"Is Affiliate Marketing Dead?"
"Is affiliate marketing still worth it?
I've always hated these questions and have been hearing them since 2007.
I hate these questions because they feel like they are excuses.
It's a bit like seeing someone in the gym doing it half-heartedly. Then they see how they blame their fitness equipment for their lack of results.
But now it's 2021 – things have changed over the years.
Rules and regulations have gotten stronger.
The competition got tougher.
The acquisition costs continue to rise.
And you have more opportunities to make money online than ever before.
Affiliate marketing is no longer the same.
People are still asking me if affiliate marketing is dead or if it is worth pursuing in 2021.
Here is my answer:
Affiliate marketing is not dead yet, but it has seen its glory days. For the vast majority of people, getting into the affiliate marketing industry in 2021 will not be worth it.
I have dedicated so much of my life to this industry. I've written countless articles promoting this industry.
It hurts me to say the industry is in decline.
Here are some signals I've observed:
- Affiliate networks have silently ceased business for several years.
The joke used to be that a new affiliate network pops up every week. Now it's the other way around.
- Not much is said about affiliate marketing. Take the STM forum, for example. STM has always been a place to go to talk about the industry. The level of activity there has dropped dramatically in recent years.
(You could argue that there are more alternatives like Facebook Groups, Telegram, and Slack. But I believe the main cause is the decline of the industry itself.)
- Not many people identify themselves as “super partners” anymore. I just checked my Facebook friends list. Everyone is involved in either e-commerce, cryptocurrency, investing or running an agency. So many network owners and affiliate managers have moved on.
- There have been no more innovations for years. There were always new trends for partners. The industry went through stages of nutra / skin trials, Facebook, mobile pops, adult dating, native ads, etc.
Innovation is an indicator of growth.
There was always a sense of excitement to find out What's next. Now it seems like the industry has been stuck in time since 2017, trying to make push ads hot.
The affiliate marketing industry is not as excited as it used to be.
Why am I writing about it?
I am no longer in affiliate marketing.
That's because I still get messages from people. You are frustrated.
They have tried their best and are still unprofitable. They want to know what's going on in the industry in 2021 and they don't seem to get an honest answer from anyone.
The aim of this article is to help you understand the changes in this industry. Understanding them will help you make a more informed decision about whether to enter them or not.
Let's get into that.
Note: Let's make sure we're on the same page. Affiliate marketing is a broad term.
This article pertains to affiliate marketing where You are spending your own money Buying traffic to benefit from being advertised for an offer. People usually refer to this as performance or cost per action (CPA) marketing. This is the type of affiliate marketing I've been writing about for years.
This post Not For more information, see Promoting Offers You Own the Sales Channel on. For example, you own a cooking blog and advertise cookware. Or create an influencer affiliate program to promote your product.
What Made Affiliate Marketing So Great?
I'll take you back to the online money making landscape in 2007.
What attracted me to this room anyway?
First people banked. I remember when someone posted a screenshot on the WickedFire forum showing monthly sales of $ 25,000.
The other guys roasted it for making so little.
Next, there weren't many viable ways to make money online.
It was either SEO or affiliate marketing. E-commerce DID existed then, but there was so much friction then.
Shopify wasn't that developed. Your app store did not exist. At that time, every change had to be coded individually.
Creating a product from scratch was a mystery.
Finally affiliate marketing simplified Business.
"I'm not afraid of the man who has practiced 10,000 kicks once, but the master who has practiced 10,000 kicks once." – Bruce Lee
I didn't want to worry about customer service. I did not have enough "Credit" to receive the dealership. Trying to source products from China was like the wild west!
I chose affiliate marketing and it was the best decision of my life.
How affiliate marketing changed from 2010 to 2020
Every industry is going through changes. But not every industry changes at the same rate.
I remember joking with my affiliate manager once, “Affiliate marketing ages like a dog. A year in affiliate marketing is equivalent to seven years in the real world. "
Let's look at the changes in the industry in terms of two categories:
/ 1 Easy profitability::
How difficult would it be for a newbie to get their first profitable campaign?
