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Rod Tolentino

Pros and Cons of Affiliate Marketing

May 21 2012, 02:06 PM by

Used by many merchants as an online marketing strategy and by website and blog owners as a means of “semi-passive” income generation, affiliate marketing is one of best ways both ends can earn money online.

It is basically a partnership between a merchant and an affiliate, where the affiliate’s aim is to promote the merchant’s product or service by placing ads or links through his or her website. The merchant, in turn, pays commission to the affiliate for promoting the product (promotion tactics include sales, clicks, registrations, downloads, etc.). The rate of commission depends entirely on the merchant and affiliate’s agreement.

In 1994, CDNOW and Amazon launched affiliate programs as a marketing strategy, making them among the earliest companies to utilize it. The idea is to have publishers place ads for products in their websites. The publishers then get commissions every time they make a sale. It is said that Amazon has over a million affiliates worldwide.

However, like most other money-making opportunities online, affiliate marketing has its pros and cons. This article focuses on the advantages and disadvantages when engaging in the world of affiliate marketing.
Advantages of Affiliate Marketing
  1. Online merchants get free ad space and will only pay for proven results (pay per sale, pay per click, pay per lead).
  2. Affiliates, on the other hand, require only an ad-space to promote the merchants’ products, and thus can enjoy watching the beautiful sunset while earning cash.
  3. Advertisers can promote a product to a vast audience, giving their brands more exposure and recognition.
  4. Marketers can collaborate with affiliate networks and can pretty much take care of the execution stages, giving the merchant little to no bother during the procedure.
  5. Consumers that come from the affiliate’s site can provide important information concerning the latest trends and demands.
Disadvantages of Affiliate Marketing
  1. False advertising on the affiliate’s website can destroy a merchant’s reputation. More and more affiliates are engaging in this kind of scheme.
  2. Merchants can suffer from commission costs. Set up and maintenance can also mean more cash outflow for the merchant from having too many affiliates.
  3. Affiliates risk not getting paid. The twisted merchant may simply leave and close down the program without paying the affiliate.
  4. Some affiliates are tricked into a program where they can get high commissions and then get less than what the merchant has actually promised. Some programs require the affiliate to give cash for membership.
  5. There are also some unscrupulous individuals who hijack affiliate links, stealing their commission in the process.
With its high payoff potential, affiliate marketing has also become a target for scammers and devious individuals wanting to earn from other people’s hard work. These people simply take advantage of the internet’s mask of anonymity.
Know Who You’re Dealing With
Despite the scams and schemes in the trade, affiliate marketing is still one of the best ways to generate income on the Internet. It is especially beneficial for those wanting to earn without having to spend too much time and effort monitoring sales or client response. Merchants and affiliates just have to be cautious when engaging in a partnership. Individuals who would like to participate in a program should know who they are dealing with. Conduct proper research and go to affiliate communities for information about your potential partner. Good relationships and getting the right partners can prove favorable in the long run.

Learn more by visiting Affiliorama today!

Posted in Tips & Resources, Growing Your Business

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