Warning: The Death of Affiliate Marketing is Coming Soon
81Why is Affiliate Marketing Dying?
What did you think when you read this headline? Did you think this guy doesn’t know what he is talking about or did you think… man I had better read this before I waste a lot of time trying to break into this business?
First off I am an Internet Marketing Expert – I do not say this to brag, it’s certainly not anything to brag about. I’d much rather say I was a point guard for the Lakers, an Oral Surgeon, or a Company CEO. Those are things worth bragging about. I say I am an expert because I want you to understand that what I am about to tell you is not based on conjecture; it’s based on fact and experience.
I run a company that owns many internet properties. Our primary focus is on Affiliate Marketing Strategy and Implementation. A few years ago Affiliate Marketing brought in big money for my company. With each passing year my company grows the Affiliate Marketing Revenues are declining as a percentage when mapped against site traffic.
To be honest I’ve known about this since about 2004-2005, but it really seems to be accelerating now. During this time I have personally transitioned many of our top Properties to an Adsense Revenue Model followed by an Affiliate Model.
Main Reasons Why Affiliate Marketing is Dying
That’s a great question with a simple yet complex
answer. First off the competition if
growing as more and more people want to get involved in businesses they can run
from home... but most of these people are unaware of the Affiliate Marketing problems and will never make much money. Many of these people have
been recently laid off or lost their jobs due to the economic downturn. If they knew what I do about Affiliate
Marketing they would think twice before just jumping in. These people need to know the truth about Affiliate Marketing.
The reasons…
- Browsers are now “Killing Cookies” at an alarming rate. If you don’t know what a Cookie is don’t even think about trying to market affiliate products until you do… it’s beyond the scope of this article, but you need to find out.
- Security Software is blocking cookies before your affiliate code is even set in your visitors browser
- Governments are aggressively pursuing legislation to both tax and regulate the internet
Some Quick Examples of Why Affiliate Marketing is Dying
Zone Alarm Claims you can get over 1000 attacks by just looking at a website. 1 in 10 sites are booby-trapped1, silently installing viruses and spyware or tricking you into revealing your confidential information.
1Based on information from "The Ghost In The Browser, Analysis of Web-based Malware" by Google, Inc, and reported in an article in The Register on May 11, 2007.
Because of the onslaught of problems brought on by the Affiliate Marketing Industry software companies are reacting aggressively to STOP security problems, and Affiliate Links are the innocent victims!
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Some websites like Expedia will detect if a Cookie is blocked and give instructions on how to turn cookies back on. Why are they doing this? Because they want to track you! This is good and bad. It tells the visitor immediately… wow something is wrong with the link I just came from (Likely an affiliate link). That is bad for you as an affiliate marketer. If cookies were not being blocked or turned off Expedia would not invest in this problem.
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Internet Explorer 8 Blocking Affiliate Cookies
This from a Washington Post Article:
Most online advertising is served to Web pages by advertising networks -- third parties. Blocking the ads would cut into the money Web publishers rely on, he said. While other ad blockers have been around, this feature worries some because it would come built into the world's most popular Web browser.
A Microsoft spokesman said that the feature, to be known as "InPrivate Blocking," was never designed to be an ad blocker, though "there may be ads that get blocked."
Instead, it was designed to stop tracking "pixels" or pieces of code that could allow third-party sites to track users as they move around the Web.
And here is a snippet about Firefox
Add ons and Spybot Search and Destroy
“… the Firefox plug-in AdBlock, which eliminates most display advertisements automatically and gives me the freedom to block Flash and other annoying components of the Web.
“Microsoft’s addition, though, makes that a default setting within the browser, one that people who aren’t prone to adding plug-ins and such on their computer will love.”
Spybot Search and Destroy - What
is being done to address ad-blocking programs that block cookies and / or scan
for and delete cookies? For example, Spybot does both, it blocks affiliate
cookies from being set and it deletes affiliate cookies after scanning. Spybot
has been downloaded hundreds of millions of times, over 106 million times from
download.com alone.
There are many other ad-blocking programs that identify affiliate cookies
during scanning and delete them. Affiliate cookies are harmless and should not
be labeled as malware by these programs, but unfortunately they are identified
as such. There is no doubt that this is causing affiliate programs and
affiliate marketers many lost commissions, especially among affiliate marketers
that cater to tech-savvy computer users.
This Commentary from a Popular Marketing
Forum Explains How Internet Security Technology is Taking it's Toll on Affiliate Marketers
The affiliate industry is probably on the verge of a major shake-out as new technologies are increasingly blocking more banner impressions and further interfering with cookie tracking. These various technologies are all ushered in under the guise of "privacy" and everyone agrees that internet privacy is a valid concern. However, privacy concerns are now making a publisher's right to earn money from their content take a back seat to privacy hysteria which threatens the livelihood of many smaller publishers. The net result is lower affiliate revenues and merchants getting a partial "free-ride" off affiliate programs hosted on innocent publisher’s sites.
Who is to Blame for Killing Affiliate Marketing?
Clearly in my view it is the large affiliate networks themselves. They have known about the problem for years and done nothing to circumvent it. Why? Because they are making tons of money off of people who have no idea what is really going on. Every day 1,000’s of people fire up new affiliate sites completely oblivious to the problem. They read some hype or myth about people easily becoming millionaires from affiliate marketing. It simply is not true. But it doesn’t matter because this seemingly endless stream of new online marketers is working for FREE! That’s right for FREE.
