Affiliate marketing is one of the few legitimate business models in the online space. Others include
- Amazon FBA
- Dropshipping or E-Commerce
Affiliate marketing is a business model which includes promoting other company’s softwares, digital goods, and even physical products for a commission. The process includes sending traffic to an optin page where you can collect emails and build an email list. This email list becomes the basis for further marketing and promotions.
Affiliate marketing beats other online business models in my opinion. Lets look at this in terms of two basic benchmarks
The commission margins in softwares and digital goods can start from 30% and go all the way up to 80%. Software subscriptions can be a one-time fee and in many cases a recurring monthly subscription as long as that customer is subscribed to that software. This means you can make recurring monthly income that can grow month after month.
Next we have high ticket programs. These programs can start from USD 1000 and can go up to even USD 5000 with an average commission rate from 30% to 80%. This means with just a few sales you can easily make a full time income.
In contrast, Amazon FBA, dropshipping and freelancing all have margins around the range of 20% to maximum 40%. Affiliate marketing also has one of the lowest initial investment required to set uo the business. There are marketers who go all in with free traffic sources to keep their costs at a minimum level so they can maximize on profits. Other marketers focus on high ticket programs and maximize commissions using paid advertising. It really depends on you which route you take but there is a free traffic method than can reduce your operating cost structure to just three software programs.
- A funnel Builder software
- An email marketing software
- A link Tracking Software
One question I get asked a lot is what makes affiliate marketing a more sustainable business model than others. Well the advantage of affiliate marketing is that it is much more flexible than other models. If lets say you promote credit cards and suddenly there is a recession and certain banks go bankrupt or get rid of their affiliate programs, then you can change your niche and go in the health niche and promote products like supplements or online workout programs.
The issue with Amazon FBA is that you are completely reliant on Amazon and they will not share with you their customer information so the opportunity to make follow up sales are non-existent. If Amazon decides to change their FBA program then you are at its mercy. This is what I call platform dependency and is really risky for businesses. This is what influencers on Youtube and Instagram are exposed to. If these platforms decide to change their algorithm, their ad revenue and overall viewership can see a huge dip. But in affiliate marketing such a problem can be averted as you have the list of your customers in your hand and you can change your niche with ease. So when amazon associates cut their commission fee by half, this was not the end of the world for amazon affiliates, they simply had to shift to other more profitable niches and offers.
Now when it comes to dropshipping and freelancing the biggest issue here is you have to build your own brand from scratch and build your reputation and authority from nothing. This can take a long time and your sales volume is dependent on your brand. In amazon you are leveraging amazon’s name so building a brand is not necessary. In affiliate marketing, you are also leveraging the name of the company you promote. So choosing a high quality product with a good customer support is essential. But what really makes your sales sky rocket is your relationship with your email list. If you can master how to develop a lasting relationship with your email list you can sustain your business for the next 10, 20 or even 30 years.
At the end of the day, the margins and sustainability of an affiliate marketing business completely outstrips other online business models. Check out my recommendation on how to get started with your affiliate marketing business.