Is Affiliate Marketing Dead?

Every year it seems we have to ask the question "Is Affiliate Marketing Dead?"  This year is no different as there are several forces poised to potentially create some change.

I don't think it's dying.

But I do think it is headed for changes.

Cruise through any affiliate marketing forum not trying to sell you a training package and you would think it was being fixed for a toe tag.

Particularly after the net neutrality act was repealed recently...

These changes are being caused  by a few increasing powerful forces and converging trends.

These forces are not all bad or at least don’t have bad intention.

But the risk of the industry getting overhauled in the next few years is not just likely but certain.

Don't get all alarmed or change the channel because there is some good news.  

I believe there is significant gold to be mined now and in the future by businesses and entrepreneurs who understand these changes and are willing to adapt. 

But it requires something that only a small percentage of successful entrepreneurs typically end up...

possessing, delivering and have the patience to benefit.

A FunnelRush.Org Article
 Written by Funnel Rush on Jan 10th 2018
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Before I launch into each one of these, I want to emphasize that understanding these are paramount to growing and protecting your hard earned profits in your business.   

Even before you learn all about affiliate marketing or invest your time in a great program like SEO Affiliate Domination, understand and prioritize your risk because one thing is certain....

Most people do not.  

Let’s turn toward discussing these 3 major forces and how you can prepare and ultimately take advantage of them.

1. FTC/FCC Regulation

The recent increase in enforcement actions reveal some new trends that spell change for the affiliate marketing industry. 

While actions have not been absent in the past, this last year and upcoming year sees that trend surging upward more than it ever has before.

The FTC has even been willing to target individuals now more than ever before for many different infractions. 

I think there would be few who would disagree that the industry is fraught with deceptive practices and people. 

The low cost and low barrier of entry invites all types so the proverbial bad apples are spoiling the entire bushel. 
The low cost and low barrier of entry invites all types so the proverbial bad apples are spoiling the entire bushel.  

There is some degree of cleansing that needs to happen and should happen at least from my perspective, but the pain of regulation and all it brings will envelope everyone and compliance will be a factor more than ever. 

For companies who use affiliate programs for their marketing, the Restore Online Shopper Confidence Act, has been around for a few years but not being enforced. 

That is changing. 

Data Pass transactions are significantly restricted and regulated. 

International restrictions such as EU GDPA, Australian Spam Act, Do Not Call Registry, Canadian Data Privacy, and many more apply to affiliate marketing. 

Use of membership programs which are so prevalent now in our industry may see one of the biggest impacts. You can’t turn around without seeing a new monthly continuity program of some kind for virtually every type of product and service. 

But the restrictions around expressed informed consent, full disclosure, ease of cancellations will be more heavily enforced in the future. 

This has been a huge area of growth the last several years in the industry but seems certain to be impacted as a high percentage of these are turning out to be fraudulent or at best moderately deceptive. 

In a recent Feed Front magazine article, Rachel Hirsch wrote an article about the increasing scrutiny of the “Continuity Model” and I am paraphrasing…. 

“the heightened scrutiny facing the industry can be attributed to factors such as inadequate disclosures, high chargebacks, fraudulent affiliate traffic, payment processing transparency, and churn and burn businesses who seem to get in/get out or rebrand before they get caught. “

There is no substitution for honest, fair, and forthright communication and business practices, regardless of your business model and delivery strategy.

Recognize that advertisers, networks, publishers and anyone linked to your businesses supply chain can all be held responsible for federal advertising law violations. Even if you’re just passing the information along with a simple landing page but the Affiliate offer you represent breaks laws…you can be held responsible. 

People are getting hurt and Big Brother is stepping in whether we like it or not. 

It would be nice if the advertisers could police themselves, but it is appearing more likely that regulatory oversight will continue to increase.

So, what does that mean for you?

If you’re an affiliate marketer, you must commit yourself to compliance of the Law but you first must know it. 

Anything you write, represent, or claim must comply with Federal, International, and local laws. 

These laws change...more frequently than ever. 

How are you keeping up with them? Do you know what the EU GDPA Regulations are coming effect in mid-2018 regarding transferring personal data? 

You should. 

Are you performing site and supplier audits regularly for your own compliance? 

