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Is Affiliate Marketing Dead, Thriving, or Somewhere In Between?

January 8, 2021

I've always been a big fan of the affiliate marketing revenue model. 

The concept is so simple.  Build an audience.  Refer that audience to affiliate partners.  Rake in the dough.

Not that long ago it was, dare I say, pretty easy to make money online with affiliate partnerships.

Nowadays the landscape of affiliate marketing is changing, and while the high level concept is still quite simple, it's not the type of business model that you can go out and get rich quick overnight with.

But is affiliate marketing dead?  My answer to that question is a resounding no.

Can you make serious money with digital assets monetized by affiliate marketing today?  Most definitely, but it's not as easy as it used to be.

In this article, we'll take a look at the latest trends in affiliate marketing, where it's headed, and some of the reasons that a few folks think affiliate marketing is dying. 

The Value Proposition of Affiliate Marketing

To lay the groundwork of the state of affiliate marketing, it's important to make sure we understand the landscape of how it all works.

Like I mentioned before, the concept is pretty simple.  There are a few different players who have a hand in an affiliate transaction:

A publisher is anybody who owns a website, blog, social media account, or the like.  This term refers to anybody who creates content and gets that content in front of an audience.

An advertiser (also known as a merchant in this context) is a business or brand who has a product that they want to market to sell.

An affiliate network acts as an intermediary between publishers and advertisers and facilitates clicks, conversions, commissions, and payments between the two.

Affiliate marketing is great for advertisers and merchants because it's an extremely flexible and cost-effective approach to marketing.  Most advertisers only pay after a sale has been made (some pay for leads), whereas other ad mediums require up front investment to maybe see a return if the campaign performs well.

On the other hand, affiliate marketing is great for publishers because it allows for them to monetize their business without having to worry about many of the logistics or operations that are associated with the products they are promoting.

That's a pretty basic overview of how affiliate marketing works - and even from that alone you can probably see why it's not going anywhere in the short term.  When executed properly, the affiliate marketing machine is a win-win-win for the publisher, advertiser, and network.

Why Do Some People Think Affiliate Marketing Is Dead?

I do not think affiliate marketing is dead, but the space is definitely changing quickly.  Change can be a scary thing for a lot of people, which I think is why you might hear the occasional person claiming that affiliate marketing is dying.

While I don't think it's dying, it's definitely getting harder to separate yourself and really make some money out there as a publisher.  Here are some of the reasons why:

Amazon Associates - The 800 Pound Gorilla

Amazon is the largest eCommerce operation on the planet.  They have a very well known affiliate program called Amazon Associates, which they manage in house.

People used to (and frankly still do) make life changing amounts of money with Amazon Associates.  There are countless online courses and gurus out there teaching how to build websites that make a full time income solely with the Amazon Associates affiliate program.

But then in April 2020, Amazon slashed their commission rates.  And by slashed I mean they kind of murdered them.

As you can imagine, this spooked, frustrated, and angered a lot of people.  I was pretty upset about it too - it was a huge drop in revenue for anybody who utilized the program! 

My most recent niche site project earned $3,896 with Amazon Associates in December.  Most of the products I promote fall into the "Home Improvement" category, which as you can see from the table above those commissions got cut by 62.5%.

That means in an alternate universe where my primary category still earned 8% fees, my site would have made over $10,000 with Amazon Associates instead of closer to $4,000.  Ouch.

I am all good and life goes on 🙂 I just use that example to illustrate just how painful this update was for a lot of people - many of whom's only idea of "affiliate marketing" was Amazon Associates.

Competition

The cat is out of the bag about affiliate marketing.  5+ years ago it felt like a really well kept secret, but people are starting to realize that you can make consistent, legitimate income with affiliate marketing.

The best part?  Most businesses that earn with affiliate marketing can be run from anywhere in the world, which most people view as an excellent thing.

I think more exposure and the normalization of digital assets is overall a good thing, but there is definitely a downside.  Generally speaking, affiliate marketing is a zero sum game (at least it is for the type of affiliate marketing I do).  There are only so many Google searches to rank for each month, and there are only so much consumer attention to monetize out there.  

Add many more people getting into the affiliate marketing game who are clawing over the same offers and you have a situation where old publishers might have a chunk of their revenue taken away by new kids on the block.

Compliance and Regulations

Honestly, I kind of understand why the FTC has cracked down on affiliate marketing in recent years.  The internet has a Wild West characteristic to it in a lot of ways, and there were way too many people earning affiliate revenue with dishonest tactics or half ass, low quality websites.

Nowadays, your affiliate disclosures have to be conspicuous.  The issue hasn't gotten to court yet, but most compliance folks will tell you that it means at the very top of your page or before your content. 

Some of the old guard in the affiliate world are worried that disclosing affiliate relationships hinders their ability to earn.  I don't see why that would be the case and I'm all for an online ecosystem where affiliate relationships are more transparent.

As a result too, affiliate networks, brands, and advertisers are getting more selective with who they accept into their programs.  You can't just get approval with a pulse and an email address anymore - in many cases your site will need to show legitimate traffic and a clear synergy with the brand for approval.

Google and SEO

It's getting harder to show up at the top of Google search results.  Part of that has to do with the increase in competition we discussed above, but part of it has to do with the direction Google has taken things over the last couple of years.

Whether it's featured snippets, text ads, shopping ads, or Youtube videos, it seems like there is more and more to compete with SEO wise with each passing day to show up at the top of Google search.

Naturally, when an affiliate site loses ranking position in search results, they lose visibility, lose their audience, and lose revenue.

It's Not All Bad.  Here's Why Affiliate Marketing Is Here to Stay

(The statistics discussed in this section were referenced by me on this article, which in turn references other articles and studies like this Forrester report)

Affiliate Marketing Spend Is Rising

Affiliate marketing spending has been rising for each year in the last decade, and is projected to continue growing into the foreseeable future.  In fact, spend has risen at an average rate of 10% between 2015 and 2020.

Advertisers Think Affiliate Marketing is Effective

81% of the advertisers surveyed in the Forrester report referenced above use affiliate marketing.  To qualify for the survey, the advertiser's companies must earn $200 million in revenue per year.  That means really big brands and big companies use and stick with affiliate marketing.

Furthermore, the advertisers in the report had affiliate marketing to thank for more than 20% of their annual sales.

Networks Are Getting Better and More Efficient

Affiliate networks play a crucial role in this process.  Most companies, even companies with large revenues, don't have the competency to develop and maintain their own affiliate software.

There are more than a handful of affiliate networks out there who provide excellent service to advertisers and publishers alike.  Efficient and transparent tracking, timely payments, and great customer service have come to be the standard in the industry when it comes to affiliate networks.

Opportunity for Publishers

Affiliate marketing still provides a huge opportunity for publishers.  No matter who you are or where you live, this is a way to earn serious money.  For those who value location independence, or investments with little upfront capital costs, affiliate marketing will continue to be at the top of the list for online entrepreneurs.

Affiliate Marketing Now and Beyond

Gone are the days where you can slap together a crappy website that's spammed with affiliate links and expect it to make money.  Sites like that don't sniff the second page of Google search results anymore.

The successful affiliate marketers, whether it's a blogger, niche site builder, or social media influencer, will be those who:

  • Put effort in to connect with your audience
  • Create content that ACTUALLY provides value to readers and viewers
  • Are willing to try new ideas

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