An affiliate program is one of the most common ways you can use to earn money from your websites. It is a way of matching online retailers with other websites who can bring them the customers they need, in exchange for a commission.
Affiliate programs offer a number of benefits to website owners. These programs allow you to present to your visitors products or services they are most likely to be interested in, without the infrastructure or burden of selling the items yourself. There’s no inventory to buy, ecommerce technology to maintain, or order and fulfillment to consider. Instead, you simply put in the banner or text of the advertiser’s product, and earn a commission if the visitor buys the product, leaves their contact information, or sign up for the services they offer. It is fairly easy: your visitor clicks on the link given to you by the advertiser, the visitor performs the desired action, and you earn your commission. For a seemingly small amount of effort, you can earn a good deal of income through affiliate programs.
However, affiliate programs are not without risks. Here are 10 things that you need to consider and watch out for when using affiliate programs to monetize your website:
1. It’s a hit-and-miss. Finding an affiliate program that will earn you money is not a simple process of applying into a program, pasting all their ad codes, and viola, money starts rolling in. It takes time and effort to find the right affiliate program that will work for your website. You need to search for the right products or services that will appeal to your target audiences. You can apply to and use 20 affiliate programs, even using well-known brand names, yet find that they hardly generate any income for your website.
To succeed in affiliate marketing, you need to search, test, promote, and test again. In most cases, you can see huge returns on cost per action or affiliate programs by doing 10x times more work than other website monetization strategies.
2. Lots of ad impressions, but no earnings. Not all affiliate programs will work for your business, even those that you think your audience will want. As a result, you’re basically giving these affiliate programs free advertising on your website with thousands (even millions) of free advertising impressions because their products never convert for you. You will find that for some programs, you need to give millions of free ad pageviews to get $10 worth of commission.
Look at how many ad impressions you’ve given the affiliate program, and calculate how much revenue you could have earned if you used a cost per impression advertising program, instead of an affiliate program. Or look at the number of clicks you are giving this advertiser, and imagine how much you will earn if those clicks are given to cost per click program like Adsense. This way, you are better able to determine what is the best way to monetize your advertising spaces.
3. Selling strategy required. Unlike cost per impression advertising programs, or even cost per click programs like Adsense, you can’t simply put the banners on your pages and expect the affiliate program to start earning you money. You need to start thinking of putting the right affiliate program on the right page. If your site covers a number of topics, it can be possible that you will need to use hundreds of different affiliate programs suitable to each of the topic you cover. To increase your chances of earning the commission, one commonly used approach of successful affiliate publishers is to create specially dedicated pages to these affiliate programs where they can really “sell” to the users the benefits of the affiliates’ products or services.
4. The risk of not getting paid. The biggest risk of affiliate programs is that you will not get paid the commission that you are entitled to after sending the advertiser sales or leads.
We’ve has the unfortunate experience of dealing with a non-paying advertiser. The irony is that this advertiser — a franchise directory — courted us directly for several months to become their affiliate. We talked on the phone several times to discuss the benefits of the affiliate partnership, as well as hash out the terms and conditions. We were pleased with their interest to make the partnership work. When we signed the contract, they even made sure that their landing pages have the same look and feel of our site. And the partnership worked at the start — in our first month alone, we generated thousands of dollars in commissions, and they were happy with the quality of the leads we gave them. After a couple of months, however, our main contact person left the company and we never got paid again. Their CEO promised to send us our check for the months we haven’t been paid, which turned out to be empty promises.
5. Responsibility to collect could fall on you. Working with large affiliate companies such as Commission Junction or Linkshare is not a guarantee that you will get paid for the commission that is due to you. If you think you’ll be assured that you’ll get paid, think again. In fact, if you want to get paid, you may be forced to pursue the advertiser yourself which significantly adds more burden to you.
