There was a somewhat heated discussion in the forum recently about whether affiliate marketing was a long term, sustainable business or not. It's tough to come up with a definitive answer to this question, because it depends what you definition of a good business model is.
I think this topic brings up something bigger regarding the way affiliates think which hurts their business.
Affiliates think in terms of black or white
Affiliates have a tendency to think of everything as strictly one way or another. Some examples:
“Affiliate marketing isn't a good long term business mode, but X is”.
“Doing X is way better than affiliate marketing, because of blah blah.”
Affiliates tend to look at stuff like this as really black or white and it just ends up hurting their business in the end. The decide that affiliate marketing isn't a long term business model so something else definitely would be.
Not sure why so many affiliates miss the point that affiliate marketing can be a long term business model. Running traffic to CPA offers can be unstable yes, but there's people who have been doing only that for years. It really comes down to what you like doing. Offers come and go, traffic sources get harder (and sometimes easier) to work with but that's the nature of the CPA marketing business. Nothing ‘wrong' with that really – you just need to be really adaptable.
I think what gets a lot of people thinking affiliate marketing isn't a long term business model is their expectations. This is especially true for someone who has never been an entrepreneur before. They get an offer pulled and get totally discouraged and frustrated. The guys who are long term affiliates aren't really phased by this. Of course they aren't happy when an offer gets pulled..but they don't dwell on it and just accept that it's part of the business.
Now, that's just talking about people doing paid traffic to CPA offers which, in reality, is such a small part of affiliate marketing as a whole. We tend to forget that, because in this ‘CPA IM circle' it seems like that's all we're really exposed to. There are tons and tons of affiliates we never run into who are quietly making a great living while never touching CPA stuff. These people have been plugging away on their authority sites, datafeed sites, coupon sites, etc, etc. for years and have some really stable and impressive incomes.
As an affiliate, you have to be really careful to not start thinking the grass is greener on the other side. It can be sure, but it can also be much more difficult. I've know many affiliates who tried to get into other aspects of the business to be more ‘stable' and ‘long term' only to completely flop. These are really smart guys too, who made tons of money as affiliates.
The really cool thing about affiliate marketing is how simple it is. I don't know of any other business where you can make so much with such a small bankroll. Not just that – you don't have to learn anything especially technical or complicated to do it. You really just have to be extremely dedicated and willing to work really hard.
Take the example of creating your own lead based offer
This model has just as many potential negatives (if not more than affiliate marketing). Lead generation is completely riddled with fraud – this is a nightmare to deal with. Think getting offers pulled sucks? How about spending tons of money to get leads only to find out they can't be sold. Ready to argue with lead buyers who say your leads don't back out? Yep, gotta deal with that too.
There's also no way of knowing if the lead gen form/offer you set up will convert at all. Are you ready to spend hours, days, weeks, setting something up only to find out it doesn't convert at all? That's much more money (and more importantly time) invested than spending a few hundred $$ to test an affiliate campaign.
It's very difficult to estimate what you'll need to pay to get leads in any given market too. Add this to the fact that you'll need to figure out what the lifetime value of a lead is for your client (which is usually met with a blank stare) and it's really easy to spend way more than you'll make back. It takes some time to get your CPA down too, and you're spending your own money to do that.
Remember all the sucky things about traffic sources as an affiliate? You know, Google algorithm changes that nuked your SEO sites, AdWords giving you crappy quality scores, Facebook ad costs rising, etc? Surprise – you still get to deal with all that! You have to get traffic from somewhere to get your leads right? Those traffic sources aren't going to behave differently just because your sending traffic to your own lead form instead of an affiliate offer lead form.
Think about all I outlined above (which is just a few issues with the whole lead collection business model) and how much time and money you would potentially need to put into getting one lead. You have:
– The phone calls/meetings with the client
– Building the lead capture page
– Building the campaign to get the traffic
– Spending your own money trying to get your cost per lead below what the client is paying you per lead
– Following up with the client or answering phone calls/emails about the leads, lead quality, etc
Depending on what you value your hourly time at, this is potentially thousands of dollars and many hours invested. Some of my very best affiliate campaigns have taken less than an hour to set up, and earn 100%+ ROI for months (in some cases even years) with very little maintenance.
I could say similar stuff about building your own offer, running your own traffic source, etc. Those things always seem like a better/more stable business model, but they often aren't.
Obviously with some of this stuff, I'm playing devils advocate. There are pro's and con's to each side. I just see a lot of affiliates thinking ‘anything's got to be more long term than affiliate marketing', but if you look at all the factors involved it really always isn't.
There is huge potential on both sides of the fence, and it's a mistake to think yo should do just one or the other.
Try to think of everything in terms of opportunities to get out of the thinking in terms of black and white mode.
In my own case, I've done some form of affiliate marketing for close to 10 years now. I've had more ups and downs than I could count, but I've always worked hard and found something that works (for varying lengths of time). Have I only focused on affiliate marketing? No, but that's mainly because I have other interests like creating my own products, writing, and developing other streams of income. I always see myself doing some form of affiliate marketing – there's just too much money to be made to ignore it completely