If you are profitable how hard is it to keep profits going?
/ 2 The Viability of options::
Are people still profitable from campaigns? Yes.
Can a Newbie Still Make A Profit From Affiliate Marketing? Yes.
However, every decision has one Opportunity costs. The decision must be assessed against all other available options.
Here is a picture I took. It shows these two characteristics over the years.
You can see that 2010-2017 was an amazing time for affiliate marketing from my perspective.
Let's delve deeper into the ease of profitability and the feasibility of options.
The ease of profitability
This refers to how easy it is to make a campaign profitable. It's no secret that affiliate marketing has become increasingly difficult.
But what are the market forces that caused this?
/ 1 There is more competition than ever before
In the early days, affiliates were buying a majority of their traffic online. Your competition was other Member organizations.
Now you are competing against everyone for traffic.
on. Reduced barriers to entry
A big reason is that the transport platforms reduced the barriers to entry. Buying media didn't look so scary anymore.
Some examples of this:
- Media buying education has been enhanced through free resources like Facebook Blueprint and Grow with Google.
- Throw a stone at a Traffic & Conversion Summit and you will meet three different Facebook agency owners. More agencies meant companies could easily outsource the purchase of media.
- Transport platforms developed technologies such as similar target groups and intelligent campaigns. Organizations could leverage the platform's machine learning to get results WITHOUT Master media buying.
Previously, the member organizations fought each other for traffic. Then the competition became Samsung's, Disney's, and the world's political campaigns.
b. The affiliate ecosystem
Everyone had their own role in the affiliate ecosystem.
Partners drive traffic.
Affiliate networks are the middlemen. You float cash.
Advertisers optimize the offer and concentrate on the backend.
Traffic sources deliver the traffic.
Then there was a shift where everyone else started buying media by themselves.
Some affiliate networks set up their own in-house media buying teams.
Some traffic platforms have started promoting affiliate offers themselves.
Some advertisers bought their own media.
They didn't have to master media buying like partners did. For one thing, they worked with much better margins. Second, it wasn't a fair fight.
Affiliate networks can view and use the top performing affiliate landing pages.
Traffic sources knew which publishers were converting the best based on the partners who took the risk.
Of course they denied it.
We started fighting versions of us in the Matrix, but they had stronger weapons.
c. The rise of e-commerce
E-commerce has been around since the 1990s.
But there was a shift around 2015. Every affiliate marketer took note of this Shopify.
Dropshipping became a rage.
It solved some of the frustrations that people had with affiliate marketing. It was considered a "white hat". Facebook loved it back then. And people felt like they were owning a company for the first time.
Dropshipping is a crappy business model. No customer likes to wait a month for their items to arrive from China.
Dropshipping refused. But a lot of people have focused on creating their own brands and leaving the affiliate space for good.
Around this time, DTC (Direct to Consumer Brands) was skyrocketing. Brands like Native, Allbirds, and Warby Parker have all increased their media spend. And these people knew how to buy traffic as well as affiliates.
The difference? Strong ecommerce brands have more profit leverage to pull when compared to an affiliate marketer. (Some of them were flush with millions of venture capital too.)
- Must benefit from the first contact
- There is no such thing as "lifelong customer benefit".
- Don't have any data
- Dealing with a world that started to hate partners.
- Can afford to lose money on first sale. (You can make it up to you in the backend)
- You have data. This data can enable them to get more from email and SMS marketing.
- You can increase the average order value through tactics like bundling, payment plans, live chat, cross-sells, subscriptions, etc.
More and more competition began to buy traffic. This led to an increase in transport prices.
The affiliate marketing model of being a middleman means that we have limited our profit margins.
Whoever can afford to pay the most wins.
/ 2 Rules, regulations and prohibitions have become more and more common
Affiliates were always at a disadvantage because we had to work with lower profit margins. How have affiliates been competitive for so many years?
