I’m bringing you another post about the death of affiliate marketing. But this one’s going to be a bit different, as I’m going to bring actual data to the table.
I’m going to analyze an article from one of the legends, Charles Ngo. Charles is well known in the Stack That Money community. He was a full-time affiliate marketer for years and now maintains an excellent blog and posted Is Affiliate Marketing Dead?
I’m here to give you my honest thoughts because I am a full-time affiliate marketer too and I believe the future is still great. I want to talk about some of the points he makes, which are excellent, and also bring some data forward. Charles also offers a lot of great insight on other options that you might want to try instead if you’re considering affiliate marketing.
Table of Contents
Types of Affiliate Marketing
Before we dive into the article, I want to talk about the types of affiliate marketing I’m going to be referring to today—which could be what you’re looking to do yourself.
Basically, there are two main strategies of affiliate marketing that we’re going to discuss.
The first one is content marketing, where you create content such as what I’m doing right now. It’s also similar to what Charles is doing on his blog. We create content, people come to it, and now and then—if we have a product that we use or a service—we will recommend it using an affiliate link.
This is similar to Amazon affiliates, which is used by anyone running product-specific niche websites. To say it plain and simple, you create content and you earn money when people visit said content. This type of affiliate marketing is pretty much never going to die. As long as you create real and valuable content, you talk to your audience, and you feed them the information they want, they will always come back. Also, people will find it in search engines or share it with their friends.
Not only this is never going to die, but there are also statistics showing that more and more people are online every day; which only means it’ll get better.
And then there’s the second strategy, which is paid traffic.
This is what Charles is mostly referring to in his blog post. It’s what you’ll see in most forums, where we’re creating funnels, we’re creating campaigns around app installs or lead generation campaigns. We’re trying to sell an eCom product that’s also an affiliate product. We’re talking about buying traffic, sending it to a landing page, and going for the direct sale or the direct lead. It’s where we’re trying to make money immediately.
Now, both of these concepts are talked about on this page often. And of course, we offer free training on this subject over at PowerhouseAffiliate.com.
Rules, Regulations and Competition
Let’s go back to analyzing the article. Charles says rules and regulations around affiliate marketing are getting stronger, especially on traffic sources like Facebook and Google. As an affiliate, you must follow these rules. In fact, you almost have to make it look like you are not an affiliate. And this is why 90% of people will probably fail at this side of affiliate marketing. There are so many things you have to be doing and in control of.
He’s completely right. The rules and regulations have gotten stronger, and competition is fierce. But at the same time, I’m going to argue that the cost per click has not drastically gone up. The cost per click on Facebook has actually been pretty much stable for the last year. For me, Google has been stable for three to five years.
There are just so many other traffic sources coming up that even though there’s tons of competition, there are also more options: Tiktok, Pinterest, Snap ads, as well as all the native ad platforms. So even though Facebook might be the be-all, end-all for some people, there are lots of other alternatives. I’ve done a complete video on Facebook Alternatives that you can look at.
Although the competition is high, that is not a deciding factor for me to move on to other things. No matter what you’re doing online, there’s going to be competition to get those clicks. It’s going to happen whether you own a product or you’re an affiliate.
Are Affiliate Networks Going out of Business?
Another thing that Charles mentioned in his article, is that affiliate networks have been quietly going out of business. I can’t deny that this is truly a fact. There are tons of major networks over the years that have collapsed, in fact, for a decade straight—including at least one or two major CPA networks.
These are the networks that house offers like Lead Submits, your CPA Cost for Action Performance Marketing Network. So these aren’t just your little one-man pony shows that you see where some guy decides to create a network because he is a great affiliate and he has a few people that want to follow him. These are major networks that have collapsed.
Now, there are many reasons for this and I’m not going to try and get into them. Instead, I’m going to talk about the FTC and the way affiliates are promoting products. Many big networks went down hard when the trial space was going on.
We had diet trials, people going on with celebrities on these major news platforms, putting up images of well-known celebrities losing weight with these pills that weren’t actually endorsed at all. So, some networks got sued, some went out of business, some didn’t get paid by the advertisers.
Paid Traffic and the Risks
The industry itself (performance marketing) is extremely risky. So going into this business on the paid traffic side, you’re going to start investing your own money for such paid traffic. If you do this, you need to be sure you understand how the money flows. It goes from the person that owns the product, through a network, to you.
The reality here is that the networks need to offer you value. If they don’t offer you value, why are you going through a third party in this relationship? So here lies the reason why many networks have been collapsing: they have no value. They have become this thing where if you don’t own the offer, if you don’t have direct access to these exclusive offers, then there’s really no need for you as a network. They’re brokering offers from other networks and they don’t really have any moat. Moat is something Charles also discusses in his article—your moat is the distinctive advantage you have, you need to offer something that no one else has.
