Myths About Affiliate Marketing

There is no shortage of misinformation about affiliate marketing, and believing it could easily cost you money. Here’s the truth behind some of the most common myths that are making the rounds.

Myth 1: Affiliate marketing is Multilevel marketing.

Not even close. It’s worth mentioning that network marketing (aka multilevel marketing) CAN be an honest, ethical business, but it tends not to perform well for entrepreneurs who buy into it. As a result, a handful of unscrupulous individuals who promote these business models try to conceal them by calling them “affiliate marketing.” Fortunately, there are some easy ways to tell them apart:

The Brand Overlord

Amway. MonaVie. Herbalife. In multilevel marketing, you’re tied to one company, or even to only one product that the one company sells. And if the company collapses (as they often do), guess what: you’re out of work.

In true affiliate marketing, you are never tied to any brand. You are completely free to enter into affiliate agreements with any merchant on the planet that has decided to support an affiliate program. Not all of them will accept you, but many will, even when you’re just starting out.

Uplines, Downlines

Commissions are handled very differently, and in network/multilevel marketing, some of the payout systems are mind-bogglingly complex. You’re required to share your commission with various people in your “upline” (who haven’t done anything to advance your business), and are promised wealth beyond your wildest dreams from commissions earned by your “downline.” I think we all know where this kind of ‘model’ ends up.

In actual affiliate marketing, there is exactly one level: you, and the merchant whose affiliate program you’re part of. And the entire commission is yours, period. If you’re not sure about something that’s labeled affiliate marketing, this is the best smell-test you can use.

Myth 2: Affiliate marketing is complicated.

Many of those marketing ‘gurus’ out there love to make this claim, because it makes it easier to sell their course or webinar, along with the attendant upsells. (Big surprise, right?) A few of these courses might even have useful information, but nothing that you truly need. The same goes for a number of software vendors who hawk expensive tools to solve all your problems as an affiliate. Again, some of them may be useful, but are far from necessary.

The reality is that the concept of affiliate marketing is about the simplest working business model in the world today. And there are really only two software tools you genuinely need: an email autoresponder for building trust in your audience, and a system for hosting the web pages that you use for capturing signups and doing ‘handshakes.’ Some marketers use a funnel building tool for that purpose; others use a web host and write the HTML themselves. There’s not much difference in cost between the two. True, there are plenty of other software products and subscriptions that can be helpful. They just aren’t necessary to keep your business going.

Myth 3: Affiliate marketing is passive income.

Many marketers who are actually honest will mistakenly use this term because it’s a cool marketing buzzword. Unfortunately, they’re not using it right.

In finance-speak, there are only two kinds of income: “earned income” and “passive income.” Anything you get paid for as a result of taking some action is earned income. That includes selling your time for a job that comes with a paycheck, along with income from a business you run, whether you’re the owner of a taco stand or the CEO of Apple.

True PASSIVE income, on the other hand, comes to you for no reason other than that you own a particular asset. This includes interest on a bank account, dividends from owning a stock, rent you collect from owning property, or royalties from owning the rights to a patent or a work of art.

So the bottom line is: there is no such thing as a business opportunity that provides passive income. Only certain kinds of investments can do that.

Final thoughts

I apologize for not blowing anything up like the Mythbusters, but hopefully I was able to clear up some of your confusion.

The Three Pillars of Marketing

If you don’t read anything else on this site, read this.

Every successful marketer in every industry knows about this concept, and you can’t afford not to. If your business doesn’t follow a marketing strategy with all three of these elements solidly in place, it’s guaranteed to fail. There are also a few extra details that are specific to affiliate marketers, which you’ll soon see.

Pillar #1: Audience

Broadly speaking, your audience is everyone who knows that your business exists. They could have learned about it by clicking an ad you placed, by reading an article you wrote, or even by word of mouth.

Every marketer wants as big an audience as possible, because a bigger audience contains more potential customers. The trick is to maximize your audience by spending as little of your resources – money AND time – as you can.

When marketers try to build their audiences, they have two tools at their disposal: the first is content creation, and the second is advertising. Advertising is by far the faster way, but of course it costs money. Whether it’s worth the cost is a completely different topic. Fortunately, a solo entrepreneur can usually buy a few ads at a relatively low cost, so it’s still an option. The free option is to create content that attracts the attention of your audience, but that approach takes much more time to show results, even in the online world.

As for affiliate marketers, most of them purchase ads when growing an audience. They maintain ‘micro-sites’ that are meant to get the viewers interested in whatever product is paying the affiliate a commission. If these sites do their jobs, their audience continues on to the vendor’s sales page.

One final point about audiences: every marketer MUST keep attracting new audience members continually. The reason is that many people will leave your audience sooner or later and forget about your business.

Pillar #2: Trust

Most people don’t spend their hard-earned money by giving it to some random individual on the Internet. They need to trust the person before giving any serious thought to a buying decision. That’s why building trust in your audience is so fundamental. No matter who you are, you won’t earn that trust from everyone in your audience, but a good marketer can earn it from a healthy percentage of audience members.

Nowadays, nearly every successful company that has an online presence uses one of more email lists to build trust. The goal is to show, over a short period of time, that the business truly understands what its email subscribers need or want, and is able to meet those needs. Of course, these series of emails are automated. The market has a number of companies that provide autoresponder services, and the costs are very low percentage of the company’s budget.

Affiliate marketers use automated series of emails to build trust, too. However, in the world of online marketing, it can be difficult to get some people to hand over their email addresses. As a result, affiliate marketers (along with most other kinds of online-only businesses), will use a free offer that they provide people in exchange for an email. This offer needs to be something that people in your audience would consider valuable: an ebook, a video, or a piece of software with an interactive demo, for example.

Pillar #3: Monetization

This is the area that almost every entrepreneur defines well, but – again – it’s useless without the other two. Monetization is simply one of the fancy words for describing what products or services the customers can pay for, and what their prices are.

For affiliate marketers, the monetization is in the commissions they’re paid. Not surprisingly, how much they make depends a great deal on both the commission rate and the size of the market. So unlike many other businesses, every time affiliate marketers choose a new product, they make a new monetization decision.

Final thoughts

One very interesting thing about these elements of marketing strategy is that they come together into the classic model of a sales funnel. The total audience has the greatest number of people (at the top of the funnel) followed by a smaller percentage who trusts your business to some degree, and finally ends with the smallest group: people who are ready to buy and then actually buy.

Most of the effective sales funnels out there are not much more complex than that.