Since affiliate marketing is based on a win-win-win model where all the three parties (the merchant website, the affiliate website and the consumer) are happy. However, is it really cost effective and efficient in marketing field?
Great Question Sakshi! I think it is really debatable! Let’s look at an example:
Lets’ say I am a business owner and I wants to sell my products. I am budgeting 30% as a cost of customer acquisition. Now I starts affiliate marketing campaign and offer 30% on every acquisition. Assuming good number of affiliate signup as well and I started getting some customers. All good! Looks like affiliate marketing is working for me.
Now, what if my affiliates start targeting users, who are coming to me in any way. I will loose 30% of revenue.
What if my affiliates start offering 5% off to my existing customers and my existing customers start following that route. I will be loosing 30% of revenue from them as well.
I think you really have to be careful in using affiliate marketing.
Thank you. It was easy to understand with the help of an example!