Most seasoned digital marketers consider affiliate marketing as the best method of creating a sizeable income online.
While such statements aren’t far from reality, like everything else under the sun (including the sun), affiliate marketing has its ups and downs.
In an attempt to help you develop a more well-rounded view of what being an affiliate marketer looks like, this article is dedicated to outlining the 11 most notable advantages and disadvantages associated with launching and operating an affiliate business.
Let’s take a closer look.
Affiliate Marketing Advantages
As mentioned earlier, affiliate marketing is usually regarded as one of the best online business models out there.
That’s mostly because affiliate marketers get to reap multiple benefits that aren’t applicable to other money-making ventures like dropshipping, print on demand, MLM, e-commerce, etc, such as:
- Minimum Startup Costs
- Low Operational Expenses
- Billion-Dollar Industry
- Huge Income Potential
- Grants Location Independence
- Offers Time Freedom
- Viable Source of Passive Income
- Very Simple to Utilize
Let’s take a bit of a deeper dive into each individual advantage.
1. Minimum Startup Costs
One of the most compelling aspects of affiliate marketing is that you can get started with it for less than $100. Heck, if you play your cards right, you might even manage to start your affiliate business for free.
To give you a frame of reference, according to Oberlo, starting a dropshipping store costs at least $500, and based on Amazon, launching an FBA business could set you back anywhere between $500 and $3,000.
Furthermore, many sources support that the initial expenses of getting a small startup off the ground could range between $5,000 and $20,000. Lastly, according to Pacific Research, developing a product of your own would require an investment of at least $30,000.
That being said, compared to most other online business models, affiliate marketing is undeniably the one with the lowest startup costs.
2. Low Operational Expenses
On top of the minuscule costs associated with venturing into affiliate marketing, the ongoing expenses of operating an affiliate marketing business are also extremely low, for 2 main reasons:
- The sole job of affiliate marketers is referring customers to third-party merchants
- Third-party merchants are fully responsible for processing, managing, and fulfilling all orders placed by the customer referrals of their affiliate marketers
As such, as an affiliate marketer, you’ll never have to invest money in most core business operational processes, such as:
- establishing a retail store
- renting or buying space for storing inventory
- hiring employees to deal with:
- monitoring & managing stock
- packaging & shipping orders
- customer support & returns
- complaints & refunds
- setting up office facilities
- collaborating with a courier service
Truthfully, I’ve been involved in affiliate marketing since 2016 and the yearly costs of fully operating my entire affiliate business have never surpassed $500.
3. Billion-Dollar Industry
According to statistics, the global value of affiliate marketing in 2020 was estimated at $19 billion.
Moreover, this study conducted by Forrester Consulting supports that the affiliate industry is steadily growing at an average rate of 10% per year.
As such, affiliate marketing’s worth is expected to surpass $30 billion by 2025, more than double compared to just 4 years earlier.
All those numbers constitute definitive proof that affiliate marketing is a multi-billion dollar industry that’ll keep growing for the years to come.
4. Huge Income Potential
Another prominent advantage of affiliate marketing is its huge income potential.
According to affiliate marketing statistics, the average yearly earnings of well-established affiliates range between $75,000 and $2,000,000.
To give you an example, based on Alex Nerney’s latest income report, his affiliate earnings surpassed $40,000 for September 2021 alone.
Moreover, in the video right below, Pat Flynn explains exactly how he generated more than $300,000 in affiliate commissions by promoting just one single product.
You can check out the huge earnings and stellar income reports of dozens of other affiliate publishers by taking a look at this roundup of affiliate marketing success stories.
5. Grants Location Independence
One of the qualities that skyrocketed my passion for affiliate marketing is that every single task, duty, and responsibility associated with running an affiliate business can be executed online.
This means that as long as you have access to a device that’s connected to the internet, you can basically operate your affiliate venture from anywhere you want without having to be tied down to a specific location.
Some affiliates like working from home. Some prefer coffee shops. Others start leading a digital nomad lifestyle, earning their living while traveling the world.
Personally, I love riding my bike to nature and doing some of my affiliate work there. In fact, most of this article was put together on my laptop while sitting on a cliff overlooking the ocean.
