Within the first year of my business, I reached a monthly sales revenue of $10,000 and by the third year, my revenue was $350,000. As a solopreneur, mostly selling my own online courses.
Back then, it was all thanks to affiliate marketing. (Some people call it JV or joint venture, strategic alliances, or referral partnerships. These days, it’s often called influencer marketing.)
Yet, after a few years, I was speaking out against affiliate marketing.
In this blog post, I’ll explain why I got disillusioned by the method that made me so much money, and why, in the past few years, I’ve come to a more moderate position.
Why is Affiliate Marketing so Lucrative?
Before you have a big enough audience, it can be difficult to make enough sales to keep your business afloat.
One of the ways to solve this problem is affiliate marketing: partnering with another business that already has an audience you want to reach, to sell your product to them.
In my space of online courses / info products, the typical commission rate is 50%. So when an affiliate partner sells one of my courses, I pay them half of the money from that sale. So in my early years, if I made a revenue of $10,000 from affiliate sales, I took home about $5,000.
Many businesses already have done the hard work of building a relevant audience for your product. So instead of (or in addition to) building your own audience, you can partner with these existing businesses. Why not?
In the first year, I found a few generous partners who were willing to bring my product in front of their audience. They (the host) were also interested in my skills, so I gave them some free consulting. Then, they helped me to sell my product to their audience (which helped to grow my audience, too). And, I also paid the host 50% of the sales.
After a year, I had a bit of an audience, and started to trade promotions with other businesses -- they would sell my product to their audience, and I sell their product to mine. This is often called JV or joint venture.
In the first few years, I was doing two to four JV’s every month! This is how my audience and income grew so quickly.
Why I Eventually Turned Against Affiliate Marketing
After awhile, I came to realize that I was in a pattern of promoting other people’s products mainly because they were going to promote mine.
Neither party was doing it genuinely -- we were in it for the money, and for the fanbase growth. We didn’t believe in each other’s product… we hadn’t even experienced their product!
Because we were pressured to sell each other’s product (so the other would also do a good job of selling ours!), we used a lot of inauthentic marketing… hype, false scarcity, and emotional manipulation, to try to get sales.
It was mercenary -- using our audience to get sales for our partners, so that we could use their audience to get sales for our product and to further grow our audience numbers.
Since many of us in the industry made the majority of our sales using JV’s -- and the typical commission was 50% -- our product’s normal price was therefore inflated because we knew we could only keep half of it.
I was selling $2,000 online courses back then, so I was paying $1,000 per sale to my affiliate partners. This made everything exciting, but also completely money-driven. If we were honest with ourselves, we didn’t really care about our audience.
The whole psychological environment of the JV world was shark-like. People competed to sell more products, so that they might then be noticed by industry leaders and promoted as a result.
Lots of inauthenticity, pressure-sales, money-focus. Hungry ghosts.
Within 5 years, I burned out. For too long, I ignored my conscience and heart.
That’s why I eventually spoke up against affiliate marketing (that link takes you to my post from 2014.)
Now, in 2019, my stance has softened, and I am doing a few affiliate partnerships, but of course, trying to do it authentically. Is it possible? Here are some principles I’m working with:
Principles of Authentic Affiliate Marketing
1. Sell products you can wholeheartedly vouch for.
Ideally, you’ve used the product you’re going to be selling. (“I can personally say that I’ve benefited from this product.”)
Or, many of your clients have raved about it. (“My clients love this product and therefore I think many of you will too.”)
2. The product’s price is not inflated.
It typically sells a lot of units without affiliate marketing. Therefore, the business model is set up to serve people at that level of value, rather than assuming that 50% of the price will be paid out as commissions.
For example, my current courses sell for $60-100 each. Most of my courses are sold by myself, not through affiliate, so I get to keep 100% of the sales most of the time. Therefore, I can serve my students at that level of value.
A few of my courses sell through affiliate marketing at 50% commissions, yet this is a minority of those sales, and I understand I am taking in much less money than normal. I do this to reach new audiences from partners I genuinely like, and in part, I pay the 50% as a gratitude gift to those partners.
3. Only promote affiliates whose marketing process you can vouch for.
Are you sending your audience into someone else’s sales funnel that will hype and manipulate them? Find out first.
Be mindful of how your affiliate partner does their marketing. Join their email list and follow them on social media, and study their marketing for a few weeks (at least) to see how they do it.
If you’re helping an affiliate partner with a launch, consider requesting a copy of all the emails they’re going to send as part of the launch. See if you’ll be comfortable sending your audience to experience those emails or promotions.
4. Be transparent about receiving commissions for a product you're promoting.
When you're paid to talk about a product, your natural human inclination is to give a glowing review. People should know that you're being paid, as they evaluate your endorsement of the product.
It's not that you're dishonest about your review and promotion of it. It's simply human nature for all of us to want to make money, and it's only fair (and legally required by the FTC!) for us to disclose that we are receiving commissions for this promotion.
You can do this in a way that feels good. For example, I like to say something like "I personally use and love this product, so I decided to become an affiliate for them. When you buy this product through my link, the company will give me a percentage in return, so you will be in turn supporting my blog / my content-creation efforts too."
Or keep it really simple, and on the sales page, mention that it's "sponsored by...." For example, when Tad Hargrave sells my Facebook Ads Course, the webpage clearly says Sponsored by Tad Hargrave to show that there's a financial relationship. Tad goes the extra step: in his promo email to the audience, he mentions that he'll be getting 50% of the revenue.
5. Be sparse about your affiliate promotions.
If you think you can make a significant amount of money selling a particular product from another company -- and you are meeting the above principles also -- then consider becoming an affiliate for that product.
But refrain from trying to become an affiliate for many products. Because then, you come across to your audience as trying to get a kickback for everything you mention! You lose trust with your audience.
It's like that "friend" who's always trying to sell you something. You start wondering if everything they praise is somehow financially connected to them.
On my Tools page, I have no affiliate links at all. This feels really good to me and to my audience.
Also, I'm not going to sell vitamins or essential oils or meditation guides, because that wouldn't be congruent with the type of things I typically sell (business/marketing trainings).
When I want to sell an affiliate thing, I'm very intentional about it and will do a special promotion, assuming it matches all the above principles.
The overarching principle is simple:
Care more about your relationship with your audience, than about the money you can make by doing affiliate marketing.
I’m open to your thoughts on these principles, and whether you can see yourself doing authentic affiliate marketing.
George Kao is a Marketing Coach for small business owners, especially solopreneurs such as Coaches and Mentors. He focuses on ethical & effective ways to grow one's platform and build true livelihood.
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