Thousands upon thousands of split tests.
An attitude that never gives up.
Oh and We were shady. We were ready to get more aggressive in order to achieve the conversion. The partners pushed on.
Here are some examples of Tactical Partners used:
- Misleading claims about what a product might do or what celebrity is using it. It was legitimate to ask people to spin a wheel to win an iPhone that we weren't.
- Aggressive scripts like redirecting back buttons.
- Account blocked? Just come back with someone else.
- Saying that people's phones / computers had viruses when they didn't.
There were levels of how aggressive some people were. Some of the worst I've seen were criminals.
Nobody wakes up wanting to use misleading claims in their marketing. But if everyone else does, you are at a disadvantage if you don't.
If that's the difference between being unprofitable or not, ethics can easily be thrown out of the window.
I'm not trying to apologize – the actions were wrong. But I do provide insights into how greyhat marketing can be so slippery.
This aggressiveness benefited the partners' paperbacks, but harmed the rest of the ecosystem:
- Affiliate networks become magnets for lawsuits.
- Platforms like Facebook developed a bad reputation for user experience.
- Merchant processors have heated up because of more aggressive billing methods such as 1-click mobile flows or test offers.
Actions have consequences.
Use a misleading claim? Now you run the risk of not getting paid if you get caught by the advertiser / network.
Was banned on Facebook? Their technology and processes have improved to the point of banning people.
Aggressive offers like 1-click mobile flows have disappeared. Nutra attempts are rare.
Affiliate marketers don't have many profitability levers, especially when creative assets are so easy to steal. A profitability lever was misleading. The rest of the ecosystem has worked hard against it.
The markets became more efficient. If a video game contains an "exploit," the developers will patch it.
/ 3 The "Monkey See, Monkey Do" mentality
Affiliates have always copied each other's creative assets (landing pages, angles, and ads).
It was a nuisance for my team to manage so many spreadsheets from our competitors. Then spy tools came out.
These tools automated everything and made it easier for partners to copy one another.
The disadvantage? These tools automated everything and made it easier for partners to copy one another.
Everyone kept tearing down and stealing from each other. It felt like the marketing version of The Human Centipede.
This has ruined the drive to innovate. What's the point of bringing out a unique landing page if it's stolen within a few hours?
When everyone does the same type of motive, this becomes one Race down. The only winner is the traffic source.
The viability of alternatives
Every decision has an opportunity cost.
As an affiliate marketer, you think this is the best business model for you.
I mentioned that I thought SEO and affiliate marketing were my only options when I first started.
The floodgates have opened in the last ten years. There is no limit to the number of businesses you can run now, and they are easier to run than ever.
/ 1 The barriers to owning an offer have decreased
I can safely say that creating your own quote is at least 10x easier than it was before 2010.
Seriously, I can get a brand up and running in a matter of days.
- Customer service can easily be outsourced to Upwork + Zendesk.
- You now have a wide variety of fulfillment options like Amazon FBA and ShipBob.
- Product sourcing is much easier thanks to AliExpress.
- Shopify itself has grown and made things so much easier.
- Shopify apps make everything easier. No need to rent a custom encoder.
- Via Fiverr and Upwork you can get any help you want. Do you need knowledge? There's Clarity.fm.
These are just products. What about all of the other options?
You can walk down the influencer path. Start a podcast or YouTube channel.
It has never been easier to become a creator. Create a course with Teachable. Start a newsletter with SubStack.
Bitcoin wasn't even invented when I started affiliate marketing! Now there is a whole economy around cryptocurrency and NFTs.
Build an app or a SAAS. I am not a programmer. But now I would feel comfortable starting an SAAS company even though I'm not a programmer. There are many solutions with no code. I can hire competent talent from a place like TopTal. You will be surprised how many SAAS companies are started by non-technical founders these days.
Timed coordination is the most underrated component of business.
Think for at least five years. As you figure out a market, consider where it will be in a few years' time.
