4.9 Pros and Cons

Learning Objective

  1. Understand the pros and cons of affiliate marketing.

While affiliate marketing certainly deserves increasing recognition for its key role in growth, it is still a young industry with all the growing pains that that involves.

What Is Holding People Back?

The following issues hold people back from fully utilizing affiliate marketing tactics:

  1. There are seldom contracts in place between affiliates and merchants. This means that an affiliate could decide to stop promoting the merchant’s program with no notice given. This could lead to a sudden drop in traffic and sales, depending on how reliant the merchant had been on that affiliate. Similarly, merchants may decide to terminate a program, meaning a loss of revenue for affiliates. Particularly if little notice is given, affiliates might have spent time and money setting up promotions, only to have the campaign pulled out from underneath. Most infamously, ASOS.com did this a couple of years ago.
  2. There is still little to no industry regulation, though the majority of the industry does strive to adopt best practices. While some affiliates have resorted to shady practices in the past (with adware and e-mail spam), the majority have banded together to blacklist this kind of behavior. The specter still remains though.
  3. Some merchants fear a loss of brand control. Affiliate programs are not easily scalable.

But of course, there are many benefits to affiliate marketing:

  1. It’s pay-for-performance marketingAn advertising model in which advertisers pay based on a set of agreed-upon performance criteria, such as a percentage of online revenues or delivery of new sales leads., so merchants are only paying for growth.
  2. The merchant sales force, as well as its branding potential, just got bigger.
  3. There is a very low barrier to entry for both affiliates and merchants.

Key Takeaways

  • Cons to affiliate marketing include the following:

    • Contracts between affiliates and merchants seldom exist.
    • There is little industry regulation.
    • Some merchants fear loss of brand control.

  • Pros to affiliate marketing include the following:

    • It’s pay-for-performance marketing, so merchants are only paying for growth.
    • The merchant sales force, as well as its branding potential, just got bigger.
    • There is a very low barrier to entry for both affiliates and merchants.