Affiliate Marketing as an Investment Strategy

There’s a good chance you’ve heard of affiliate marketing, especially recently. Over the past few years, this online business model has grown in popularity, and it has many people thinking they can use affiliate marketing to get rich quick. Now, it’s not exactly that simple, but it’s true that there are a lot of opportunities for people to earn money via affiliate marketing. If you have some capital to start with, that can only help your position.

Many people with extra capital that they would like to invest are wondering if affiliate marketing might be a sound investment strategy to pursue. Well, the answer is a little more complicated than a simple yes or no. It’s like any other kind of investment really. If you have knowledge of the industry landscape, affiliate marketing can be a very lucrative investment opportunity. But if you dive in head-first without understanding what you’re getting into, you might not see the return you were hoping for.

As with any investment, it’s important to understand the potential costs of affiliate marketing, as well as how the payment/revenue system works. So, first, let’s review some of the major costs associated with affiliate marketing.

Platform and Network

If you’re going to start affiliate marketing, one thing to look into is what platform you will be using to conduct your marketing campaigns. If you are signing up with an affiliate network, then there’s a good chance that network will have a platform already set up for you to use. Most affiliate marketers use a network, and there are a number of reasons for this.

  • Many merchants require affiliate marketers to use a specific network because the merchant uses this network to manage their marketing program.
  • Using a network lends more credibility and seriousness to your affiliate marketing efforts.
  • Networks often provide tools for affiliate marketers to use in their campaigns.

One thing to keep in mind, however, is that an affiliate network may take a percentage of your earnings as a commission. This is standard practice, but it’s important to consider when laying out your investment plan. Affiliate networks act as the middleman between affiliates and merchants who have products to sell. These networks provide a valuable service, but it isn’t free. It’s important to consider whether you will be joining an affiliate network or trying to go it alone. You’re probably better off joining an affiliate network, but if you’re trying to pinch pennies, it is possible to become an affiliate marketer on your own.

Creatives

In this sense, the word “creatives” refers to the advertising materials you’ll need to execute a successful affiliate marketing campaign. This includes things like landing pages, banner ads, email templates, and other materials that are meant to attract potential consumers. An affiliate network may offer some of these creatives to be used by their affiliates, but there’s also a chance you’ll need to create some of your own. Keep in mind that this will cost you money, time, or both. You can elect to build your creatives on your own, but even then you may need to purchase design software, and at the very least you’ll need to devote time to it. Or you can outsource the development of your creatives, which will save you time but could potentially cost more depending on which third party you use.

Maintenance/Management

Once your affiliate marketing operation is up and running, it’s not all pure profit from there. You’ll still need to pay for maintaining the operation and managing your campaigns. The most effective affiliate marketers are constantly cycling through new creatives to fit seasonal trends or current events. Plus, you may need to hire additional employees if your operation grows to the point where you can’t manage it alone. Affiliate marketing is a continuous investment, so you’ll need to be willing to continue spending even if your operation is successful.

Potential revenue models

Now, assuming you find a quality product to market, and your efforts start taking off, eventually you’ll start seeing revenue. There are a few different methods by which merchants pay affiliate marketers, and it’s important to understand each one of them. The most common are:

  • Pay per Lead
  • Pay per Click
  • Pay per Sale (or Acquisition)
  • Pay per Call

These models are fairly self-explanatory. Pay per lead means that you as the affiliate marketer will get paid for every time a consumer fills out a form to give information like their email address. Pay per click means that for every time someone clicks an ad on your site, you’ll receive a payment from the merchant. Pay per acquisition or sale is a method preferred by many merchants because they only pay affiliate marketers for every product they actually sell. And pay per call is a more specific model that relies on consumers calling in to a merchant’s call center. Every time someone dials the specific number from your campaign, the merchant will pay you for it. Be aware that for pay per call models, some merchants may require the call last a minimum amount of time, in order to mitigate fraud.

So, is affiliate marketing a worthwhile investment? The answer is, it depends. If you have enough capital on hand that you aren’t afraid of burning some money in the short-term for potentially huge long-term returns, then affiliate marketing might be worth considering. However, the key is that affiliate marketing is not a short-term or low-effort investment. More often than not, you’ll need to spend time optimizing campaigns, communicating with an affiliate network, building your audience, and performing other tasks that can take months or even years to fully achieve.

For potential investors who have the money and time to spend properly executing an affiliate marketing strategy, it holds the potential promise of huge profits down the line. But for impatient investors, or those who are looking for an opportunity they can “set and forget,” affiliate marketing might require too much time and effort. Many affiliate marketers would like you to believe that affiliate marketing is an easy way to get rich quick. The truth is that you certainly can make a significant amount of money with affiliate marketing, but it probably won’t happen overnight. Like any investment, it’s important to keep your expectations realistic if you choose to dive into the world of affiliate marketing.

Luke Loftin is a blog writer and an award-winning indie filmmaker. When he isn’t writing about himself, he specializes in finance and health, blogging about all sorts of topics including credit cards, personal loans, bank accounts, and the digestive system. He currently writes for LeadsMarket among other sites, and his articles are scattered all across the information superhighway. In his spare time, he enjoys listening to country music and watching his favorite sports teams lose. If you want to learn more about him, he doesn’t mind if you search his name on the internet.

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