One of the ways is to stay connected into resources like Feedfront Magazine, Fair Credit Reporting Act for Affiliate Marketing , and the FTC guidelines on advertising and marketing. 

The FTC offers a variety of resources to help make it easier for you to comply with the guidelines, including: 

There are also generally several blogs that stay on top of the latest news and items of concern for the marketing industry that you should research. 

Second, you must fully investigate and know the companies and products you represent. 

In the past, this has not been a problem. 

All you have to do is sign up through some affiliate network or fill out a form and you’re in business.

Moving forward you need to take on the role of investigator and qualify your offers you represent better.

Companies are going to start doing it more to you…and you need to do it more with them. 

That is if you are a real business person and not part of the problem.

This brings me to what I think the next biggest shift is going to be over the next 10 years.

2. The Streamlined Affiliate Industry - 

Over the next few years, I believe you will see three big changes in companies that use Affiliate marketing for marketing their products and services

A. Fewer companies choosing Affiliate marketing as a means of marketing their products and services. This will align with their budgets and risk profile.

B. Higher level of qualifications, auditing and enforcement for affiliate marketers, leading to smaller and manageable networks of affiliate marketers.

C. Preferred or Segmented Networks may become more prevalent and limit Affiliate Marketers ability (at least through today’s traditional methods) of getting their message out. 

I think (B) will be the first and most impactful domino to fall. 

I expect that representing a company’s products will become more conditional on several qualifications.

In fact, the best marketers should be aware when those things are not present. It likely signals the company is loose with its standards and the dregs of marketing society are probably going to jump in if they are not already.

When you have thousands of affiliate marketers running around out there and all they did is fill out some form in 60 seconds, your just inviting trouble.   

"I expect to see more legitimate companies make intentional moves to have a smaller affiliate marketing field representatives and adding more quotas and other conditions."

I also expect to see more required industry certifications to represent products in the health & wellness and financial industry in particular.

And it's not just companies who use affiliate marketing... it is also the major social platforms tightening their qualifications as many of them have gone anti-affiliate marketing.   

If your an affiliate marketer and use Facebook for example as a major outreach strategy, you will have to follow strict guidelines or get your account deactivated if you have not already.   

Many affiliate marketers have had their accounts shut down with no explanation other than "we don't like your business model". 

So, what can you do?

For starters, tighten up your intent and objectives to think long term sustainability and not just “make a quick buck”. The industry is filled with the latter. 

I think over time, they will diminish...which is a good thing. 

If you want to be in the affiliate marketing business for the long haul, you must think long term, comply, and commit yourself to doing it the right way and demand the same from those around you. 

Affiliate marketing is being treated in many ways like the network marketing industry.   Again, low barrier to entry will invite the seediest element but it also creates an opportunity for anyone to succeed.

You can also revise your business model to do more on the front end of your sales funnel, rather than just post links, banner ads, and other creatives that link directly to the product, without you first providing some value on the front-end.   

It also seems appropriate and necessary to diversify your traffic sources, advertising and SEO strategies across many different platforms and accounts to protect your business.  

The balance must be struck with better compliance, auditing, and qualifications on both the companies and marketers part.

I admit I am a conservative in my economic positions. 

I will typically choose the “less gov’t is better” position on just about everything. 

But in this case, I think a little more regulation to protect the consumer may be necessary because I think it is such a large problem that consumers and companies will have a difficult time policing it themselves. 

It will clean out the bad element and provide more opportunity for those who are honest and do it right. 

But I know in the process that some good marketers or those with good intentions may get swept up in the clean-up, but it must happen to get the industry back where it needs to be.

So, don’t look at this as a negative. It has the potential to be very positive but may go through some growing pains first.

You should enter affiliate and online marketing in general for the right reasons and take the ethical high road in everything you do and make sure that those you go into business with are doing the same.

The other unknown that could influence Affiliate Marketing is the repeal of internet laws of 2017 that impact net neutrality. 

No one really knows how it will impact consumers, companies, and affiliate marketing to get it more personal. 

We need a little more time to see how it will play out.

But one thing I can future cast with more confidence is it will give large tech providers more data about you and give them some abilities to potentially charge for their services different and even segment services or limit certain types of traffic. 

Their ability to limit internet traffic or types of traffic could create a short-term issue at a minimum. 

