You’ll often hear that the easiest way to start making money online is affiliate marketing. Join an affiliate network, pick a few offers, set up a site, put up some banners, reviews, text links, get some traffic and make money!
Sounds simple. You don’t have to create an actual product – you can promote someone’s proven products. You don’t need complicated websites – a simple blog will do the job. You don’t have to deal with clients – there are none. Just make a sale and pocket the money.
I have been on both sides for quite a while since 2005 and it allowed me to see the pros and cons of both, being an affiliate and being a product developer, a vendor. So allow me to compare the two and put things into perspective.
Affiliate marketing is definitely easy to start with – that’s why it is recommended to beginners so often. But the irony is that it’s really one of the most difficult ways to make money online. Your greatest enemy in this case is the cutthroat competition.
Now, many experienced marketers will say that 99% of affiliates don’t know what they’re doing and it’s very easy to beat them regardless of how big the competition is. However, all the edge that these marketers would use to do that comes from their experience as product developers.
You see, there are only so many ways to beat the competition and the key is always providing more value to the customer, even if they are not your customer. Bonuses, freebies, and other kinds of “bribe” come from product creation side and is “cheating” your way through as an affiliate. It’s breaking out of the frame of an affiliate what gives you an edge. And it’s all fine except that it costs you the biggest benefit of affiliate marketing – the 100% hands off approach.
By providing extra value to the customer, you make that customer your own. And it comes with all the responsibilities of having customers. In that case, a sale made doesn’t end there – the customer “lifespan” just begins. And it’s all great because you can get even more value out of every customer, however isn’t that what product creation is all about? You’re not just an affiliate anymore at that point!
The “pure affiliate” marketing doesn’t know any “bribes”. You pick an offer, send traffic to it, make a sale and happily put that money to your pocket. End of story. And that’s why affiliate marketing is so great – there’s no further responsibility (mind you, that doesn’t mean there are no ethics).
The downside of that is that really anyone can do it and pose you a serious competition. Any newcomer to the market is a real threat. And only your skill set is what can give you an edge – that’s why it’s so difficult.
Product creation may sound intimidating because as a beginner you may have no idea how this all online business thing works, let alone creating products. But as a matter of fact, it’s one of the easiest ways to make money online, as counter-intuitive as it sounds. And there are several reasons for that.
First of all, it nicely fits the notion that you have to create value to get money. Secondly, there may be very few competitors in your market (much much less than there are competing affiliates). Thirdly, you get an edge by creating more value for your customer, and not necessarily with your skills which may take years to develop. And fourthly, you create a relationship with your clients which allows you to sell to them over and over again without having to worry about advertising, traffic and other difficult stuff.
In addition to that, having your own product opens so much more advertising opportunities for you, as opposed to being an affiliate. Your product is unique, so you can approach other vendors for JV and integration marketing opportunities. You can recruit your own affiliate army and so on.
The only catch is, of course, creating a product that someone would find valuable enough to buy. And that’s the part that is most intimidating. However, if you consider that everyone of us is proficient in some area (be it gardening, fishing, babysitting, juggling, etc.) and any area has people who want to excel in – people all around the world, which by the power of the Internet you can communicate with – you can create something of value to them. Simply go out there, find those people on the forums, social networks and other sites and see what problems they have. Solve those problems and you have a product, whatever niche that may be.
Now here comes the downside. As I mentioned, selling your own products introduces customer relationship to the play. That means more money, but that can also mean more headache. Making more money is great, but are you able to provide the support? People will ask you questions, they will have unexpected problems, they will bombard you with requests. That’s something to seriously consider, because at this point it becomes your job (even if you can outsource some of those tasks). And it’s so different from the 100% hands-off affiliate approach.
The conclusion would be that a comparison of affiliate marketing and product creation is very subjective. It really comes down to what you like and what you’re good at. If you’re more of a “techy” type, affiliate marketing might be more appealing to you. And if you’re a people’s person, you may actually enjoy the product creation that involves working with customers.
Nice post. I agree that affiliate marketing is very cutthroat competition-wise. However, all the customer service is automatically “outsourced” to the vendor.
As you point out, that is the downside to product creation.
Thanks for clearing up the affiliate marketing vs product creation issue for me. You explained it very well. I wonder if the average startup costs for product creation are much larger than the money you invest in promoting an affiliate offer.
In general, I would say the startup cost for affiliate marketing is smaller. That’s what makes it attractive.
But it depends on several factors on case by case basis. It’s possible to create a product with the same or even less resources than doing affiliate promotions. And vice versa, you can spend a lot of money promoting affiliate products.
The main factors that influence the costs are:
* Whether you work alone or outsource parts or all of your project. Product creation is usually more expensive to outsource.
* How much you spend on traffic. If you pay for traffic, affiliate promotions are more expensive (while with your own products you can get affiliates to get you traffic for a commission).
* The customer care – can you do it yourself to begin with or do you have to hire staff right from the start? In affiliate marketing this issue is non-existent, but in product creation it can be costly depending on the product.
But if you’re considering which way to go – affiliate marketing or product creation – the startup cost is not the only thing to consider. As I mentioned in the post, true affiliate marketing is very competitive and I personally think that you have a better chance to succeed by creating a product with a good USP, even if it involves a larger startup cost.
Thanks for your feedback. I’ve been doing the affiliate marketing thing unsucessfully for over a year now. I’ve set up a few presale websites but have not made any sales. I switched to CPA offers but my adspend consistently costs more than the money it generates. I’m staying on the grind though. I just need to focus on bulding (or outsourcing) high converting sites with strong calls to action and pretty graphics.
Nice post,and product creation is the best way to make money because if you have good solid product there lot of people will happy promote your product,just sit and see your money grow, but absolutly its not for newbie, newbie must spent time and money on their own experience
thank you for that article. But still the internet marketing is confused for me. Could you give us an example of a product creation someone advertised on, generate traffic and make money with it ?!! how would a site on juggling can make money ?!! regards
There are plenty of examples on Clickbank. I’m sure you’ve bought something yourself too. Note how you’ve come across the product, what made you buy, etc. That’s what you do to market it.
Juggling might be a bad example as there might be few people who’d buy ebooks or videos about how to learn juggling. Your products should be wanted. That’s why make money, weight loss, trading, and software products are dominating Clickbank.