I’ve been a full-time affiliate marketer for about five years now. While it’s a lucrative business, it’s not without its downsides. In this guide, I’ll share the pros and cons of affiliate marketing based on my 6-figure business.
For me, affiliate marketing means freedom. I can work where I want, how I want when I want, and with who I want. That, my friend, is quality of life!
If you’re unfamiliar with affiliate marketing, it’s a way to earn money by promoting other people’s products. You can create a blog or website and then add links to the products you’re promoting. You earn a commission when someone clicks on one of your links and makes a purchase.
There are many reasons why affiliate marketing is a great way to make money online. In this blog post, we’re going to explore some of the best reasons to get involved in affiliate marketing. So, if you’ve been thinking about trying it out, this article is for you!
The Pros of Affiliate Marketing
Anyone who’s ever dreamed of earning a living from their laptop knows that affiliate marketing is one of the most popular ways to do it. And for good reason – affiliate marketing has a lot of perks.
No Inventory or Shipping
You don’t have to worry about stocking products or shipping as an affiliate marketer. That’s all taken care of by the product owner. You promote the products on your website or blog and earn a commission on every sale you generate. Without physical products, your overhead costs are very low, and you don’t have to spend time or money on shipping.
My daughter has a business where she hosts auctions on an app. While she can make thousands of dollars in a matter of hours, she has to spend the next day packaging and shipping the products. That certainly reduces the dollar per hour earned.
High Potential Earning
The earning potential in affiliate marketing is very high. If you can build a large website or blog with a lot of traffic, you can make a full-time income from affiliate marketing alone. And since there are no limits on how many products you can promote, your earning potential is only limited by your efforts.
While no results are typical, I’ve seen people making seven figures per year from affiliate marketing, and I know many close to that mark.
I make five figures monthly from affiliate marketing, just from one income stream. I have other projects that bring in money, but if I relied on affiliate marketing alone, it would be more than enough to support my family.
There are various ways to make money with affiliate marketing.
High-Ticket Affiliate Programs
High-ticket affiliate marketing programs can pay you a substantial commission per sale. You earn 10% on every vacation booked through a travel affiliate program. If someone books a $5,000 vacation, you just earned $500.
This morning, I got an email from a brand offering me $1000 for qualified referrals to a software program they sell. That’s a very healthy commission, and it’s not an uncommon payout in big-ticket SaaS products.
In my opinion, the real earning potential comes from recurring revenue products. Once you have a customer, who continues to pay every month or year, you get a piece of the pie. Recurring commissions are common in the software as a service industry and can provide you with a healthy residual income.
For example, I have one affiliate partnership where I make more than $8000 per month. I have subscribers that have been using the brand’s software for six years or more, and I get a commission every time they renew their subscription.
And then there is another one of my favorite ways to make money as an affiliate marketer. That’s with two-tier commissions. When you refer an affiliate to a program, and they make sales, you also earn a commission on their sales.
You don’t have to do any extra work, but you can make much more money. A sub-affiliate relationship is a great way to build an army of people working for you and earning you money.
One example of this model is Send Out Cards. As an affiliate, you earn money on the cards and gifts your referrals purchase. But you also earn a commission from the customers that they enroll.
Low Barrier to Entry
One of the best things about affiliate marketing is that it’s a very low barrier to entry. You only need a website or blog and some time to write helpful content. You don’t need an office, a vehicle, or supplies. You can start with very little money and grow your business over time.
The biggest investment you need to make is in yourself, learning how affiliate marketing works, and building an audience of people who are interested in what you have to say.
Work with Who You Want
I’m picky with who I work. I love that I can be choosy about who I want to work with as an affiliate. Since I don’t serve customers directly, the brands I partner with are very important.
I generally choose products that are well within my niche, offer recurring commissions, have well-established affiliate programs, are part of a strong affiliate network, have professional affiliate managers, and offer marketing assets.
When you’re just starting out, it’s okay to work with anyone who will have you. But as you grow your business, it’s important to surround yourself with affiliate partnerships that support your business goals.
Work From Anywhere
One of the best things about affiliate marketing is that you can work from anywhere worldwide. All you need is a laptop and an internet connection. I’ve done affiliate marketing from boats, planes, trains, and other places.
I’ve even made sales while I was sleeping. It’s a great way to make money if you want the freedom to work from anywhere.
Passive Income Potential
Affiliate marketing can be a great way to generate passive income. Once you’ve built up a following and your website is getting traffic, you can earn money while you sleep! Passive income requires massive action in the beginning to build the momentum you need to reach your goals eventually.
But once you get there, it can provide you with financial freedom and the ability to live the life you want.
I appreciate the freedom that affiliate marketing has given me. I can work from anywhere, and I don’t have to punch a clock. I make my own hours, and I’m in control of my destiny.
You Get Paid Often
Waiting for the next payday can be nerve-wracking. But as an affiliate, you can get paid often. Some programs pay monthly, while others pay weekly or bi-weekly.
