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I make over 4-figures a month from affiliate marketing.

It’s one of the many ways to make money online “passively.”

I say that because there’s a lot of active work you don’t see on the front end.

But before you start affiliate marketing

You’re probably thinking:

  • Is it the right choice for you?
  • Is it a viable monetization option as a creator?
  • Is it a pyramid scheme?

Here are all the pros and cons of affiliate marketing from my experience to help you decide.

What are the pros of affiliate marketing?

Affiliate marketing done right can be a real game-changer.

Curious to know what it can do for you?

Here are the top benefits of affiliate marketing:

  1. Billion-dollar market
  2. Minimal investment costs
  3. Low-risk business model
  4. High-income potential
  5. Passive income
  6. Convenience and flexibility
  7. Extensive product selection
  8. Secondary commissions
  9. No prior experience is needed
  10. Affiliate support

1. Billion-Dollar Market

Yes. With a “B.”

Affiliate marketing is a rapidly growing global industry.

Here are some of the most recent affiliate marketing statistics from Demandsage:

  • 84% of businesses have an affiliate marketing program.
  • 16% of all e-commerce sales come from affiliate marketing.
  • Affiliate marketing revenue has been growing at a 10% rate annually.
  • Affiliate marketing spending is projected to reach $13 billion by the end of 2023. 

This means that even if you only conquer 0.00001% of the market…

It’s still a ton of money.

2. Minimal investment costs

One of the key advantages of affiliate marketing is its low barrier to entry.

To give you an idea…

The primary costs of starting an affiliate marketing business can range from $0 to $500.

This depends on your traffic sources and tools to reach your target audience. 

Let’s break these costs down… shall we?

  • Tracking Tools: You’ll need to keep track of things along your affiliate journey: sales, ad performance, competitors, ranking keywords, etc. Some of these are built into your affiliate program… But free and premium third-party tools are also available for more advanced tracking starting at $0 to $100+ a month.
  • Website Costs: You can expect to spend around $200 to build a basic website and an additional $50 monthly for maintenance. These costs cover web hosting, a custom domain, a website builder, email autoresponders, etc.
  • Paid Traffic: Building organic traffic can take months… even years. The fastest way to reach your audience is through paid traffic. Your ad spend budget is entirely up to you… But I recommend starting at $100 to $300 for test campaigns.
  • Others: You might also want to spend on content, such as premium stock images and freelancers for content writing and video editing… But you can always DIY.

3. Low-risk business model

Not only does setting up an affiliate marketing business cost next to nothing…

The business model poses a low financial risk to the affiliate and the merchant.

This is because affiliate marketing is both cash-efficient and time-efficient. 

  • Cash-Efficient: Signing up for affiliate marketing programs is free, and income is purely performance-based. The merchant pays you only when you deliver sales. But… The more effective your affiliate marketing strategies are, the more sales you make and the more commissions you earn.
  • Time-Efficient: You can set up an affiliate marketing business in a couple of days — and it only takes a few hours a week to run it. This means you don’t have to take a serious risk. You can try out affiliate marketing as a side hustle while enjoying the safety net of your 9 to 5.

Pro Tip: You can mitigate risk by claiming certain business expenses like a laptop and internet connection as tax write-offs.

4. High-income potential

There is no limit as to how much you can earn from affiliate marketing. 

The average affiliate earns at least $53,000 in annual revenue.

If you think that’s astounding…

Here’s how much affiliate marketers make, according to Authority Hacker:

Annual IncomeShare of Affiliates
Up to $80,00080%
$80,000 to $1 million15%
Over $1 million1%
Source: Authority Hacker

Many affiliate marketers also take advantage of additional income streams such as:

  • Content monetization
  • Selling ad space on their websites
  • Paid subscriptions to premium content

This makes affiliate marketing an enticing opportunity if you want to build a scalable business.

5. Passive income

Another benefit of affiliate marketing is it generates passive income.

This means you can make money even when you’re not actively working…

As long as you’re getting consistent traffic, that is.

This is why I recommend producing evergreen content over viral content. 

Here’s the difference:

  • Evergreen Content like articles and long-form videos stay visible for years. These types of content people intentionally search for make for a market-ready audience and a higher conversion rate.
  • Viral Content like TikToks and Instagram reels are only visible for a few days. Viewers often don’t intentionally seek out these types of content either. This means the audience is not guaranteed to be interested in the product. In other words… Millions of views may very easily translate to zero sales.

