I’m a big fan of affiliate marketing. Over the past two years, affiliate marketing has earned me tens of thousands of dollars. All passive income rolling into my Paypal account at all times of the day.
So why I’m I writing about the disadvantages of affiliate marketing? The internet is filled with posts about the pros of affiliate marketing and not enough about the cons. This leaves many entrepreneurs – especially bloggers, content creators, course creators – with unrealistic expectations.
My goal is to highlight some cons of affiliate marketing that are often swept under the rug. I want to be upfront about the realities of affiliate marketing so that newbies can better understand what to expect.
Affiliate marketing is often touted as one of the best ways to make money online. Yet most people who attempt affiliate marketing fail. It’s not just that they make common affiliate marketing mistakes. It’s also about choosing an online business model that doesn’t suit them. After I go over the disadvantages of affiliate marketing, you’ll better understand whether or not this business model is for you. Let’s go over six of the biggest disadvantages of affiliate marketing.
Disclosure: This post may contain affiliate links as explained in my disclosure policy.
You’re building someone else’s brand
The first major disadvantage of affiliate marketing is that you’re helping other companies grow their brand instead of growing your own. Many people, like myself, become digital entrepreneurs because they want more control over their lives and finances. As an employee, your hard worker makes your employer rich. When you become an entrepreneur, your hard work is supposed to build up your company, an asset that rewards you for years to come.
As an affiliate marketer, you spend a tremendous amount of time, money, and effort to promote the products and services of other brands. In exchange, you earn a percentage of the sale. If you become a full-time affiliate marketer, you can choose the products you promote, work from anywhere, and make as much money as your skill set allows. While this sounds better than being an employee, it still follows the same employer-employee relationship.
You’re reliant on the company that runs each affiliate program your promote to remain in business. If the company goes out of business, you’re out of luck. In addition, whenever you make a sale, the affiliate program earns the bulk of the revenue. In my experience, affiliate commission rates rarely go higher than 40%. It typically falls within 10-30% for online courses and digital software, which are among the highest-paying affiliate programs. Amazon Associates has commission rates as low as 1%. That means that if you generate $100 worth of sales, you only earn $1.
You have no control over the business decisions of affiliate programs
True entrepreneurship is about validating the need for a product in the marketplace, creating a minimum viable product, and then taking it to the market. If you’ve ever watched Shark Tank, you see entrepreneurs who come up with all sorts of clever solutions to common problems. From the ideation phase to the testing to the branding and marketing, these entrepreneurs are in control of the whole process. That’s what makes starting a business exciting (and also risky).
As an affiliate marketer, you have no say in any of the core functions of the businesses you promote. Branding, marketing, management, sales, customer service, and all the moving parts that make a business work are in someone else’s hands. In The Millionaire Fastlane, one of my favorite books on entrepreneurship, MJ Demarco, talks about the five commandments of an online business that can make you a millionaire. He refers to this as the CENTS framework:
Affiliate marketing violates the first commandment, control. Another company can kill your business in an instant. The analogy that MJ Demarco uses is getting into a stranger’s car and letting them drive. You’re not truly your own boss as an affiliate marketer. You’re working for someone else as a freelancer with no guaranteed income or benefits. If you’re not good at sales and marketing, you may end up essentially working for free.
It takes time to build up your affiliate income
Anyone who tells you that you can start affiliate marketing today and quit your job in a few months is lying. Affiliate marketing is definitely not a get rich quick scheme. It takes time, dedication, and discipline to earn consistent affiliate commissions. You first have to learn how affiliate marketing works. Then you need to build up an audience to market your affiliate products to, usually through a website. You also have to create content regularly to draw in more leads and keep the sales rolling in.
Anything worthwhile takes time, and passive income through affiliate marketing is no different. You’re not going to be sitting on a beach sipping margaritas while collecting thousands of dollars in affiliate income within three months. I would say you should give affiliate marketing at least a year of consistent effort to establish consistent commissions.
Some affiliate marketers start making good money fast, but they are the exception. For instance, Adam Enfroy started generating over $18,000 in affiliate income just 9 months after starting his blog. If you check his backstory, you’ll learn that he was previously the head of affiliate marketing at a startup before starting his blog. He already had the knowledge and insider secrets to hit the ground running. I’m bringing this up so that you can set the right expectations based on your background.
Affiliate programs can change terms or be discontinued
Along with having no control over core business functions, you are also at the mercy of whatever direction the affiliate program goes. This is a challenge I have experienced first-hand. I was promoting an online course called the Billionaire Blog Club, which I thought was fantastic. However, in the past two years, the creator has had multiple overhauls of his course offerings. He decided to scrap the initial course and offer a new suite of courses. Then he scrapped that new suite of courses and offered a newer version. The product today is completed different from the original offer I signed up to promote.
It’s great that the course creator is constantly updating his offerings to make them better for students. That’s what businesses should do. However, this is a challenge from the perspective of an affiliate marketer. You have to go along with whatever changes an affiliate program makes. Since you’re not involved in the decision-making, you won’t know if or when the changes will happen. A business can change the terms of the affiliate agreement or discontinue its affiliate program altogether. If you were relying on it for your livelihood, you’d be in serious trouble.