I love getting paid frequently because it helps me cash flow my business better. Paying the bills is a lot easier when you have money coming in regularly.
I set up a money sound in my email system so that each time I earn an affiliate commission, I get a little jingle letting me know that money is coming in. It’s a great way to celebrate each win!
I’ve owned small business before, and I know how much work it is to manage employees. As an affiliate, I don’t have any employees. I outsource everything that needs to be done.
I don’t have to worry about payroll, employee benefits, or managing people. It’s a huge weight lifted off my shoulders. And it allows me to focus on what I do best: creating content and driving traffic.
One of the best things about affiliate marketing is it’s very scalable. You can start small and grow as big as you want. I’ve seen people who started with a simple website and grew it into a multimillion-dollar business. Adam Enfroy turned his blog into a 7-figure affiliate marketing business in just 2-years.
For most marketers, content is the key to success. But it’s important to remember that you can always outsource help as your business grows. There are a lot of great services out there that can help you with everything from website design to content creation.
It’s Your Business
As an affiliate marketer, you’re in control of your own business. You don’t have to answer to a boss, and you can make your own decisions.
Of course, this comes with a lot of responsibility. But it’s also very empowering. You get to decide what products you want to promote, how to promote them, and when you want to work.
I love being my own boss.
Cons of Affiliate Marketing
There are some downsides to affiliate marketing that you should be aware of before you get started.
Competition Can Be Fierce
The affiliate marketing industry is very competitive. With the rise of social media, more people are trying to make money as an affiliate. The work-from-home economy is booming, and making money online is very popular again.
It Takes Time to Build an Audience
Another downside of affiliate marketing is that it takes time to build an audience. You can’t just start writing about a product and expect people to find your blog and buy from you.
It’s a Creative Outlet
Some people view affiliate marketing as a creative outlet. If you’re the type who likes to write, take photos, or create videos, then you’ll probably enjoy affiliate marketing. I enjoy researching, testing offers, playing with graphics, optimizing my website, and writing helpful content.
As a natural-born teacher, I enjoy helping other people learn software, grow their businesses, and achieve their goals.
You’re at the Mercy of Algorithms
To make money as an affiliate marketer, you must create content in all popular formats. You should write articles to rank on Google, make videos for YouTube, and post on Instagram or TikTok. You need to be where your audience is and create content that they will want to consume.
Each platform, however, has its algorithm, and you’re at the mercy of those algorithms. If YouTube decides to change its algorithm, your traffic could drop overnight. The same is true for Google or any other platform.
You need to be prepared for that and have a plan for what you’ll do if your traffic dries up. I remember when Pinterest changed its algorithms. Top bloggers and affiliate marketers lost 80% of their traffic overnight. It was a very tough time for many people. Unfortunately, many had all their eggs in one basket and weren’t prepared for the change.
It’s Not a Get Rich Quick Scheme
Affiliate marketing is a great way to make money, but it’s not a get-rich-quick scheme. Building an audience and making sales takes time, effort, and consistency.
You must be prepared to work hard and be in it for the long haul. You cannot set it aside to get to it when you’re feeling motivated. You must consistently do the work daily, weekly, and month after month. Too many bloggers quit 5-minutes before the miracle happens. Patience and consistency are key.
While affiliate marketing can be a great way to make money, it does require discipline. Most people are not naturally disciplined, and it can be hard to stick to a strict schedule.
You need to be disciplined with your time if you want to be successful with affiliate marketing. That means creating a schedule and sticking to it, even when you don’t feel like working.
That schedule may be timed or a publishing schedule requiring you to produce a certain number of pieces of content per week. But whatever schedule you create, stick to it!
I’ve found that treating my affiliate marketing business like a real job is the best way to stay disciplined. I show up every day and work on content. I happen to do it in my pajamas.
It’s easy to get distracted when you’re working from home. There are always things that need to be done around the house. But if you can discipline yourself to treat your affiliate marketing business like a job, you’ll be on your way to success.
You’re Not in Control
You’re not in control of the product or service you’re promoting when you’re an affiliate marketer. You have no say in the price, the features, or how it’s marketed.
You also don’t have any control over the relationship between the company and its customers. If there’s a problem with the product or service, you have no say in how it’s resolved.
You’re essentially a salesperson for the company. You’re promoting their product or service and hope that people will buy it. But you’re not in control of any of it. Choosing reputable brands and products with good reviews can help mitigate this somewhat.
It Can Be Difficult to Get Approved
Not all companies accept affiliate applications from everyone who applies. Some companies are very selective about who they allow to promote their products. They want to make sure that their affiliates are reputable and will represent their brand well. So, they may not approve your application if they don’t think you’re a good fit. It can be frustrating to put in the work to apply and be rejected.
Another issue is that some companies only allow established bloggers or YouTubers to be affiliates. So, if you’re starting out, it can be difficult to get approved by some of the bigger brands. You’ll need to build up your blog or YouTube channel before approval.
Programs Changing Cause Chaos
Brands move affiliate networks a lot. And this causes chaos for affiliate marketers. When a brand moves from one network to another, it often changes the terms of the agreement. This can result in lower commissions, new creative requirements, and more.