Pro Tip: Opt for subscription-based affiliate products and services. These often offer recurring commissions, so you’re repeatedly making money from the same customer over extended periods.

6. Convenience and flexibility

Since your only role in affiliate marketing is promoting another company’s products…

You don’t have to deal with direct sales.

No need to manage inventory and logistics.

No need for customer service.

You only need a laptop and an internet connection.

In other words… You can work anytime, anywhere in the world.

And you are your own boss. 

You’re the one who decides:

  • The niche
  • Products to promote
  • The commission rates and payment methods acceptable for you
  • Your marketing strategy
  • Traffic source
  • Type of content, and so on

7. Extensive product selection

There are 11,400 affiliate programs in the US alone and over 110,000 companies worldwide that carry them.

This means an endless list of products, services, and marketplaces exist. 

You can choose to pursue your passion…

Or you can opt for the highest-earning products and niches. 

You can also promote as many affiliate products as you want. This is crucial if you’re promoting low-ticket offers.

Pro Tip: I recommend starting with relatively high-ticket offers and mastering your marketing strategy before branching out to a more extensive product portfolio.

8. Secondary commissions

Many affiliate programs like Amazon offer the advantage of making a commission from a customer’s total purchase instead of just the specific product you are promoting.

Some programs even have affiliate programs for sub-affiliates.

Meaning…

You get a cut from the sales of others.

This ultimately increases your Earnings Per Click (EPC).

Additionally…

You’re not only limited to earning commissions from a sale. 

There are many other ways you can make money from affiliate marketing, such as:

  • Pay per click
  • Pay per lead
  • Pay per install

You can diversify your income streams by using different traffic sources or building parallel affiliate marketing businesses for various niches.

9. No prior experience is needed

You don’t need a degree or special skills to get started.

Learn as you go.

In other words…

It’s not only a money-making opportunity but a skill-building one.

You will learn how to:

… and so on.

You can also counter the steep learning curve with many free guides that are just one search away.

Pro Tip: Many self-proclaimed gurus give generic and outdated advice and inflate their numbers to appear more successful. Want a free and solid affiliate marketing resource? Read my blog. It’s free.

10. Affiliate support

Most brands offer affiliate support.

The typical marketing kit includes:

  • Ad copy
  • Email swipes
  • Product images
  • Banners and logos
  • Graphics and videos

Some merchants also offer chat support and even one-on-one coaching.

This can save you time and effort.

What are the cons of affiliate marketing?

Affiliate marketing sounds easy and exciting… 

But it’s not without pitfalls. 

Here are some of the disadvantages of affiliate marketing:

  1. Requires time and effort
  2. High competition
  3. Low conversion rate
  4. Unpredictable revenue streams
  5. Unpredictability
  6. No control over the rules
  7. Slave to the cookie
  8. Link hijacking
  9. Can’t establish your own customer base

1. Requires time and effort

Affiliate marketing doesn’t get you rich quickly. 

Earning your first commission can take anywhere from three to six months.

I took about three months before I earned my first dollar and five months to hit 4-figures.

You will need to do much research and testing before seeing some success.

It also takes a lot of effort to keep up with the latest trends in your affiliate niche.

You’ll need to know:

Most fail not because of these…

But because they don’t stick around long enough to see results.

2. High competition

The downside of low barriers to entry is high competition.

The way I see it, you’re competing on two fronts:

  • With other merchants: Hundreds (if not thousands) of brands promote the same products and services. You must convince your target audience that YOUR affiliate offer is the best.
  • With other affiliates: Amazon has over 900,000 affiliates, and they are just one of the tens of thousands of affiliate programs out there. Thousands more sign up every day. You will need highly effective marketing strategies to conquer your slice of the market.

3. Low conversion rate

The average conversion rate for affiliate marketing is 0.5% to 1%.  

You need a lot of traffic and clicks to generate decent revenue. 

This will depend on the quality of your content, landing page, and the affiliate offer itself.

You must take your audience through an effective affiliate marketing funnel to turn them into paying customers…

Even with a high-quality product.

You must convince your audience to take at least four actions:

  1. Consume your content
  2. Visit your landing page
  3. Click your affiliate link
  4. Hit the checkout button

4. Unpredictable revenue streams

Affiliate marketing is a gamble…

Just like any other business model.

You could be grinding away at your computer for 12-hour days for months and still not see a dime in return.

Or you could be chilling on the beach while your affiliate links rake in hundreds of dollars a day.

Why the inconsistency?

