You get what you pay for
The more money you pour into affiliate marketing, the better the results are likely to be. The higher the commission, the greater the number of high-profile affiliates you’ll have pushing your product.
“Businesses need to offer affiliates the opportunity to make at least a $10 commission,” James says. “If they want to want the type of affiliates who can deliver a reasonable number of eyeballs, they need to offer commissions in the $30-$50 range.”
(If you want a plug from a celebrity, the sky is the limit. Kim Kardashian reportedly charges US$250,000 – $500,000 for a single ‘sponsored’ Instagram photo, Facebook post or tweet.)
Millionaire bloggers and well-known globe-trotting Instagrammers receive lots of media attention. But James points out most affiliates have modest revenue streams.
“As with any field, the top performers do well for themselves but for most it’s just pocket money,” he says. “To take the example of the yoga studio-owner, she might make $5,000 - $10,000 a year in commissions. It’s not enough to live on but it’s an attractive return on investment for putting an ad on her home page.”
“Most affiliates only recommend goods and services that they would buy themselves.”
Banish those brand-damage worries
Business owners are often wary of affiliate marketing out of concern it could result in their brand being trashed. Granted, there are periodic headlines about companies having their wares promoted on porn or neo-Nazi sites. But James argues it’s almost always a non-issue.
“To take the yoga course example, it doesn’t make any commercial sense to market that on a website featuring extreme views or content,” James says. “It’s going to be promoted in online spaces focused on health, fitness, relaxation and spirituality. Plus, when signing up with an affiliate network, it’s easy for businesses to specify what they don’t want their brand associated with. If a business owner doesn’t want their brand anywhere near, for example, alcohol or gambling they can specify that.”
James points out it’s the affiliates who need to be worried about brand damage.
“If I click through an ad on the yoga studio’s site and book a holiday at a yoga resort that turns out to be a disappointment, I’ll be left with a negative impression of the yoga studio. I definitely won’t be clicking on any other ads on that site,” James says. “There’s a kind of karma that operates on the Internet that promotes accountability. That’s why most affiliates only recommend goods and services that they would buy themselves.”
Affiliate marketing should be a low-risk activity, especially if carried out through a reputable affiliate network. Nonetheless, it’s still a good idea to make sure you have your professional indemnity, products liability and public liability insurance up to date before engaging in it. A Steadfast insurance broker can provide the advice you need.
Important note - the information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Group Ltd (ABN 98 073 659 677, AFSL 254928)
Anything can be an affiliate-marketing opportunity
You may be thinking affiliate marketing is fine for someone who owns a yoga studio, but your business just doesn’t lend itself to cross-promotional opportunities. James argues that kind of mindset means you’re most likely missing out on seizing an opportunity. He points to his own affiliate-marketing site – highjump.club – to make his case.
“In high school, I was Australia’s junior high jump champion,” he says. “High jump has a small following in Australia and around the world. There isn't really any money in the sport unless you compete at an elite international level.”
Nonetheless, James drew on his personal experience to write a handful of advice articles and then created an aesthetically pleasing website. As a result of that small investment of time and effort, he now has an ongoing, low-maintenance revenue stream. One derived from affiliate marketing high-jump books, coaches, equipment, shoes and training programs (ads for general products also appear on the site).
“At the start, I wrote a series of articles over the course of a month,” he explains. “I now write one every few months. Whether I choose to work on the site or not, that passive income stream is always coming in. Affiliate marketing can be the passive-income gift that keeps on giving. If you put in the hard yards upfront, it grows like a snowball."