Some industries with tailwind (growing): Cryptocurrency, the creative economy, cloud kitchens, eSports, eCommerce, college alternatives, work-from-home clothing,
Some industries facing headwinds (dying): Restaurants, newspapers, commercial real estate.
Affiliate marketing no longer has the tailwind it used to have.
One of my favorite laws out of the 22 Immutable Laws of Marketing is:
"It's better to be first than to be better."
It's a lot easier to make money when you are in a trending industry. If the industry you are in is in decline, it makes sense to switch to another.
/ 2 As a partner, there are no moats
A moat is a distinct competitive advantage that makes it difficult for a competitor to copy.
The Coca Cola moat is its brand. You can create a copycat formula, but people still want the red can.
One of Shopify's trenches is the App Store. There are many Shopify alternatives out there, but none of them can compete with the App Store's utility.
What's stopping others from demolishing your campaign? Ads, angles, and landing pages can easily be stolen with no effect.
Exclusive offers? Somehow. It is rare for an affiliate marketer to have a truly exclusive offer. Advertisers want to scale. And it is risky for them to have all their eggs with a single partner.
It gets more and more frustrating to run a business without a moat over time. It feels like you've been on a hamster wheel year after year.
This has always been the affiliate marketing model. Why am I addressing this now? Because it wasn't a big deal as long as simple wins came in.
As the campaigns got tougher, it became more frustrating to work without a moat.
/ 3 Exit Value
Affiliate marketing is a great way to generate money.
Let's say you made $ 1 million in profit from affiliate marketing. What's the deal worth? Whatever is on the bench. That's pretty much it.
Other companies may have a multiplier depending on the type of business.
You create a brand that makes $ 1 million in profit. Suppose there is a 5-fold multiple depending on the company. This business can be sold for $ 5 million.
You're doing 5x more just because it's a different business model.
Most affiliate marketers got their first glimpse into the business through this industry. As the partners became more enterprising, they found that they wanted “more” than just cash.
/ 4 partners got bored
Myself and most of my partner friends entered the industry in our 20s.
Now most of us are in our 30s.
Your priorities change as you age.
Most of the people entered the industry to make money and to travel. But after you've made some money and lived the four-hour week lifestyle, ask yourself, "what's next?"
I had to ask myself, "Do I want to run campaigns in my 40s?"
You want more stability when you are raising a family.
Affiliate marketing is a challenge. However, the challenges of account bans or unstable offers become exhausting.
Every business has challenges, but some headaches are more fun than others.
I was frustrated that I didn't create anything bigger than a campaign. I have this intrinsic motivation to build something bigger than myself.
It's not about money. It's about minimizing regrets. I want to know that I've kept looking for bigger home runs instead of sticking to what's comfortable.
After about two years as a full-time employee, the pace of learning slows down. You start up, do some split tests, and repeat. Some people left because they want a bigger challenge. There is something to be said when you build something tangible.
Companies tend to work better overtime due to a flywheel effect. More sales mean more reviews. More sales mean lower costs for goods due to economies of scale.
Campaigns feel like you start over each year.
Who should be doing Affiliate Marketing in 2021?
I want to talk about why someone would WANT being an affiliate marketer these days.
I don't want anyone to go and think this is the worst industry in the world. (That would be the one involved in Netflix's Cuties movie.)
Here are some great reasons for joining affiliate marketing:
They love buying media and HATE everything else. Affiliate marketing is a simple business. You do not do that ever have to deal with customers. You don't have to worry about merchant processing issues or your inventory getting stuck in customs.
You want to market certain industries. Nowadays it's easy to private label a supplement line. What about being vertical and owning auto insurance? Not so easy. Or you would like to advertise EDU offers.
They don't like engagement. Establishing an agency is an obligation. Starting an ecommerce brand is commitment. You might feel like these commitments mean putting all of your eggs in one basket. Running affiliate marketing campaigns can help you diversify.