6. Offers Time Freedom
On top of location independence, affiliate marketing also offers time freedom, that is, the ability to have complete control over almost every aspect of your daily schedule, such as:
- wake-up time
- working hours
- rest breaks
- off-work hours
- vacation days & duration
- and more
For instance, my standard working schedule as an affiliate is 10:00 to 19:00. However, sometimes I might work from 10:00 to 14:00, stop for a few hours to rest, do some chores, and work out, and then resume working from 20:00 till midnight.
Now and then, I might also split my schedule into multiple small shifts spanning throughout the day (e.g. 10:00-12:00, 13:00-15:00, 16:00-18:00, 19:00-21:00).
Lastly, a couple of months ago, I even decided to go on an impromptu 3-day trip right in the middle of the week just because I felt like it!
That’s pretty much how malleable the life of affiliate marketers is.
Nevertheless, it’s worth pointing out that if you abuse the time freedom that comes with being an affiliate marketer by recklessly doing whatever you want whenever you want it without ensuring that you remain highly focused and committed to your affiliate endeavors, chances are that you’ll end losing both your business and your time freedom.
7. Viable Source of Passive Income
Unlike most other online business models, affiliate marketing is extremely viable for becoming a source of passive income.
In fact, Bankrate lists affiliate marketing as the 3rd best passive income opportunity.
Passive income is money generated as a result of work you’ve done in the past that requires very little to no effort at all to maintain.
An example of passive income is the royalties paid to an actor for participating in a TV series.
For instance, each cast member of the TV series “F.R.I.E.N.D.S” which has ended since 2004, is still getting paid $20 million in yearly royalties to this very day for taking part in the show.
Affiliate marketing works in a somewhat similar manner.
To give you an example, this roundup of The Best Affiliate Marketing Courses I published about one and a half years ago is still bringing in consistent affiliate sales month after month without me having to put any extra time or effort into it.
As a matter of fact, the vast majority of my current affiliate earnings are generated completely passively as a result of blog posts, guest posts, reviews, videos, and social media posts I’ve published months ago.
This means that if I were to stop working on my affiliate business right now, my affiliate income would keep flowing in unaffected for many months or maybe even years down the road.
8. Very Simple to Utilize
Last but not least, affiliate marketing is very simple and straightforward to utilize by virtually anyone regardless of age, background, previous experience, available capital, tech-savviness, professional network, etc.
As a matter of fact, most contemporary 6-figure affiliates had no greater skill and expertise than you currently possess when they first embarked on their affiliate journey.
Contrarily, leveraging other MMO (Make Money Online) ventures like e-commerce, dropshipping, print on demand, Amazon FBA, etc is much more challenging and requires a much larger capital or even possessing special knowledge and hard-to-attain skills.
Affiliate Marketing Disadvantages
Up until this point, affiliate marketing might seem like the greatest money-making opportunity of all time.
However, just like every other online business model, affiliate marketing isn’t all rainbows and unicorns.
Some of the drawbacks that you might stumble upon as an affiliate marketer include:
- Tons of Hard Work
- Performance-Based Approach
- Kinda Saturated
Let’s take a closer look.
1. Tons of Hard Work
Despite the innate simplicity of its mechanics, affiliate marketing should never be mistaken as a surefire approach to having thousands of dollars magically land on your lap every single month with little to no effort on your part.
On the contrary, building a profitable affiliate business involves a steep learning curve, immense amounts of trial and error, and tons of hard work over a significant period of time.
Nonetheless, you could short-circuit your journey to affiliate success by signing up for one of those Best Affiliate Marketing Courses.
2. Performance-Based Approach
Affiliate marketing doesn’t resemble a wage-based system that pays employees a fixed monthly salary.
On the contrary, affiliate marketing is a performance-based approach that compensates independent salespeople with commissions for referring paying customers to third-party online merchants.
In simpler words, the amount of money you’ll be making as an affiliate isn’t going to be steady no matter what but rather completely dependent on how well you perform in terms of customer referrals.
On the upside, this means that by venturing into affiliate marketing, you’ll be granted absolute control over your earning potential.
However, if you can’t help but perform poorly, you’ll be compensated correspondingly.
3. Kinda Saturated
Lastly, while affiliate marketing can’t be considered saturated in itself, there’s undeniably a massive overflow of affiliates in almost all high-profit affiliate niches, such as:
- Health, Fitness, & Weight Loss
- Personal Finance & Making Money
- Dating & Relationships
- Beauty & Fashion
- Technology & Gadgets
That’s because the more profitable a niche is, the more people attempt to break into it, thus increasing its saturation.
