Prediction | Affiliate | Business | Commision | Government Regulation

The Whole Truth About Affiliate Marketing

Warning! This article may be dangerous to your beliefs about affiliate marketing.

If you are at all faint-hearted, susceptible to easy discouragement, an incorregible optimist, or simply don't like to be exposed to negative thoughts, you may wish to stop reading now.

It is not my intention to throw water on anyone's fire, but I believe that there are certain risks and dangers that need to be exposed so that people who are serious about building a strong and prosperous business can prepare for and deal with them. At the end, I'll also offer a few tactics you might use in meeting these challenges .

I do not claim to have an infallible vision of the business. Some of my predictions will never come true, some may happen only in part, but some will be fighteningly accurate. Unfortunately there is no way to know, in advance, which will be which. To me the wisest course is to consider them all , make some plans to deal with the worst , and prepare to survive through the rest .

Prediction Number One: Affiliate Marketing will change.

This is an easy one. Everything changes and affiliate marketing is no different. So what?

This prediction is the basis of all the others that follow, and also why it would be ridiculous to maintain that "times are different." One of the most sure things about change is that it brings surprises.

The only way we can minimize the effect of those surprises is to spend a little bit of our time trying to imagine what could happen and prepare for those things that we can. Maybe the predictions might not come true but the preparations may help us deal with another problem that we hadn't forseen.

Prediction Number Two: Lifetime Affiliate Plans will Falter

There are several reasons to believe this. First, is simply that many of the companies which offer to pay lifetime commissions on a customer will go out of business or will sell to others who will not honor the commitment.

I remember purchasing furniture with a "lifetime guarantee" and a few months later the company was out of business. (The fact that the owners started a similar business under a new name shortly afterward has left me wondering if this hadn't been planned.)

Next, many customers who are identified with a certain affiliate through a cookie will lose that connection, either through erasing their cookies , changing computers, making a purchase from another location, etc. Even if other parameters are used, they are not infallible.

Competitive conditions will force sellers to look for ways to lower costs. Even if the seller continues to pay, he may lower the commission , or add some additional requirement to the affiliate for him to continue receiving payment.

Finally, although it is the dream of everyone to set up a "perpetural non-stop money making machine," nobody in history has ever achieved this dream. We are simply conning ourselves if we believe that somebody is going to hand us such a plan. (Now, if it does happen, but we've made plans to survive in spite of the promises, we're just that much better off ... but what happens if we don't have alternate plans ?)

The only way you can ensure that you will always be in a position to require some payment is to have the customer come back and make future purchases through you. If you don't you will always be at the mercy of forces which are beyond your control.

Prediction Number Three: Affiliate Programs will become Government Regulated

This is perhaps one of the most nebulous predictions I'll make because it is almost impossible to forsee exactly what regulation there will be, but as long as governments continue to act as they have over the past few hundred years I feel comfortable with the belief that there are going to be efforts to regulate and control this business, just as there are in every other business. (How many businesses do you know that have less regulation than before?)

I remember when MLM businesses were a new thing. I had become involved with one which I believed was highly ethical. In spite of their high standards, they were forced to adapt and change because of laws that were provoked by the practices of some of the less scrupolus players in the field. You might debate about the value of some of these laws, but the point they illustrate is that governments have become involved on many different levels with many laws which have changed these businesses.

Some areas where I expect regulation include the responsibility of affiliates in the sales process. These might be spurred on by complaints of "promises" made by affiliates that weren't realized when the purchase was made.

Reporting of earnings and commissions to taxation authorities is sure to be an area which governments will want to deal with. This may have effects on the business which are entirely unforseen under the present circumstances. How are payments to foreign affiliates going to be handled? Are taxes going to have to be with-held at their source? Are affiliates going to have to have a business licence? Will licencing require some degree of certification or establish some qualifications that need to be met? What liability will sellers have when dealing with "clandestine" affiliates?

I'm sure I haven't even covered the minimum of government potential for involvement in the affiliate business.

Prediction Number Four: Affiliate Program Conditions will Change

This is a no-brainer. We've already seen this. Some programs have been completely eliminated , others modified.

The reasons are simple business realities. Businesses with products to sell have to compete with other businesses and even if they start with a unique product or service, sooner or later there is some alternative which trys to take away some of the business.

If an affiliate program is paying a high commission rate, that product may become over-priced in realtion to another with a lower commission.

The product seller may have decided that it needs to penetrate the market, to gain customers for its brand name, then decide that the affiliates which orginally brought them their customers are not needed any longer.

In some cases the seller might decide to drop an affiliate program because it is difficult or impossible to control how an affiliate acts in bringing a customer to them.

How to Deal with the Future

If you are starting or running a business based on earning commissions for finding customers for others here are some steps you can take to cushion yourself from some of these effects.

First, be flexible . Build your business in a way that will allow you to quickly and easily modify what you are doing to adapt to other changes.
Next, diversify . Seek out a variety of sellers to affiliate with and perhaps a variety of products. You might go so far as to set up several independent businesses: multiple-streams of cash, as Robert Allen calls them. One of the hotest business ideas to recently surface is the Internet Auction. Make Your Net Auction Sell
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If you want more information about Net Auctions this free course may fil in those details.
Become a value-added seller . Rather than simply pass customers on to the sellers, find ways of adding some unique value to the customer's purchase so that that customer comes back to you for future purchases.
Develop your own product to sell. This can be tied to the previous tactic, or independent from it. In either case it is another form of diversification. There are limitless possibilities. If you're searching for ideas, you might want to consider selling what you know. Make Your Knowledge Sell
provides guidance and a plan of action you can follow to turn what you know into a saleable, and profitable e-book.

I hope these suggestions will be helpful in preparing you to weather a few of the storms which may come. I do wish you smooth sailing, but in case the going gets rough, I'd also like to see you survive.

Discover the Future of Internet Marketing
Some people have done a lot more research and study of internet business trends than I've discussed here. This highly accalimed publication contains 378 predictions which you could turn into cash if you act before the trends become established.

Discover the Future of Internet Marketing
Some people have done a lot more research and study of internet business trends than I've discussed here. This highly accalimed publication contains 378 predictions which you could turn into cash if you act before the trends become established.

Follow this link to read more informative articles.