I have dabbled in affiliate marketing from both sides of the fence and no one seems to be talking about how dirty it all is. In theory of course it should work out great.
Affiliate Marketing What is it?
Let do a brief recap on what is affiliate marketing. Person A has a website that gets traffic for the same demographic as the customers of Company X products, they advertise on the site and get paid a commission on the sales.
There are a few issues that instantly pop up though the first is how many consumers act like that? They might well click an advert that interests them but if they do not decide buy there and then the commission will be lost, for high ticket items which will carry large amounts of commission the time lag (amount of days from first visit to order) is longer.
The single biggest issue though is PPC (Pay Per Click). Terms that convert will be brand terms, example for Orange I have no doubt [mobile phone deals] does not convert as well as [orange mobile shop]. Once you set up an affiliate program affiliates will be able to use PPC to bid on terms.
These affiliates are not going to waste time or money building a brand, all they are interested in is the commission. So as a company you could literally spend millions building a brand and then have to pay commission to affiliates.
It like a dirty little secret that no one wants to address, the worse of it is yet to come. Google seem to be complicit in all this you bid big branded terms that were penny clicks but now there is competition amongst affiliates for this traffic, competition for clicks drives up the CPC this drives up Google's revenue.