Pursuing a niche that consists of too much well-established authoritative competition could inhibit your progress, crush your profit potential, diminish your ROI (Return On Investment), get your business trampled, and consequently, significantly decrease the chances of reaching your financial goals.
Thankfully, you can sidestep all of the aforementioned setbacks by refining your niche as much as possible.
The 3 golden rules of picking the right niche for your affiliate business are:
- Low to modest competition
- Modest to high demand
- Interest, or even better, passion
Affiliate marketing FAQs
Affiliate marketing is an online business model that involves promoting products or services created and distributed by third-party online merchants in exchange for getting paid a commission for each sale you refer.
In layman’s terms, affiliate marketing is the process of being compensated for helping businesses sell to more customers.
Here’s a bird’s eye view of how affiliate marketing works.
- You join a merchant’s affiliate program
- The merchant gives you a unique affiliate link that points to their e-shop
- You promote your unique affiliate link online (blog, forums, social media, paid ads, etc.)
- Every time someone clicks on your unique affiliate link and makes a purchase on the merchant’s e-shop, the merchant pays you a commission
There are thousands of successful affiliate marketers all around the world. Some of the most well-known ones are:
- Pat Flynn
- Matt Diggity
- Matthew Woodward
- Doug Cunnington
- & more
You can check out a roundup of my 17 favorite examples of affiliate success and their backstories right here.
- Billion-dollar industry
- Very low startup & operational expenses
- Huge income potential
- Flexible & versatile
- Passive income
- Simple to implement
- No technical background
- No customer support
- No physical setup
Affiliate marketers can be divided into five main income groups:
- Total beginners: $0 – $20,000 per year
- Low-level affiliates: $20,000 – $50,000 per year
- Intermediate affiliates: $50,000 – $100,000 per year
- High-level affiliates: $100,000 – $500,000 per year
- Super affiliates: $500,000+ per year
Some of the factors that influence how much you earn as an affiliate marketer include:
- target niche
- available resources
- previous experience
- marketing efforts
- & overall mindset
Here’s a rough income growth timeline of a typical affiliate marketing business:
- months (0-3): no earnings
- months (3-6): first affiliate sale
- months (6-12): $100-$500 monthly
- months (12-18): $1000 monthly
- months (18-24): $3000+ monthly
This timeline isn’t a guarantee of future performance but rather a mere approximation of the income growth of an average affiliate business. Your own timeline could be shorter or longer than projected.
Over the years, I’ve seen aspiring affiliates striking a gold vein just a few months into the industry. On the other hand, I personally know people who’ve been struggling to grow their affiliate revenue to $1000 per month for several years.
Affiliate marketing is one of the most affordable money-making models out there.
Here’s a breakdown of everything you need to get started as an affiliate marketer along with their associated costs:
- web hosting & domain name: $2.95/month (Bluehost)
- keyword research tool: $49/month (Jaaxy)
- expert guidance: $49/month (Wealthy Affiliate)
- email autoresponder: Free for up to 1000 subs (MailerLite)
Please note that on top of expert guidance, Wealthy Affiliate also provides free access to hosting and a keyword research tool so you don’t have to purchase them separately.
The process of getting started with affiliate marketing can be broken down into the following four simple steps:
- Pick a niche
- Launch a blog
- Build an audience
- Promote affiliate products
No, you don’t.
Affiliate marketing is very simple to get started with by virtually anyone regardless of age, education, background, available capital, tech-savviness, professional network, etc.
In fact, most 6-figure affiliate marketers were no more experienced than you currently are when they first ventured into the affiliate marketing industry.
Nonetheless, being knowledgeable in fields like marketing, sales, content production, business management, etc., could help you reach your financial goals somewhat faster.
Affiliate marketing might not be all roses and sunshine but as you saw for yourself, its advantages greatly outweigh its disadvantages, which frankly, can be easily completely mitigated by conducting solid research, implementing a few simple measures, and getting your hands on some high-quality guidance.
Truthfully, getting started with affiliate marketing is if not the best, one of the best decisions I’ve ever made so if you’re still torn about whether you should embark on an affiliate marketing journey or not, I’d encourage you to do so as soon as possible!
If you have any questions or require further assistance, I encourage you to leave a comment right below or contact me right here and I’ll do my best to get back to you as soon as possible.
All the best,
Harry, Founder & Editor at dearboss-iquit.com