It causes a lot of work for affiliates who need to update their links and promotional material. Some brands even stop working with specific affiliates when they move networks. So, an affiliate could do great with a brand and then get cut off when the brand changes networks.
I remember when WPEngine bought Studiopress. While they didn’t switch affiliate networks, the Studiopress links were suddenly invalid, as the new offers were under the WPEngine affiliate program. It was a mess for many people who had links on their sites, including me.
I learned, though. After that fiasco, I added the plugin Thirsty Affiliates to my site. It allows me to set a keyword or phrase that I want to use to link to an affiliate offer. Then, when there is a change, I can change the link once, and Thirsty Affiliates automatically updates them when there are changes, so I don’t have to worry about it. If you’re an affiliate for many brands, I recommend this plugin.
Affiliate Programs Get Cancelled
Ouch. This one hurts. You’ve been promoting a product or service as an affiliate. You have all your links set up and drive traffic to them. Then one day, you check your analytics and see that your sales have dropped off. You go to the affiliate network to see what’s happening and discover that the affiliate program has been canceled. Now you’re out of luck and have to find a new product or service to promote.
When this happens, you lose the commissions from the current month and any residual income you may have earned. This can be a significant loss, especially if you counted on that money to pay bills or other expenses.
Some programs will send notices and honor commissions for sales made before the program ends. But it’s not guaranteed. So, this is still a risk when promoting affiliate products and services.
Earnings Can Be Hard To Track
Tracking your earnings as an affiliate can be difficult. It often requires logging into multiple networks and track which links generate sales. Some programs have better tracking than others, but it can still be challenging.
And if there’s a problem with the tracking, you may not get credit for the sale. This can be frustrating, especially if it’s a larger sale. You may not find out there was a problem until you check your account and see that the sale isn’t there.
There are ways to get around this, though. Some affiliate networks offer sub-IDs, which allow you to add extra tracking information to your links. And some WordPress plugins, like Thirsty Affiliates, also offer tracking features that can help.
While not a perfect solution, the best software I have found for tracking affiliate links and earnings is Affilimate. It checks my Amazon links and lets me know if it found a problem.
I can see how much money I made from each network, each product, and even the page on my website that generated the referral (not always, but sometimes).
You Might Get Paid Late (Or Not At All)
Some affiliate programs have strict payment terms, while others are more relaxed. But even programs with more relaxed terms can have issues paying on time. When this happens, it’s not always the fault of the affiliate program.
There can be issues with the payment processor, like a problem with the credit card used for payments or a bank issue. The affiliate program may also be waiting on payments from the merchant before they can release funds to affiliates.
Whatever the reason, not getting paid on time can be a big problem if you’re relying on that income to pay bills or other expenses; you may have to find another funding source until the issue is resolved.
My big affiliate partner I told you about earlier had a snafu last month. Rather than direct depositing my check by the end of the month, it’s now the 16th of the next month, and I still have not received the check. They had an issue when switching billers for their office, so many people are in the same boat as me.
It’s not the end of the world (I have other sources of income to pay my bills), but it is a hassle. And it means I must wait longer to get my hands on that money.
Of course, this isn’t always the case. Many affiliate programs have paid me on time and without issue. But it’s still something to be aware of before promoting products as an affiliate.
You’ll Owe Taxes
Income is taxable. So, when you earn money from affiliate marketing, you’ll need to pay taxes on those earnings. This is true whether you’re an individual or a business.
If you’re an individual, you’ll report your affiliate earnings on your personal tax return. The IRS offers a detailed guide on how to do this.
But you’ll need to file a business tax return if you’re a business. On that return, you’ll report your affiliate earnings as business income.
You may also have to pay self-employment taxes if the IRS considers you a sole proprietor. This is in addition to regular income taxes.
Of course, you can deduct business expenses from your taxes. So, if you’re promoting affiliate products, you can deduct the cost of your website, hosting, domain names, marketing costs, and more.
Keep good records of your expenses to prove them to the IRS if needed. You should also set aside money for taxes throughout the year rather than waiting until tax time to pay the bill. The IRS has an app where you can pay your estimated taxes as you earn money as well (such as weekly, bi-weekly, monthly, or quarterly).
The amount of taxes you’ll owe on your affiliate earnings depends on several factors, including your tax bracket and the state you live in. You may also be able to take advantage of deductions and credits. So, you should speak with a tax professional if you have questions.
I use Quickbooks Self-Employed to help me keep track of my business expenses and taxes. I highly recommend it to any self-employed person, especially those in affiliate marketing. It links with my bank accounts and creates simple automation for categorizing expenses and generating payroll if you want to pay yourself that way.
Pros and Cons of Affiliate Marketing
As you can see, there are risks and benefits when you become an affiliate marketer. While affiliate marketing offers freedom and unlimited earning potential, it also requires discipline and patience as it builds. Understanding the pros and cons of affiliate marketing helps you better prepare for your affiliate marketing business.