In an article last week I gave an overview answer on how you can actually use a website to generate income and turn that website into an online business.
If you’re interested, you can read that article here:
In this article I want to talk about Affiliate Marketing – which is one of the methods discussed in that article.
So What Is Affiliate Marketing?
Affiliate Marketing is a marketing practice that’s very common in online business. If an online business a product or service you want to sell one of the ways that they can generate potential customers is by recruiting affiliate sellers.
These affiliate sellers will then place links on their website to your product or service and try and encourage their website visitors to click on that link and hop over to the vendor’s website and buy the product or service.
In return for ‘recruiting’ a customer, the affiliate seller is rewarded with a commission from the sale. Affiliate commissions range from 4% right up to 100%. 50% is an n affiliate commission figure I see frequently in online business.
Affiliate Marketing – The Good
Affiliate Marketing should be seen as a business tool. And there are three applications of Affiliate Marketing that can really help you grow your online business.
(i) Testing The Market
When you first start an online business you should, to quote Steven Covey and The 7 Habits Of Highly Effective People, ‘begin with the end in mind.’ One of those goals you should have firmly in your sights from Day 1 is actually creating a sustainable and profitable online business.
In the long run creating your own products is one of the best strategies to go about achieving this. However, when you’re first setting up your website you can get pre-occupied with creating content for the website as well as promoting that website. Often that doesn’t leave much time for creating your own products.
Affiliate Marketing is a great way to test the potential profitability of your online business before you’ve created a product. It’s also a great encouragement to actually see some money come into your online business in its early days.
Here’s how you could do it: find a product that you think would be a good fit for the audience that you’re writing for that offers an affiliate commission, and then BUY it.
Make sure the product you are going to recommend to your audience is good quality – and then review the product on your website or in a mail out to your audience telling them why you recommend this particular product.
If you start making affiliate sales then not only are you bringing in some revenue to cover early set up costs – even though they are cheap – but you are also testing your market and making sure that a percentage of the audience will take action and purchase good products and/or services.
If you don’t make any affiliate sales this can be a clue that your online business may be in a market where people don’t readily spend money. If so, it’s a good warning flag for you to do some more research before you invest lots of time and energy creating content and promoting your website.
(ii) Use Affiliates To ‘Launch’ Your Product Or Service Into Your Market
Another way you can start building your business is to create a quality product or service that fills a need in your business. The only problem is that if you’re new to that market it can take a while to build an audience and start generating sales of your product or service.
Being prepared to use the affiliate model for your product can be a quicker way to both generate sales and build an audience.
Here’s how you could do it: find an existing ‘player’ in your market who you know already offers affiliate products. And approach them and ask them if they’d be willing to sell your product/service on their website. Or even better, mail their list about it. In return they get an agreed percentage of each sale that they make.
This can be a great fit for both you and the person you approach – because you get your product in front of a larger audience than you have, and the Affiliate Seller gets to recommend a quality product to their audience. Which adds value to the affiliate seller both in pure monetary terms, and in terms of their relationship with their own list.
(iii) Add Value To Your Audience
If you recommend a product or service to your audience that helps them solve some of their pressing problems, they’ll thank you for that. Their perception of you will increase because you’ve added value to the relationship that you are building with them.
Here’s a rule of thumb I use: I only recommend products or services that I have personally purchased, reviewed, and used. And continue to use or derive benefit from. That way I KNOW I’m adding value to my audience.
OK, so that’s three ways where Affiliate Marketing can be used that benefits you and your audience. Let’s turn to the dark side as they say in Star Wars.
Affiliate Marketing – The Bad
Affiliate Marketing can appeal to the crowd I labeled in a previous article as ‘Quick Buck Marketers.’ This is because it can be seen as an easy way to make money online – you don’t have to create a product or a service. You don’t have to deal with after-sales support. You just try and attract visitors to your website where you can put your affiliate links…and hopefully make some sales.
This mentality leads to some online business decisions that I believe will damage your business in the long run. Here are a couple of them:
(i) Recommending Affiliate Products You’ve Not Purchased or Used
The reason this is a bad long term business practice is that if you’ve not used a product or service – and didn’t buy it yourself – you don’t know if you’re recommending something good or not. And there’s a lot of crap out there – the minute you send someone to a crappy product via YOUR affiliate link, that’s the minute your credibility just evaporated into thin air.
Too many people using this model seem to be looking for short term sales, and don’t seem to be thinking about long-term customer value. Read any business book and you’ll find stats that prove it’s easier to sell to an existing customer than to a new one. If you send an existing customer to a crappy product, there’s no chance of converting them into a long term repeat customer.
(ii) Sending Repeated Affiliate Offers for Different Products To Your List
This is another technique that I think is short sighted.
Building an online business is about creating an audience that you have a relationship with. Whether that relationship is conducted via an email list or via the blog section of your website is irrelevant – if you send multiple affiliate offers for different products to your audience you risk burning them out or diminishing your ‘expertise’ with them.
If you send 5 offers a week – and I’ve seen guys doing this – your credibility vanishes. How can you possibly have used and be recommending all these different products and services? It’s a surefire way of getting people to hit your unsubscribe button.
Affiliate Marketing – The Downright Ugly
Here’s where we get to the dark side of Affiliate Marketing.
There are people out there who create what are called ‘niche’ websites. And these websites exist for the sole purpose of trying to get website visitors to click on an affiliate link.
What I find objectionable about this practice is that people creating these kinds of websites aren’t looking to create quality content for their visitors. They are just looking to get these niche website ranked in Google, attract visitors, get them to click on affiliate links and make some quick bucks.
This often goes hand in hand with flooding the Internet with poor articles that have been fed through article spinning software and mass submitted to article directories purely for the back link to their niche website they’ll get from the Article Directory.
The volume of crap that these guys produce can be staggering. And it pollutes the Internet. Plus these people aren’t experts in these niche markets – but try and portray themselves as if they are. And often their articles contain misleading or potentially harmful information.
This kind of quick buck marketing also runs the risk of falling foul of Google. If you invest a lot of time in this kind of business model all it takes is a change in Google’s algorithm to slash your income literally overnight. And Google are always tinkering with their algorithm and looking to reward quality sites and penalize sites they consider are spammy or ‘gaming’ the system.
1) Affiliate Marketing is merely a tool. And like all tools it can be used effectively in your online business strategy, or it can be misused.
2) Affiliate marketing is a great way to test an online business idea in the first place, generate sales and an audience when you’re starting out or increasing the value that you provide to your audience.
3) Conversely affiliate marketing used the wrong way can piss your audience off and damage your credibility.
4) There’s more to online business than making a quick buck – there were howls of protests on places like Warrior Forum and Digital Point when Google changed their algorithm earlier this year and hundreds of ‘niche’ marketers saw their Google rankings disappear overnight. Don’t make the mistake of focusing on the quick buck; build a long term, sustainable business.