Efficiency of affiliate marketing


#1

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?


#2

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.


#3

Thank you. It was easy to understand with the help of an example!