I still believe though that the best Affiliate Marketers will know how to pivot quickly or creatively to take advantage. 

This is also another area where capital investment may be a limiting factor in new startups in this space.

Much is still unknown but it is something to keep an eye out for.

3. Increasing Internet Consumer Intelligence & Advocacy

The last major force shaping Internet, Affiliate, and E-commerce Marketing over the next few years is based around consumer intelligence.

Much of what I have talked about in this article is not really ground breaking news. 

We should all know the screw will get tightened on enforcement, but these and other forcing driving greater online consumer intelligence is something I have been thinking about for some time. 

I don’t know how to quantify it completely with data yet or have extensive studies to point to, but... 

"the convergence of technology, consumer advocacy, and regulation is leading to a much more informed buyer."

Right now, consumers in many areas where affiliate marketing is used have buyers blur. 

All the offers, products, and approach seem similar and no one really knows if they can trust a source or not especially in the purchase process. 

It has been a very decentralized customer buying experience if you venture outside of the top e-tailers.

With data privacy issues, security hacks, payment fraud, and other issues occurring frequently, it will only direct consumers to more trusted sources. 

I think you will see more customer advocacy groups and trusted sites become major sources of triage for consumers buying anything. 

In a way, some of the major online retailers already function as that point because they have store or brand recognition. The more they steer away from that and decentralize the buying and fulfillment process, it will begin to hurt them over time so I don’t see that reversing course. 

That is why the Amazons, Walmart, and others have such a big advantage is they don’t have the hurdle of developing customer trust in the buying process. 

A statistic I read from Survata that I thought was a marker for this trend was that 44% of all product research by consumers was done on Amazon. That was back in 2015. That compares to about 30% for major search engines and 20% direct to retail stores. 

1 in 4 households have and use Amazon Prime. But keep in mind that is the product research only. 

What is not factored is the percentage of buyers that went to a retail store or small niche site to buy a product they found through a search engine, then went to Amazon afterwards to buy the same or similar product.

Customers buy from sources they trust. 

Initial trust can be established through credible referrals, marketplace visibility, mutual value exchange and then it is repeated out of just plain old habit. 

So where does that leave the Affiliate Marketer?  

"As you look towards your long-term strategies, you need to think about how you are creating or aligning to trusted sites or networks." 

You may have the greatest product in the world. 

Be the most honest person in the world. 

Have the fanciest looking website and easiest checkout process on the planet. 

But it won’t make a difference if your prospective customers have questions about your credibility. 

One of the ways credibility can be enhanced for first time transactions through reference and influencer partnering.

Don’t have an Amazon store? Why not? 

That might not be your thing and it does not have to be Amazon, but you better figure out how to increase customer confidence one way or the other.

Consumer advocacy sites that are trusted can be real sources of power for the affiliate marketing and e-commerce business owner in general. 

Think about building one of these sites or partnering with one, or advertising directly there.

But you’re probably saying, I don’t have a product or store. I just have a landing page and direct traffic to someone else. 

I think one of the major things we will see pick up speed is the increasing reduction in “click confidence” from consumers. 

We have been so concerned as business people about purchase confidence that you are going to start seeing click confidence plummet as well. A consumer won’t even click your ad in FB or subscribe on your landing page without first checking you out.

Sound crazy? Don’t laugh too hard because it’s happening now.

These are just a few ideas but the Affiliate Marketer that is constantly looking for ways to increase their rapport in the marketplace whether through their site, partnering, or influencer marketing will be the winners in the long run.

Affiliate marketers will have to work harder in the future to earn commissions and be successful.

So is Affiliate Marketing Dead?  

Not at all, but if you don't adjust your business for these things, your business will be. 

But hey, that will weed out a bunch of competition and create more opportunity for everyone else.

To Your Success

Shawn - Funnel Rush

This article is not legal advice. Funnel Rush is NOT a law firm and the author is NOT a practicing attorney. An attorney was NOT consulted in the preparation of this article. The author makes no claim as to the accuracy or currency of the data or relevancy to the reader. The reader is strongly encouraged to investigate all aspects of this article and evaluate the application to his or her business.  Forward looking statements made in the article are not firm predictions or projections but opinions only. The author is not responsible for any actions taken by readers based on the article content. Readers and businesses are encouraged to seek personal legal advice from an attorney for their business.
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