Re:How to Validate Demand for Your Product
by shostack on Friday December 30, 2016 @09:22AM
(#13284469)
Affiliate marketing is very different from owning and marketing your own product.
For starters, you have next to no control unless you are a major source of revenue for the merchant. This is a huge risk factor. Just ask everyone who got slaughtered on eBay's program when they decided they wouldn't pay a flat $25 CPA for new sign ups who purchased. Businesses lost major revenue overnight.
You also have lower margins and often can't use similar marketing tactics because in many programs you need to land the last click to get credit. That often rules out display, video, mobile in many cases (if the final sale happens on desktop you won't get credit), etc.
Lastly, you are competing with every other affiliate. So instead of having an affiliate program that serves as a force multiplier for your business, you are competing for table scraps, often for only 10-15% of gross revenue as commission on many programs.
So all of that said, affiliate programs can be great to vet a product space. You might get some small sense of market sizing, pricing, positioning, etc all from reviewing competitor program's terms and details.
For starters, you have next to no control unless you are a major source of revenue for the merchant. This is a huge risk factor. Just ask everyone who got slaughtered on eBay's program when they decided they wouldn't pay a flat $25 CPA for new sign ups who purchased. Businesses lost major revenue overnight.
You also have lower margins and often can't use similar marketing tactics because in many programs you need to land the last click to get credit. That often rules out display, video, mobile in many cases (if the final sale happens on desktop you won't get credit), etc.
Lastly, you are competing with every other affiliate. So instead of having an affiliate program that serves as a force multiplier for your business, you are competing for table scraps, often for only 10-15% of gross revenue as commission on many programs.
So all of that said, affiliate programs can be great to vet a product space. You might get some small sense of market sizing, pricing, positioning, etc all from reviewing competitor program's terms and details.