Take our experience with Commission Junction. From November to December 2009, we supposedly earned a total of $585 from one of their advertisers that we were promoting. Unfortunately, six months have passed and we still haven’t gotten paid. The advertiser was apparently deactivated for insufficient funds in their account for payment. According to CJ when we contacted them, if we want to get our commission, we need “to pursue the matter independently of CJ.” That means they’re basically washing their hands off of it, and if we want to get that money, we need to go after that advertiser. Afterall, CJ covers this on their agreement at http://www.cj.com/psa.html , which states in part that,
PSA Section 3(e) states: If CJ elects, in its own discretion, not to make payment to You for amounts not received from an Advertiser, those amounts shall not be included in the Minimum Balance Amount. Your recourse for any earned Payouts not paid to You shall be to make a claim against the relevant Advertiser(s), and CJ disclaims any and all liability for such payment.
The fun part was that this non-paying advertiser, Virtual Call System (www.virtualcallsystem.com) even invited us to ShareASale which now manages their affiliate program. Why, so they can dupe us again?
6. Commission earned can be retracted. You log in today to find $100 worth of commission in your account, only to log in the next day to find that your commission has fallen to $20. So where did the $80 go?
It is fairly common to see retractions of commission earned with many affiliate programs, so what you see today in your account panel is not necessarily what you will actually receive. This is especially true for affiliate programs that allow you to earn for leads, but expect those leads to turn into paying customers. They are most likely to retract the commission you supposedly earned if the lead did not give their credit cards or did not purchase within a set period of time.
With affiliate programs, you can spend (or waste) countless months promoting a particular advertiser only to find that they retracted payments to you weeks or months later.
7. Commission structure can be changed. One of the most irritating facts about the affiliate program is that advertisers can very easily change their commission structure. What was once a source of high income can shrink very quickly, and there’s nothing you can do about it.
An advertiser we were once promoting – where we earned good money – initially paid $5 per signup. After about four months of earning high commission checks from them, they suddenly changed their commission structure and paid only $1 per signup. So basically our income was cut 4x from what we used to get from them. So either accept the lower payouts, or dump the program (we dumped the advertiser).
8. Earnings can just suddenly stop. Let’s consider this scenario: You found the right affiliate where you earned good commissions for several months. As a result, you gave this advertiser millions of impressions per month and premium real estate on your website. Then all of a sudden, commissions stopped coming. No changes were made from your end – same millions of impressions, same premium ad placement, same number of clicks from your visits – yet what was once a high performing affiliate program suddenly turned into a dud. You stopped earning anything anymore.
Some experts opine that it could be cookie washing or deletion, faulty cookie tracking of affiliate advertisers, or simply gaming by the advertisers. It is hard to understand, but this is a fairly common occurrence when you are doing pay per performance or affiliate programs. We’ve certainly experienced this several times with Commission Junction, where high performing advertisers will do well for a month or so, then suddenly all earnings stop despite giving them the same exposure as we did before.
9. Cheating affiliates can rob you of your commissions. Some affiliates use “cookie stuffing” methods to prevent other affiliates like you to earn anything from the program.
“Cookie-stuffing” is a method that can cause affiliate merchants’ tracking systems to conclude that a user has clicked through a tracking link (and to pay commissions accordingly) even if the user has not actually clicked through any such link. These affiliates not only cheat the advertiser, but also rob other affiliates like you of your commission. They steal and overwrite the cookies, and commissions that you should have earned are credited to them instead. Also because these cookie stuffing affiliates earn so much, affiliate advertisers are then forced to cut their commissions to everyone, further reducing your income.
10. Constant shifting and testing of affiliate programs. With affiliate programs, you need to be very proactive in monitoring how the programs are working on your site. You need to be aware that there’s a lot of affiliate fraud that’s happening.
If using affiliate program is the monetization approach that you want to use for your website, you need to be on your guard always. Dump programs that have suddenly stopped earning for you without reason. Remove programs that constantly retract the commissions you’ve earned. Don’t keep on promoting advertisers that don’t earn anything for you, never mind if they are well known brands or provide great-looking banner creatives. What matters is how much you earn from these affiliate programs, and whether using them makes the most sense for your website.
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