Let’s Talk About Affiliate Marketing
Charles also raised the point that there is a lot less activity—or a lot less talk—about affiliate marketing. And this is true, I think in the paid forums like STM you’ll notice the activity there has actually dwindled quite a bit over the last two or three years. But I don’t think this indicates that affiliate marketing is dropping by any means.
If you actually look at some of the data from Statista you’ll see that in 2022, it’s expected that in the U.S. alone, over 8.2 billion will be spent on affiliate marketing. This is three times more than what was spent 10 years ago. So the charts are going up, and I think we can’t really measure the impact of affiliate marketing based on the amount of activity we’re seeing in paid traffic forums.
Globally, in 2017, there was 13 billion spent on affiliate marketing, and of course, that number is going up every single year.
The Rise of E-commerce
Moving down in the article, Charles talks about the rise of e-commerce. He’s very clear that this method is taking over. And I agree; a lot of people that I know personally are moving to the e-commerce model. This consists of building a product, like a Shopify store, and then branding and building your own brand.
This is excellent for people that want to build an asset online. You’ll be building something that you own and you can sell. You own the data. To create this, you need to be motivated and want to build a business. But also, you need to understand traffic. If you don’t know how to get traffic, then starting out building this empire of a store and then trying to get people to come to your store without actually testing first with affiliate marketing—then you’re setting yourself up for failure.
This is why I recommend starting with affiliate marketing and then moving on to the bigger and better things like owning your own business, where you own all of the data. Owning a product is a great thing, and you should actually look forward to that when you start affiliate marketing. Being an affiliate should be a stepping stone to bigger things.
That is what we’re doing with affiliate marketing: we’re trying to spend money and make a profit without having to build an empire business first.
Let’s Talk About Digital Spend
Charles states that affiliates must profit on the first contact. There’s no lifetime customer value on affiliate marketing because you don’t own any data and you’re dealing with a world that has started hating affiliates.
But there are a lot of things you could do here that can help. First and foremost, list building is one of them. Charles actually has a course on this, where he explains how to build a list first using Facebook ads. This allows you to own the actual e-mails, and when you start sending emails to these people, you’ll be doing more aggressive advertising on the back.
We’ve done a full case study on this (inside PowerhouseAffiliate.com) where we’ve used the exact same strategy. And yes, it works. You can build a mini funnel and then you’re selling products on the back end. Have in mind that there are more advantages if you own the entire funnel right to the checkout page.
Now, the rules, regulations, and bans on Facebook mostly have become more prevalent, not only on affiliates but for product owners too. Even e-commerce stores are getting banned on this platform. This is another reason why there are so many different alternatives that people are getting into. YouTube for example is one people haven’t even started to really tap into. This is a platform that could be used to start selling performance-marketing-based products like the CPA offers.
Monkey See, Monkey Do
Another point raised was the monkey see, monkey do mentality. This is what affiliate marketers do: they rip and run. It’s one of those things discussed in-depth in another YouTube video I posted a few months back. This is why you need to create a ton of great content, build your own lists, build your data sets: you can’t just start and think that you can rip somebody’s landing page, start running traffic to it and start making a ton of money. That’s not going to happen, you need to put the work in.
If you find an affiliate campaign that actually works, which allows you to convert but you’re scared about the other factors at play, about people ripping and running, then maybe building your own product line is more suitable for you.
There is just a lot of extra work in affiliate marketing, so that’s why looking into alternatives is a good option. Charles gives some excellent alternatives in his article, like Bitcoin, which is the obvious option as it’s skyrocketing at the moment. Or the stock market. All of these are excellent ideas, and there are tons of alternatives to consider. This makes the question “is affiliate marketing right for me?” so difficult.
So in conclusion, a paid traffic strategy is the way to go if you want to make a ton of money fast, but content marketing is the choice if you’re in for the long run. Creating a platform with reliable and valuable content that people will keep going back to. Neither of these is going to die, paid traffic just requires more effort. You’ll need to constantly keep up with the times, understand how rules are changing, how to set up your funnels so you can track every step of the way, how to collect data, and then use it the way it’s supposed to.
One of the sites I used to check statistics is called Supermetrics. Affiliate Marketing, which is a multibillion-dollar industry, shows that 81% percent of advertisers and 84% of publishers in the US have turned to affiliate marketing. That means their interest is going up, which has a lot to do with people being at home right now looking for ways to make money.
In further statistics, I could see that 85% of online shoppers check Google. I run Google ads myself, and you can do complete training on it here to see exactly how I do that as an affiliate.
The top five categories searched on Google are: computer and electronics, clothing, online services, accessories and beauty, and business and marketing.
All the information shows that affiliate marketing is growing, and there’s still a lot of money to be made. You just have to understand which direction you want to go in.
If you want to start off with some great free training, consider joining PowerhouseAffiliate.com. You get instant access to wealth of up to date training covering a ton of affiliate marketing topics.
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