn't. When you are ready to launch your own product, you will have the experience and tools to become the next overnight wonder.

Need help getting started in affiliate marketing? Download my free resource ebook Blogging For Affiliates.

Diane Watkins has been marketing online since 2005. Read her new blog at http://ez-marketer.com/ez-blog/

Need more information about starting your own online business? We offer a comprehensive written and video course at Internet Marketing Toolkit.

No comments: