Why Affiliate Programs Don’t Work

Mar 7, 2008 by Matt | Posted in Monetization 10 Comments

Affiliate programs are one of the oldest methods used to monetize web sites, and promote online product sales. By offering a commission, site owners are baited into linking to and promoting a product. This practice has a lot of good and bad implications. However, we’re not going to talk about that today. No, today we are going to discuss why affiliate programs don’t work.

There are two types of personalities, when it comes to buying things. There are impulse buyers, and those who debate whether or not they should purchase something before they do (I fall into the latter group). Affiliate programs are designed with impulse buyers in mind. The goal is to turn a user on one website into a customer on another.

Consider scenario #1: A user on Example.com is reading through a blog’s archives, and finds a review of a book on PHP. After reading the review, she follows the affiliate link to Amazon, where she noted that it’s only $20, instead of the $40 it would cost at the local Barnes and Noble. An impulse buyer would just add the book to the virtual shopping cart, and surf off somewhere else. But this user just writes down the title of the book, along with the price. She doesn’t actually buy the book until three days have passed, and the 24-hour cookie from Amazon has expired, costing Example.com the commission on the book. The moral of this story? Don’t expect people to buy the product right away.

Scenario #2: An amateur photographer is trying to find the lowest price for a digital camera. He types the make and model into Google, and is greeted with the first ten results. He checks the top three results, and discovers that the top result has the lowest price. He buys is directly from there. How did that online retailer get to be the top result on Google? All the suckers who linked to them, hoping to make a few dollars off their affiliate deal, helped them to the top. For a real-life example, try Google-ing a few book titles. How many times does Amazon come-up?

Affiliate programs can work, but they often don’t. They only really work if the referred user buys the product fairly quick, which not everyone does. Whether you’ll have decent results depends largely on your user base, and the nature of the product. If you’re referring people to a service like Text-Link-Ads, then you may see better results than if you’re trying to persuade people to buy an expensive product like a computer or camcorder. Expense is a big factor in whether someone will complete the action required for your referral.

  • http://wp-premiums.com PJ

    I’m an affiliate for several items via e-junkie.com, and their cookies last six months, which is probably more than enough time to hold on to a possible buyer.

  • http://www.webmaster-source.com Matt

    Whoa. Six months? I’ve never heard of one being that long before (Amazon is only 24 hours for example). That’s pretty good, though you’ll only get about 24 hours from people, like me, whose browsers clear their cache and cookies upon closing.

  • http://www.wealthtreasure.com Tim

    I have been using affiliate programmes as a source of online income for years and it has been a reliable source for me.  It has worked for me because I have been under good tutelage, particularly from two of the world’s best affiliate marketers, Derek Gehl and Ewen Chia.  They have been my mentors and coaches for three years.  So, I should think that affiliate programmes still work well as long as you mastered the tricks of affiliate marketing.

    Hope my comments help to clarify certain points.

  • http://www.webmaster-source.com Matt

    I’m not saying that affiliate programs don’t work at all. I’m merely trying to point out that there are side affects (PageRank), and that a sizeable percentage of your users may buy the product, but not when the affiliate cookie is active.

  • http://www.GoToGuyEnterprises.com Andrew Seltz – The Go-To Guy!

    You make some pretty sweeping generalizations about how affiliate marketing operates and how affiliate programs in particular work.A variety of affiliate tools in the marketplace use IP tracking and other ‘back-ups’ to simple cookie tracking to ensure better results for affiliates. Big retailers like Amazon have short tracking expiration dates, but many others don’t. And, some that I’m affiliated with actually grab the affiliate ID when a referred visitor joins the vendor’s mailing list and embeds it in their subscriber account so that any future promotional email has my affiliate code appended to the link and a fresh cookie is placed every time there is a click-through. That customer could buy 5 years from now using an email link and I’ll get the sale.I make affiliate sales every month for both digital and physical products and one key to success is where your site’s content engages the visitor in the buying cycle. If they’ve been researching and debating the purchase for days, and come to your site to read a review (or watch a video demo of the product) they might just proceed from there to the order page. In short, the nature of your site will have a huge impact on whether visitors are likely to make purchases from your links.It’s also possible to motivate people to order through your links by offering them bonus products/reports etc. if they order through your site. I’ve done it and also responded to offers like this as well.Finally, if you have a good relationship with your visitors and they regularly receive great value from you  – they might just buy from your links because they want you to get the commission.There are many variables involved and just saying “it doesn’t work” is a little simplistic.

  • http://www.webmaster-source.com Matt

    Andrew, maybe it is a little simplistic. My arguments do have some merit to them though. They may not be all-inclusive, but it’s still something to think about.

    Later in the year though, I tried some other affiliate programs, an did so in a smart way, and I made some good money. One such affiliate deal was the Revolution Theme, but sadly the theme has been discontinued, and along with it the money I had been making off it…

    I’ve since reconsidered my view of affiliate programs, though I still prefer direct sponsorships as my main source of blog income.

  • http://www.fashify.com Miami Fashion Mag

    I'm inclined to agree with the author in the low success rate of Affiliate programs for publishers. But what I'm having a hard time understanding is why certain retailers go through the process of creating accounts on networks like ConnectCommerce.com (aka Google Affiliate Network), but then make it very difficulty for publishers to meet their qualifications to be allowed to market their links on their website.

    I work at an online fashion website based in Miami and Atlanta, and we will often find that some fashion & apparel retailers will deny our application, saying "we're not a good fit for their product". Do retailers have to pay a fee for each publisher that is logged into their account. I would think that it would be in the best interest of a retailer to have as many "related affiliate marketers" promoting their product. It's almost free advertisement for their brand until a purchase is made, regardless of how often the affiliate link or banner ad is clicked.

    Am I missing something here.

    • http://intensedebate.com/people/redwall_hp redwall_hp

      I don't think you're missing much there. Affiliate links are like CPA ads, which are about as cheap of advertising as you can get. It doesn't make sense to limit your affiliates. More affiliates means potentially more sales.

      • http://www.fashify.com Fashion Magazine MIA

        Thanks for responding. We thought we thought that perhaps we were viewing this matter from a skewed perspective.

        Perhaps the retailers limit the amount of associates in an effort to protect their "brand identity". I hope that this is not the case. If your brand is not good, then no amount of gatekeeping will protect it's identity on the internet.

        Case study:
        Tmobile Sidekick Data Servers go down for a week. Sidekick (Cel Phone) Owners lose their data (phone numbers, emails, photos). Tmobile refuses to let customers out of their contract without penalty. Thousands of Twitter Followers bring down the Tmobile Sidekick and Tmobile service venting about their problems. Tmobile has to rescind their statements and let customers switch to a new phone and plan, or leave their contract without penalties.

        So as we live in the world of Twitter, It's suprising to me that retailers are still using a "picky-choosey" strategy when it comes to allowing more affiliates to market their merchandise.

        • http://intensedebate.com/people/redwall_hp redwall_hp

          Before (and even more so after) the T-Mobile Sidekick scandal, I've been pondering the subject of public relations in the age of blogs and Twitter. It's interesting to watch business after business fall into the same trap. Before the internet, a company could have a major screw-up and have it go unnoticed pretty much. With the internet, it becomes a major black eye. This is good for consumers, I suppose. Not quite related to affiliate programs, but interesting all the same. :)