Cash without work always sounds too good to be true. And yes, it holds here. At first glance, affiliate marketing looks like an outstanding opportunity. As a merchant, you’ll align yourself with publishers of sites that have lots of traffic who will present your products in exchange for a percentage of the revenue generated by leads originating from their sites. If you’re operating with a minuscule marketing budget, this might well be a good solution—when you know what to look for and go into it carefully.

Here are the pros and cons of affiliate marketing:

Pro: Free Advertising — Pretty Much

As we mentioned above, you’ll typically pay nothing for placements until you make a sale. This means you can get a wide variety of advertising vehicles on board with no cash out of pocket expenditure. What’s more, if you set it up right, when you do pay, you’ll only pay for the results. If the product sells, the site generating the lead gets a percentage of the sale price.

Pro: Wide Exposure

Let’s say you start a furniture business and align yourself with a popular home décor blogger. Suddenly, that blogger’s audience becomes yours, as they’ll see your ad every time they log on to the blogger’s site. Now, let’s say you repeat the process over 15 or 20 different sites. Your reach just expanded 15 or 20 times. This, plus your social media efforts and content marketing efforts will stand you in good stead when it comes to attracting customers.

Pro: Minimal Effort on Your Part

Once a publisher agrees to host your ads under an affiliate deal, there really is nothing else for you to do—after you provide the advertising materials. They’ll put them up and keep them in place until the terms of the deal you cut expire. Meanwhile, your ads will attract visitors, all you have to do is convert shoppers when they come calling.

Con: Setup and Maintenance Fees.

While many sites will take you on based strictly upon pay as you go basis, some publishers with whom you will most want to be allied charge for the placement, because their audiences are engaged. This, in turn, will actually limit the number of sites with which you can work, as the fees can be too burdensome.

Con: Fake Clicks

Depending upon the nature of the deal you strike with the affiliate site, the publisher will expect to be paid based either upon a click, a lead, or an actual sale. As a merchant, you’ll want to push for actual sales. Leads and clicks won’t necessarily mean more business, plus they can be falsified. There have been many cases wherein click farms have been established to bilk merchants out of money.

Con: Customer Churn

In most cases, repeat business does not accrue as a result of an affiliate sale. If you’re looking at affiliate marketing as way to establish a loyal customer base, you’ll be disappointed. By and large, customers who shop this way are only interested in finding the lowest price. With that said, if you provide outstanding customer service and include marketing materials with the purchase, you might have a shot at reducing churn, but it’s pretty rare. They usually go back to where they found your link.

Con: Heavy Competition

You had to know this was going to be an issue. If you can get your wares out in front of a large audience with next to no effort or expense you’re going to be up against a whole lot of other people attracted to the same proposition. For this reason, it might be difficult to get aligned with a publisher because there are so many other merchants trying to do the same thing.  

These pros and cons of affiliate marketing are intended to help you determine whether or not this could be a viable marketing solution for your business. Ultimately, it’s not as easy as it sounds, but done well, it can be quite successful.