Affiliate marketing advantages and disadvantages

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Advantages

Many of the benefits of affiliate marketing are closely related to search engine marketing since affiliates are often expert at deploying SEO and PPC to gain visibility in the search engine results pages. The main benefits of affiliate marketing are:

  • SERPs visibility. Gain more visibility in the paid and natural listings of the SERPs (increase ‘share of search’ page).
  • Reach of different audiences. Can use different affiliates to target different audiences, product categories and related phrases.
  • Responsiveness to marketplace changes. Affiliates may be more responsive than your in-house or agency teams in terms of algorithm changes for SEO or changes in bidding approaches for PPC. They are also great at identifying gaps in your search strategy. For example they may be quicker at advertising on new products, or may use keyphase variants that you haven’t considered.
  • Target generic phrases in SERPs. Enables you to reach customers through generic phrases (e.g. clothing) at a relatively low cost if the affiliates secure better positions in natural listings.
  • Increase reach in SERPs. Increase reach of your brand or campaign since affiliate ads and links featuring you will be displayed on third-party-sites.
  • Generate awareness. Can be used to generate awareness of brand or new products for which a company is not well known.
  • Diversify risk. Use of affiliates reduces risk caused by temporary or more fundamental problems with your SEM management or other digital marketing programme.Pay-per-performance. The cost of acquisition can be controlled well.

Disadvantages

There can be substantial drawbacks to an affiliate marketing programme which arise from the fact that your affiliates are mainly motivated by money. It follows that some of them may be unethical techniques to increase their revenue. Potential disadvantages are:

  • Incremental profits or sales may be limited. You may be cannibalising business you would have achieved anyway.
  • Affiliates may exploit your brand name. This particularly be case where affiliates exploit brand names by bidding on variations of it (for example ‘Dell’, ‘Dell computers’ or ‘Dell laptop’) or by gaining a presence in the natural listings. Here there is already awareness. It is important to prevent this and many affiliate programmes exclude brand bidding, although affiliates can have a role in displaying competitors from the listings for brand terms.
  • May damage brand reputation. Your ads may be displayed on sites inconsistent with your brand image, such as gambling or pornography sites. Alternatively, creative may be out-of-date which could be illegal.
  • Programme management fees. If using an affiliate network to manage your campaigns they may take up to 30% of each agreed affiliate commission as additional ‘network override’.
  • Programme management time. Affiliate marketing is founded on forming and maintaining good relationships. This cannot be done through the agency alone and marketers within a company need to speak to their top affiliates.
Chaffey, D. and Ellis-Chadwick, F., 2012. Digital marketing: strategy, implementation and practice (Vol. 5). Harlow: Pearson.

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