Why Affiliate Marketing? The Facts And Figures You Need To Know

What precisely is affiliate marketing?

Simply put, affiliate marketing means marketing as an affiliate. This basically means selling products in order to get commission – just as you might do as a door-to-door salesman for cable TV.

Of course the life of a door-to-door salesman is a rather unpleasant one because they’re travelling around all day, getting doors slammed in their face and only earning money if they get fortunate enough to land a sale. As a salesman you live and die by your ability to persuade a cynical audience and you invest huge amounts of time to try and make the sale.

As an online affiliate things are a little different. Now you’ll be selling products for commission but you’ll be doing it through the web and you’ll be letting your customers come to you. You’ll have any means necessary available to you to achieve this with and you’ll be able to constantly tweak and improve the system you’re using to make sales. What’s more, you can learn from the advice and mistakes of others and in some cases even use templates. In fact, you can even outsource the marketing process!

And because you’re investing less time in marketing this way, you can take on as many different products as you want and thereby scale up your income significantly. Moreover, you can do this ‘on the side’ to begin with and not rely on it for your main income – it makes a wonderful supplement to your income.

The Truth About Affiliate Marketing: Facts and Figures

That’s affiliate marketing in a nutshell but what do the numbers say?

Affiliate marketing has certainly been growing over the years with about 5.7% of big affiliate marketers starting in 2006 versus 13.9% in 2012. Most affiliate marketers are between 31-40 according to surveys and target B2C products (business to consumer) rather than B2B (business to business). 91% of these affiliate marketers choose e-mail marketing as their primary method of contacting customers while 60% work from home.

What’s really interesting though is the salary. While nearly 40% of affiliate marketers earned below $5K in 2013 and use it as a secondary source of income, the top earners surveyed earned as much as $500K (this accounted for 3.3% of marketers). 50% were earning at least $10K a year, whereas about 20% were on $50K+. Not bad! (Data from Three Ladders Marketing).

More data from Webprom shows us that UK businesses earned 14 billion GBP in 2013. This was up 15% from 2012, showing more growth still.

The bottom line? Digital marketing is a highly lucrative job that appeals particularly to young entrepreneurs. There’s a lot of money to be made and the industry is only growing with time.

Affiliate Marketing vs Selling a Product

If there’s a downside to affiliate marketing, it’s that you won’t keep 100% of the profits you generate – which can be disheartening. The percentages you get for affiliate marketing actually are very good and in some cases you get more of the profit than the creator – a lot of suggest that creators and producers give their affiliates 60% of the income as the starting point in fact. And it’s unusual to see affiliate marketing get you much less than 40%.

But then again, this still isn’t 100%. So now the question becomes, why would you choose to use affiliate marketing when you could be getting all the profit by creating and selling your own product?

There are many answers but the first is that you don’t have to go through the lengthy process of creating a product to sell. The sorts of things that sell very well online are quite often digital products – which means e-books, online courses and software. Any of these things take a lot of time to create and a lot of skill – if you’re not a proficient writer, then you might struggle to create an e-book that people are going to be happy to pay for. Likewise, if you’re not a programmer, you probably can’t make the next must-have piece of software. And if it’s a physical product you want to sell, you’ll have to learn the entire manufacturing process.

Now you have two options. One is to learn the necessary skills or just to work hard to overcome your limitations. You might write and rewrite your e-book for instance, get it proofread and then rewrite it again. But it will be a slow process. You could learn to code meanwhile, or you could learn how products are designed and created.

The other option is to outsource the entire process. If you can’t write/program/design, then you can find someone who can by going onto a site like UpWork, Elance or People Per Hour. So is this a good strategy? Well yes, it can be, but it will also cost you a big upfront investment and it will mean you lose some control over the outcome. The best programmer in the world can make you an amazing piece of software but they can’t read your mind – so that software may not be precisely how you imagined it. Likewise, a good writer will try to stick to your guidelines, but unless you give them a full-length draft they’re always going to insert some of their own ideas and opinions which may be contrary to your own.

And here’s the thing: you can never know if a product is going to be popular or not. So in other words, if you spend months and hundreds of dollars creating your product, you may yet find that there’s no one interested in buying it. Of course this will then leave you at a huge loss and you’ll have to either give up or sink even more money into yet another untested idea. It’s actually quite a rough ride!

Smart business nous will tell you instead to use the ‘fail fast’ approach. This means testing as many ideas and products as you can to begin with to see what sticks and not committing yourself financially to any project unless you have some evidence that it’s going to be successful. When you fail with affiliate marketing you lose nothing and you can thus keep trying different products until you find the one you’ll profit from best.

And what’s even better? You can pick a product that’s already selling well and that’s already getting amazing reviews. You can literally find someone online who is making a killing from selling an affiliate product and then you can sell that exact same product knowing that it’s possible to get rich from that strategy. When you sell your own product and it’s not making the money you hoped it would, you may find you can’t tell whether it’s the product or your sales strategy that is holding you back. With affiliate marketing you know that the product works, so it’s just a matter of finding the best way to peddle it.

Now there are scenarios where it does make more sense to create your own product and ultimately this gives you more freedom and flexibility and more profit. But for a lot of people, affiliate marketing makes more sense at least to begin with.

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