Is Affiliate Marketing Suitable for Your Startup

Is Affiliate Marketing Right for Your Startup?

Whenever I bring up the topic of affiliate marketing for startups or business owners, the response is usually something along the lines of; “I will try affiliate marketing when everything else fails”.

Seriously?

 

Is Affiliate Marketing Suitable for Your Startup

 

So Is Affiliate Marketing Right For Your Startups?

I’m not sure what they actually understand about affiliate marketing, and just in case you don’t know what it is either, let me quote trusty old WikiPedia for a “proper” definition:

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. […]

Affiliate marketing is frequently overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers’ marketing strategies.

Affiliate marketing is basically a revenue-sharing arrangement between the business owner (merchant), and free agents (affiliates). The affiliate can be an individual blogger working from home, or large media organizations with a portfolio of online publications. Under this arrangement, the affiliate promotes the merchant’s products and offers, with the understanding that a percentage of each sale generated would be paid to the affiliate.

That’s why it’s also commonly referred to as “performance-based advertising”; you pay for measurable performance and quantifiable results. This is drastically different from traditional media advertising, where you pay the agency for pure hit-or-miss mass exposure.

Affiliate marketing is not multi-level marketing, although lots of sneaky MLM companies commonly use the same term to mask the true nature of their business. There is no “upline” or “downline” or whatever in affiliate marketing; it’s a one-on-one relationship between the merchant and each individual affiliate.

Here are some advantages of using affiliate marketing for startups:

  1. You get traffic fast – If you are running your affiliate campaigns through an “affiliate network” like Commission Junction (US), ShareASale (US), or JomNiaga (Malaysia) [Disclaimer: We own JomNiaga], your brand is usually visible to a massive army of affiliates. Most of these affiliates can just plug your offer into their existing traffic channels, sending you high-quality traffic fast.
  2. You don’t need to be an expert at everything – Want to master SEO, Google Adwords and social media? Good luck, but you’ll probably still be “mastering” it ten years later (don’t ask me how I know). You should be an expert at just one thing; growing your idea. Get ten affiliates, each a master in a particular traffic generation method, you’ve covered it all without having to learn anything.
  3. You pay only for results – Almost all types of traditional advertising require that you pay upfront, with almost no guarantee of measurable success. With affiliate marketing, you pay the affiliate when a sale is made. It’s very easy to scale your affiliate marketing efforts and remain profitable at the same time.
  4. You don’t need a big sales team – Downsize your sales personnel, and hire an affiliate manager to recruit affiliates to your cause. You reduce your overhead costs and risk, while leveraging on the affiliate’s existing market relationships. Affiliates do not earn a “basic salary”, so it’s in their best interest to make more sales for you.
  5. You can discover new markets – No matter how large your sales team is, you cannot possibly reach out to all demographics and verticals, specially the ones you never knew existed! By getting affiliates in a range of markets, you may discover that your idea has the potential to be re-targeted (or spun off) to an entirely new market.

Of course, affiliate marketing is not the cure for all your problems. Here are some of the disadvantages of affiliate marketing;

  1. Doesn’t work as well if you have nothing to sell – Affiliate marketing works best when you are actually selling something. If your startup is built on offering services, content syndication or selling ads, it just doesn’t work as well. (An exception to this is Cost-Per-Action / CPA / Pay-Per-Lead affiliate marketing, which I will probably discuss here someday.)
  2. Does not work well for extremely niche products – At the end of the day, affiliates are human beings who respond to brands and products that they understand. If your product is more mainstream, you will be able to find more affiliates who understand it, and thus be interested in promoting it. If your product or idea is too niche, you will have trouble finding good affiliates. Even if you do, affiliate marketing will not make up for a large part of your sales.
  3. You have less control over branding – You cannot have complete control over when, where and how an affiliate promotes your brand. The last thing you want is a spammer on your side. That being said, if you choose your affiliates wisely, and give them clear instructions on how you want your brand represented, you will probably never have a problem.

I think the biggest selling point for affiliate marketing is that you have nothing to lose to give it a try. You don’t have to pay a boatload of cash just to get in, and you can track your results easily with the web-based control panels offered by all affiliate platforms. You can scale up or down without investing in your own sales team.

You don’t have to wait till everything else fails before you try affiliate marketing, because it may be a little too late. Affiliate marketing should be one of the first options you explore, as it will give you a steady flow of traffic and sales until you’ve cracked the magic formula and your business becomes insanely viral.