Because affiliate marketing is performance-based.

Your earnings are directly tied to how well your strategies and content perform, not how many hours you put in.

If you think long hours and hard work will guarantee success, think again.

Instead…

Focus on:

  • Curating Quality Offers
  • Crafting High-Impact Content
  • Implementing Proven Strategies

You’ll increase your chances of success.

But there are no guarantees.

5. Unpredictability

Affiliate marketing is unpredictable.

The affiliate marketing industry itself is projected to grow year by year.

But… Your actual income can drastically change month by month even when your business is already well-established.

Here are a couple of ways you can minimize this risk and stay on track:

  • Evergreen Products: Opt for products that are in constant demand instead of trending ones.
  • Audience Quality: Focus on the quality of your audience instead of quantity. 1,000 engaged followers with disposable incomes will yield a higher income versus 1 million unpredictable followers.

6. No control over the rules

Because you are promoting someone else’s products…

You are subjected to that merchant’s whim and fancy. 

Affiliate networks can change the rules at any time. 

They can:

  • Reduce commission rates
  • Alter their commission structure
  • Discontinue the products you’re promoting
  • Shut down the entire affiliate program

Or worse…

Not all merchants and affiliate programs follow ethical practices.

Some have a ton of loopholes and “fine print” they can pull as an excuse not to pay you. 

This is why researching before deciding which affiliate programs to sign up for and which brands or products to promote. 

Affiliate marketing gathers data through custom tracking links and cookies.

There are two challenges to this…

Cookie periods and data privacy.

  • Cookie period: Each merchant specifies their cookie period. A.K.A the time a customer can purchase through your affiliate link (ave one to 30 days). You won’t earn a commission if the purchase is made outside of this timeframe.
  • Data privacy: Nations worldwide are passing laws to limit the use of cookies in light of data privacy issues. Affiliate programs are coming up with alternative tracking methods to address this problem. But… In the meantime, affiliates may be losing a good chunk of rightful commissions.    

Link hijacking is another way you can potentially lose your commissions as an affiliate.

Here’s how it typically works:

  1. An unscrupulous individual creates software that looks for affiliate links and switches them out with their own affiliate IDs. For instance, the hacker can replace your affiliate link amazon.com/productname/?affiliateid=123 with their affiliate ID affiliateid=456.
  2. This software gets installed into people’s devices without them knowing.
  3. Purchases get credited to this individual instead of the rightful affiliate whenever others click on the affiliate links.

Cloaking your links can combat this problem.

This means using a redirect to hide the destination of your links.

For example, you can cloak your affiliate link amazon.com/productname/?affiliateid=123 using Pretty Links like brendanaw.com/amazon-product.

However…

Link cloaking comes with its own drawbacks:

  • Your affiliate program might not allow it (especially the Amazon Associates program).
  • It might have potentially negative consequences for SEO.
  • Social media platforms might re-cloak your links

9. Can’t establish your own customer base

While you may have a dedicated following that trusts your recommendations…

These individuals are not truly your customers.

They are customers of the brands or merchants you’re promoting.

Think of it this way…

You recommend a fantastic skincare product, and your followers buy it through your affiliate link.

Great, you’ve earned a commission.

But the next time they need to replenish their skincare stash?

They’ll go directly to the brand’s website, leaving you out of the equation.

This is especially limiting if you’re not promoting subscription-based products with recurring commissions.

In that case, each customer’s value to you is a one-and-done deal.

To Sum Up

Affiliate marketing is a low-risk, high-reward business model…

But it’s also high-failure.

The perks are undeniable…

But so are its pitfalls.

I’ve outlined the pros and cons of affiliate marketing to help you make an informed decision.

The question now is: Are you up for the challenge?

P.S. One more thing before you forget…

Join my newsletter, The Raw Baw

I share insider tips on building my creator business with actionable tips to grow yours in 5 mins or less.

Brendan Aw Black Shirt Tattoo

Article by

Brendan Aw

Brendan founded brendanaw.com™ to help others start and grow a creator business. He brings over 6 years of executive marketing experience from startups in E-commerce, NFTs, Crypto, Fintech, E-sports and Agencies. Now, he’s growing his family’s 7-figure luxury lighting business in Cambodia and his creator platform. Brendan received his Bachelor of Commerce with a double major in Accounting and Finance from the University of New South Wales. He also has a background in Data Science.

Disclaimer

If you buy anything through my affiliate links, I may get a small commission at no extra cost to you. Check out my disclaimer.

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