It’s not very hard to find explanations of HOW affiliate marketing works. It’s a straightforward concept, and there are plenty of articles and YouTube videos describing it. You’ll even find a quick explanation on our About page. What you have a harder time finding – from under all that hype – is an accurate explanation of why affiliate marketing has worked so well for a number of entrepreneurs over such a long time.
To understand why affiliate marketing works, you need to imagine yourself as a vendor. You sell products, services…anything, really. Now imagine that you make most or all of your sales through e-commerce. The number of vendors like you is growing all the time.
So how do you market your business?
Well, your target audience is probably online already, so naturally it makes sense to spend most of your marketing budget on online advertising, most likely Google and/or Facebook. But here’s where you can run into a problem. The cost of both these ad services keeps going up, and it might be especially high depending on your target audience. If you can’t raise the prices of your products significantly, your “best” sources of advertising could be eating into your return on investment.
Fortunately, there’s an alternative. One that’s been around almost since the beginning of e-commerce itself.
A great many vendors have discovered (or are now discovering!) that it can be much less expensive to recruit an army of affiliates when they’re paid only in commissions after each sale. Compare that to having to pay your ad service up front with no guarantees about performance.
The affiliates win, too, because they’re able to introduce almost anyone’s product to almost any audience, as long as the message is correctly targeted. And of course, their costs are minimal compared to almost any other type of marketing.
The bottom line is that affiliate marketing is not a crackpot scheme. It actually plays a major role in helping the online economy to function as well as it does.