Fraudsters can hijack your affiliate links
While I haven’t personally experienced this problem, I heard about it enough for it to be a concern. There are some hackers out there who have figured out how to insert their code into other people’s affiliate links. That means that those hackers earn a commission from sales that other people generate. One way to mitigate this risk is to cloak your affiliate links using a link shortener lile Pretty Links. I use this plugin to give my affiliate links a new URL using my domain name. That way, they are easier to manage and harder to hijack.
Referring a sale doesn’t always guarantee income
With the affiliate marketing model, you’re supposed to earn a commission every time you refer a sale. That’s not always the case though. Some products don’t lend themselves to instant commissions. For instance, when you promote web hosting companies, you don’t earn a commission if someone purchases a hosting plan through your link and then cancels their subscription. Each sale must be verified, which can sometimes take 30-45 days. There are other conditions that every sale has to meet in order to qualify as a verified sale. This doesn’t seem to be an issue if you’re promoting physical products and any products that aren’t subscription-based.
Why should you do affiliate marketing?
After all the disadvantages I just listed, why would I still recommend affiliate marketing as a business model? I think that affiliate marketing is a great stream of income for online entrepreneurs. However, I don’t recommend that anyone focus on affiliate marketing as their primary source of income. Sure, there are millionaire bloggers out there that make the bulk of their money from affiliate marketing. Those people are the exception. The vast majority of affiliate marketers never break $1,000 a month in income.
If your goal is to make a full-time income from affiliate marketing (at least $5,000/month), be prepared to invest two years to build up this income stream. You could definitely surpass that goal in less than two years depending on your previous experience and sales skills. However, it’s best to be conservative about your expectations.
Now, that we’ve gotten the downsides out of the way, let’s go over the advantages of affiliate marketing.
There’s a low barrier to entry
Affiliate marketing is one of those business models that truly levels the playing field for aspiring business owners. The costs of starting an affiliate marketing business are basically a laptop and a WiFi connection. You don’t need any degree or certification. Just a willingness to learn, a great deal of drive, and the discipline to work.
There are low start-up costs
Another great thing about affiliate marketing is that it costs so little to get started. While you technically don’t need to spend a dime to get started with affiliate marketing, it certainly helps to invest in education. This will help you fast track your success. You can avoid typical mistakes that new affiliate marketers make. I highly recommend Making Sense of Affiliate Marketing by Michelle Schroeder-Gardner. She is a personal finance blogger who makes $50,000/month from affiliate marketing. Michelle has also shared her best tips for making money with affiliate marketing on this blog.
You can make money while you sleep
Once you wake up in the morning and see that you made some sales while you were asleep, you become hooked. This was one of the biggest draws of affiliate marketing for me. Like most people, I only learned about earned income from my parents and school. Discovering passive income was a huge revelation for me. Affiliate marketing is passive in the sense that you can do the work upfront and continue to earn sales without having to trade time for money. Passive income doesn’t mean you don’t have to do any work at all. There’s some maintenance involved to keep the affiliate income coming in.
You can develop sales skills
Affiliate marketing can be a great way to develop your sales schools. By promotring other people’s products, you learn the fundamentals of sales. Depending on your mode of promotion, you may have to master email marketing, copywriting, or Facebook ads. This can help you promote your own products should you choose to go that route later.
You don’t need to deal with customer service
One of the most intimidating aspects of running a business is dealing with customer issues, like refunds and complaints. Affiliate marketing eliminates this problem. Your only job is to refer new customers. The owner of the affiliate program takes care of any customer issues that may arise.
While affiliate marketing has it’s disadvantages, I still think it’s an excellent source of passive income. If you have a blog, a Youtube channel, an email list, or any type of established audience online, affiliate marketing is really a no-brainer. As long as you have the right expectations and the right strategy, you can make passive income with affiliate marketing.
Check out these additional affiliate marketing resources to help you get started:
Making Sense of Affiliate Marketing
Making Sense of Affiliate Marketing is the best affiliate marketing course I’ve taken by far. It is taught by Michelle Schroeder Gardner, a personal finance blogger who makes over $50,000 per month as an affiliate marketer. Michelle explains the ins and outs of affiliate marketing, from the legal aspects to the best strategies to drive conversions. This is a text-based course that comes with workbooks and actionable steps to implement what you’ve learned. Read my full review of Making Sense of Affiliate Marketing to learn more about the course.
Pin To Profits – Affiliate MarketingPin to Profits – Affiliate Marketing is a step-by-step guide to making money with affiliate marketing on Pinterest. It is taught by mom blogger and Pinterest expert McKinzie Bean. This video-based course walks you through the process of creating and posting affiliate pins on Pinterest to generate commissions. It covers topics such as how to create click-worthy affiliate pins, what boards to post your pins to, and what types of products do well on Pinterest. Read my full review of Pin To Profits: Affiliate Marketing to learn more about the course.
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