Are Affiliate Marketers Getting Screwed?

Just how undervalued/underpaid are affiliates?

[skibum]

Can't find the original study but according to a ComScore study, up to 92% of sales associated with search occur off-line as mentioned in this article [clickz.com].

Obviously affiliates do a lot of search marketing and those that don't, often generate a lot of their traffic from search and aim to dump the consumer off to the end merchant site rather quickly with the hope of generating a sale. So if you are promoting one of the big boys like WalMart, Nordstorm, Target or some niche player with lots of physical locations and they pay 3-10% of online sales with a 1,5,10, or 30-day cookie (if you are really lucky), is the affiliate getting paid anything close to the value of their traffic?

Granted this study focused on consumer electronics and computers (which seem like some of the easiest things to buy online) but it seems like it would be applicable in clothing or other things that may be rather difficult to purchase online.

Do you think affiliate traffic drives high off-line sales as search is reported to?

If so, do you think there is any hope of affiliates getting paid the true value they deliver which according to these numbers would be about 10x the current payouts from most bricks and mortar companies?

[MrSpeed]

Yes. They are getting screwed big time. You list just one example..

What about programs that get repeat purchases?
Do most affiliate programs pay you for residual income?
No. The lifetime value of a customer goes mostly ignored.

And what about those merchants that pay you $6 EPC but happily bid 50 times that amount for clicks on Adwords?

Look at the loan industry. Let's say they pay $50/lead.
You just deleivered to them a customer that will generate hundreds of thousands of dollars in revenue for them.

But what makes this attractive for affiliates is that you can start with just about a zero investment and do it while working in sweat pants.

[zivkovicp]

Yes we do get screwed... almost always.

On the bright side, the skills we learn in the process are priceless!

After a while you will be able to consider dumping affiliate programs in favour of "drop-shipping" and ultimately incorporate and run the entire process yourself, from wholesale warehousing to distribution.

It takes time and money, but we have the advantage! While we are learning the ropes, our money just piles up (unless you spend it all) and when you're ready, all of your website visitors become YOUR customers. :)

(I hope to take the next step towards this goal very soon... it's very exciting :)

[howiejs]

Interesting question. For online stuff (e-books, lead generation, etc) - I think affiliates are taken care of in general . . .

On the offline stuff - I only focus on "virtual" things so I have never really thought about it

Aren't there programs that offer online coupons with an affiliate code that can be used in-store?

if not - THERE SHOULD BE

[hdpt00]

ziv: I have thought of doing this recently. My plan was to try out some of the affiliates in a market I think could be pretty big and then if it works start selling the stuff myself. This way it eliminates any of the risk of buying stuff that may not sell. On the downside, I am playing on much lower margins, but if it works on these low margins it could be very successful on higher margins (obviously).

Do you think that is the best route to take, try an affiliate first then start selling it yourself if it works?

[zivkovicp]

hdpt00,

It looks like we think along the same lines. :)

I think that it is a very good idea to "test the waters" with an affiliate program and if it proves to be profitable make the move into drop-shipping or distribution.

I have tried this with a few niches but didn't really get the results I was looking for, I am now working on a digital product that I hope will prove to be useful and popular. :)

PS: Another bonus of testing your niche first is that when you take over the sales process, you have an established website with traffic right from day #1.

[gabby]

Why not do both? Continue promoting affiliate links. But add one or two items to your site that you can source and retail yourself. Over time you can continue adding products, while promoting affiliate links that are not directly competitive with your products.

[siteseo]

I do this with sites where I'm not earning any commissions from the merchant and I know my cookies are getting eaten, or the merchant is simply choosing to screw me over. I've started selling the products myself via drop-shippers - yes it's more work and more "responsibility," but you can earn many times more money per sale, and not have to worry about your affiliate cookies and dishonest merchants.

[TrustNo1]

I don't feel i'm getting screwed. You pick and choose who you partner up with and what type of sites you make and you're only getting screwed if you allow yourself to be screwed. I have the type of site that gets a lot of repeat traffic due to offering deals and promotions that can only be used online. So the conversions rates are pretty high and EPC looks nice.

[hdpt00]

siteseo & ziv: where can you find drop shippers for your niche? What I mean is there some free directory that has a ton of drop shippers and you just find your niche and pick a drop shipper. Also, can you negotiate to use like custom boxes with your name on it so people stay loyal instead of say having the drop shipper put their name so next time they buy from them if they sell to the public?

Thanks for the help!