Why Affiliate Marketing Is Still Great:
- It's a simple business model. You only focus on marketing.
- It can be done with a single person. You don't have to hire a team like you would in an agency or e-commerce company.
- It's easy to scale. Sometimes scaling a campaign is as easy as increasing the budget.
- It's easy to diversify. You can run campaigns for different traffic sources and different industries.
- You will get quick feedback. Because you are so focused on paid marketing, you develop this skill faster than other people.
I want to point out that there is a difference between the affiliate marketer on paper and the real thing.
Affiliate Marketing – Is It Really Good?
I would like to point out some possible counter-arguments along with my thoughts on them. Being able to understand the other side is a stronger case.
By the way, I want you to question everything I say. Think for yourself. Draw your own conclusions.
/ 1 "Blank Says Affiliate Marketing Is Going Well!"
Does that person benefit from being an affiliate marketer?
Don't ask a real estate agent if this is a good time to buy a home.
Of course, when you speak to your affiliate manager, they will say that affiliate marketing is killing it. What do you get out of it?
/ 2 "But I've heard that there are still partners who make money"
Of course there is – I'm not saying the industry is 100% dead.
Most of them, however, built their skills from another time. Use them as examples Survival bias.
((From the wiki: Survivorship bias is the logical mistake of focusing on the people or things that made it through a selection process and overlooking those who didn't, usually due to their lack of visibility.)
Remember to start a YouTube channel in 2021. I don't know if this is still a good idea or not. But you can't say it's a great idea because Mr. Beast and PewDiePie make a ton of money.
- They are outliers.
- They started in a different period.
You need to ask yourself, “Who started YouTube channels in the past two years? How are you? What is the average success rate? Is YouTube the best platform for me to start with?"
You might conclude that most new YouTubers are struggling. But you do notice that there have been so many successes overnight that started with TikTok instead.
Let's trace this back to affiliate marketing. Cant say I have seen too many new success stories in affiliate marketing in the past few years.
/ 3 "But the data shows that affiliate marketing is increasing"
Google trending data shows that interest in affiliate marketing has not decreased at all. Indeed it has elevated since 2016.
This is a false positive because affiliate marketing is a broad term.
- Interest in affiliate coupon sites is growing.
- Interest in participating in partner programs like Amazon's is growing.
- Interest in influencer marketing is growing (some of them use affiliate codes).
But none of these are the type of affiliate marketing I am describing.
What should I do to make money online instead of affiliate marketing?
I am glad you asked!
Affiliate marketing is in decline. But there is an industry that is BOOMING! I'm telling you for a low payment of $ 1,497!
(That was sarcasm in case it doesn't translate well.)
Here's the thing: I don't know what leverage you have.
Opportunities should be pursued based on your resources, skills, and passions. So I find it hard to tell what to do.
But I'll try to answer it anyway, as people hate "theoretical" answers. Here are some options I see if you're new and on a budget:
- E-commerce – This is where most of the affiliate marketers passed over.
- Crypto / NFT – Education and marketplaces.
- Paid communities – It's amazing how engaged some Facebook groups are. But FB groups themselves are pretty crappy. I would try TO BUY a Facebook group and offer a paid community upgrade for a platform like Circle.
- Boutique agencies – Go into an alcove. Specialized in Marketing for Crypto. Specialized in Snapchat / TikTok Marketing. Don't just be another Facebook or funnel specialist. There is too much competition.
There are so many options out there.
What is Affiliate Marketing?
I look at affiliate marketing as a mindset.
There is a relentless focus on testing.
It gets results through creativity rather than brute force spending.
It is a willingness to push the boundaries to achieve that conversion (hopefully ethical).
It's on the cutting edge of media buying.
The methods have changed. But many subsidiaries have moved on to build larger companies. I can see so many affiliate marketing methods and influences in everything they touch.
Affiliate marketing will live on in this vein.
But the affiliate marketing I knew and loved is gone.
Photo of Ahmed Adly from Pexels