Is Affiliate Marketing Right for Your Business?

affiliate basicsMany small business owners are intrigued by the idea of affiliate marketing.

Indeed, it sounds almost too good to be true: you can have an army of web marketers come flying in to your business, promoting it on their blogs and other network websites, and you only have to pay them when it results in a sale!

While that is often the basic gist, the reality, many entrepreneurs discover, can be quite different. In this post I’ll lay out a few of the challenges businesses face when they start to implement an affiliate marketing campaign for their product.

Challenge 1: You Have to have the Right Type of Product

Affiliate marketing isn’t for everyone. While many affiliate platforms will try to convince you that just about anyone should be using their service, the reality is quite different.

Firstly, you need to have a product where the purchase occurs online. While some companies offer CPA, or cost-per-action (cost-per-lead) programs where you pay per lead or call, this field is rife with fraud and fake leads, just to get you to pony up the cash.

Even if you sell your product online, you have to have a high enough margin in order for a competitive commission to make sense. For many physical products, the metrics simply don’t work out for small business owners, and they get lost against their larger competititors, like Amazon or Walmart.com.

Challenge 2: You Have to Recruit Affiliates

The second huge obstacle is to recruit good affiliate marketers to your program. Most industries have tough competition, and affiliates have many options of programs to choose to promote.

Recruiting them ultimately comes down to the quality of your product, and the competitive commission rates you can offer. Oh, and you’ll also need a platform where you can find the affiliates to begin with.

Challenge 3: There Are A Lot of Scams

Finally, it’s important to be aware that affiliate marketing is notorious for spam and scams. Even some of the leading providers, like Clickbank or Commission Junction, have gotten into trouble over the transparency of their reporting, leaving some to wonder if they were really running a scam.

None of these challenges is a show-stopper, however, and if you’re considering affiliate marketing, I simply encourage you to take a hard look at all of the different angles involved.