Benefits & Risks of Affiliate Marketing
Affiliate Marketing offers a number of unique benefits compared to other marketing techniques:
- Cost Per Acquisition (CPA). Affiliate Marketing is the only true marketing channel where you only pay for sales or leads. Thus a positive return on your marketing investment is guaranteed.
- High Transparency. Affiliate Marketing offers high transparency at all stages of the Internet Marketing Cycle. Precise accounting of impressions, click-throughs, and conversions is typically available within hours of occurrence.
- Close Coupling. Affiliate Marketing offers close coupling between all stages of the Internet Marketing Cycle; less so than Sponsored Search, but better than other methods. Changes in affiliate incentives produce effects on referral results whose general nature and timing are predictable and consistent.
- Low Latency. Affiliate Search Marketing offers low latency across the Internet Marketing Cycle. Changes in affiliate incentives typically produce effects on search results within a matter of days.
- Good Controllability. Because of its high transparency, close coupling, and low latency, the Affiliate Marketing renders the Internet Marketing Cycle fairly controllable. Achievable results are constrained mostly by the dynamics of the marketplace, and far less by those of the Internet Marketing Cycle.
- Guaranteed Profitability. A consequence of the good controllability of Affiliate Marketing is that it is almost impossible to lose money.
- Responsiveness. Unlike the search engine algorithms that determine ad placement in Sponsored Search, your affiliate partners effectively amount to a small army of Internet marketers. Because it is in their collective interest they listen closely to their marketplace and efficiently use the tools you give them to sell your product. Establishing relationships with your top affiliates is key: they are a gold mine of specific information about your market and major contributors to your Internet profitability.
- Opt-out Immunity. Regulars in the affiliate marketplace are unlikely to try very hard to avoid your message, since their primary reason for accessing your affiliate’s resources is to find your specific product and/or offer.
- Blacklist Immunity. Unlike Organic Search campaigns, Affiliate Marketing carries no real possibility of blacklisting.
- Cumulative Effect. Each new affiliate acquired contributes to your firm’s footprint in the online marketplace. Affiliates will continue to sell your product so long as it remains profitable for them, so even minimal maintenance can keep a large affiliate network producing residual sales well into the future.
- Some Channel Bias Control. Channel bias in Affiliate Marketing is a function of the websites, e-mails, and other tools employed by your affiliates to drive traffic to your website. Affiliates do tend to specialize consistently, though, so a targeted message passed to an affiliate is likely to stay targeted into the future.
- Minimal operational impact. When managed by a third party like Profit Rank, an effective Affiliate Marketing campaign requires very little interference with your firm’s operational cycle.
- The “Long Tail” effect. An effective Affiliate Marketing campaign involves hundreds of affiliates managing thousands of web pages, representing a large cumulative footprint in the search marketplace. Many affiliates will expose your products on the basis of keywords central to other merchants but marginal to yours. The overall result is an instance of the Long Tail Effect.
- Click Fraud Immunity. The Pay-Per-Action model renders most Affiliate Marketing campaigns immune to click fraud.
- Cross-channel impact. Many assets of an Affiliate Marketing campaign, including landing pages and creatives, can be used effectively to support related Sponsored Search Marketing campaigns.
There are also a few of risks and limitations associated with Affiliate Marketing. They are:
- Affiliate Marketing may not be right for you. It could very well be that you may not be successful in the affiliate channel. Before we decide to work with a new client Profit Rank will analyze the market place, yoru website, and your competitors in the affiliate channel to determine if affiliate marketing is right for you.
- Poor granularity. Segmentation in Affiliate Marketing occurs on the affiliate side. Many affiliates will segment their marketplaces in similar ways. So it is in your best interest that you and Profit Rank maintain the lines of communication and provide creative and other tools that support common segmentations. Something we do every day.
- No persistent effect. Unlike Organic Search, Affiliate Marketing ceases to produce traffic immediately once commissions stop flowing.