Better Learn About the Disadvantages of Affiliate Marketing Now
Learn of the Pitfalls of Affiliate Marketing So That You Can Guard Against Them
Are you surprised that I am writing about the disadvantages of affiliate marketing? In the past I have written several articles on affiliate marketing. These include:
and the like...
This has led some of my readers to believe that I am a strong proponent of affiliate marketing. While that is true to an extent, I would not go so far as to say that I am blindly in love with affiliate marketing. Given the large number of ecommerce players that have failed in affiliate marketing, there are bound to be some pitfalls, if not a dark underbelly.
Disadvantages of Trying to Grow Your Ecommerce Business Through Affiliate Marketing
Affiliates Are Fair Weather Friends
When you are a new discovery in the affiliate space, there might be some initial curiosity, or even euphoria, about your offering. But after the initial spike in sales, the next ecommerce business will come along and take a large proportion of your affiliates away.
Also, my experience with affiliates has been that they monitor their earnings reports quite closely, often multiple times a day. As a result, they get nervous if earnings slow down even for a short period. And you can be sure that sales will occasionally slow down. The exodus of many of your affiliates, who will seek greener pastures, will exacerbate your slowdown.
Affiliate Commissions and Network Commissions Will Erode Your Bottom-line
In the best case, you will notice that you are able to increase sales with the help of affiliates. But that growth in top line will be at the cost of your bottom line. Affiliate commissions of 5 - 10% are common. In addition there is the overhead of paying commissions to affiliate networks if you choose to join them.
Your Profits Might Decrease as Your Usual Sales Get Routed Through Affiliates
This is one serious disadvantage that is usually beyond the imagination of hapless ecommerce merchants. What I am talking is the following scenario:
You have significant sales, but don't yet use affiliates. When you sign up your first set of affiliates, you are thrilled to notice that they are bringing in lots of sales. But when you look at your aggregate sales level, you hardly perceive a difference. So, what happened? It turns out that your affiliates successfully managed to get your customers to visit you after clicking a link that had their affiliate code. As a result, what should clearly have been a direct sale, cost you affiliate commissions.
How would this happen, you ask? Through a wide array of methods: SEO, SEM, creation of fake coupon codes, offering fake promotions, and the like, an affiliate marketer could end up compelling your customer to visit your ecommerce website only by clicking their link.
I know that I have not exactly spelled out the path to this fraud, but the last thing I want to do is create a playbook for scammers.
Affiliates May Not Treat Your Brand With the Respect and Care it Deserves
You spend resources conceptualizing and developing your ecommerce brand. Along comes an affiliate with scant respect for your brand. You experience a volley of headaches from smaller crimes such as affiliates distorting your brand imagery, to serious offenses such as misrepresenting your offering.
I do not mean to imply that affiliate marketers as a class are unethical. But the short-term orientation of affiliates will cause some of them to use dodgy methods.
When I caution ecommerce professional about the dark side of affiliate marketing, their first reaction is, "in light of all this, is affiliate marketing worth it?" My answer is usually, "Yes." I do think that affiliate marketing presents a great tool for ecommerce marketers. But, like in all other aspects of business, you need to be careful of the pitfalls.