In affiliate marketing you don’t get paid until you make a sale! And often you won’t even be paid when you make a sale. Most people new to affiliate marketing have heard about ClickBank. But what they don’t know is that ClickBank requires you to sell at least 5 or more different credit card numbers and at least 2 different payment methods (Visa, MasterCard, or Paypal). They call this their customer distribution agreement. Then if you don’t make a sale in 90 days your account goes dormant and they start taking back your commissions at the rate of a dollar a day until you make you next sale!
Add to this Thresholds – both time and dollar amount and you may never see a payment for your work. This happens all the time. It’s free money to the Affiliate Program!
Forrester Research in August 2009 reported 59% of online shoppers are abandoning shopping carts at the point of sale. This is getting drawn out, but you should know if you are attempting to be an affiliate marketer the odds are very against you!
If you are planning on a career in Affiliate Marketing You really should read this article:
http://www.vinnylingham.com/specialreports/cookiedetections/
What Can You Do to Avoid a Dying Affiliate Marketing Industry?
Still want to give it a go? Well my advice is simple, do what I am doing. Focus on Adsense. Why? Because Adsense is run by Google and Google Affiliate opportunity through Adsense still works!
You get paid when someone clicks on your ad period. It may not be much or it could be a lot.
I’ve written an entire hub on how to make money with Adsense Here
and another on
How To do effective keyword research so you can make money with Adsense Here.
I use Adsense and I click on Adsense Ads (but never my own). Why would I click on an Adsense Ad? Because if I want to find something I know that it’s often easier and faster to find exactly what I want from Adsense. I will actually search Google and click Adsense because it’s faster and easier to find what I want.
I don’t care if a webmaster gets paid because of my click. In fact that is a good thing, because any webmaster who has properly placed an advertisement and helps me to find what I want quickly and easily deserves to be rewarded. Sure I know the advertiser will pay a few pennies, but that’s okay because they got what they want too. They got me as a customer. Win/Win.
There you have it. Hopefully a better method than Cookie Tracking will come along, and the Government will stay out of the way of Internet Development, but don’t count on it.
If you really want to make money online then sell your own stuff! This is what I am working on now!
The Death of Affiliate Marketing
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I didn't understand all of what you wrote but from what I did....it doesn't look good. The machine is eating itself because it got too big.
A well written hubpage, although to be honest I was expecting an affiliate product of some kind to be shoved in my face, but I was pleasantly surprised to see that it was a genuine concern about the decline of affiliate marketing, but there are new measures being set in place to counter act most of what you speak of in the affiliate marketing industry, software cookie blockers has always been a problem but I reckon like you say the people who have their own products will be the top earners and that's what we should all strive for, instead of trying to put money in others pockets through blind recommendations!
I enjoyed reading the hub, scary though it is. I've had concerns myself about cookie tracking. I'm not selling my own products at this stage, but I have opened an ecommerce business and I am sourcing goods from suppliers to sell directly.
Update: There is a current proposal in the European Union that any company wanting to promote products online also have a "Bricks and Mortar" establishment.
I've always wondered why I seem to get a lot of visitors but my stats don't show many clicks. I guess this explains some of it. Maybe I should try something else. Thanks for the great info.
Hi Mike,
I don't understand why a successful businessman like you use hubpage, maybe you want to promote libertarian belief here, but I think you should teach us more about entrepreneurship and stuff.
One of the best solution to defend capitalism is for successful entrepreneurs to mentor the employee, the poor, and the ignorant to be as successful as them.
It may look like I spend a lot of time here... I don't. I spend most of my time working on my business. I just completed a 600+ page web property that took me 8 days... working about 7 hours a day straight just on that site. I never come here until my other work is done.
I'll let you in on another secret... I type... very very fast. I also use Dragon Natually Speaking to do a lot of my "commands" while working.
And I make a pretty good amount of money from hubpages. You would be surprised.
Write one good hub that gets a lot of traffic. It may take an hour. And that hub stays up for how many years?
So I invest an hour... and the return is substantial. If I make only 1 dollar a day from that hour invested it's the same as making $365 an hour!
Think about that for a moment.
Plus hubpages lets you include:
Affilaite Links
Links to your sites
And a way to meet and connect with new people.
So change your focus and look at all the positive benefits. You can write on Hubpages and your hubs is you do your keyword research correctly get ranked almost immediately. You get visitors on the same day.
I absolutely agree with you about affiliate marketing. I host a series of websites, but hands down, I make more money through Google and I do very little work to put the Google Ads on my website. I'm currently considering removing Clickbank from my websites, as I believe they're one of the reasons my stats have decreased.
It is also true what you wrote of earnings on HubPages - write one really good hub (usually one that isn't written for marketing purposes) and the money will follow!
Thanks for writing about this. I use affiliate marketing on my business website and of course on HubPages too, with Amazon and eBay. But lucky for me, I do sell my own stuff too. I caught how you mentioned that this is the only safe way to make money. I agree with you that we can't expect affiliate marketing to last much longer. I already see the same problems that you talked about. Great hub. Voted up.
The main problem for Affiliate Marketers extends beyond Organic Search to the Affiliate Consolidates themselves (Shareasale, Commission Junction, Amazon, etc.). The technology to track affiliate sales and thus reward commissions to the affiliate has not made any real improvement.
If you use a redirect - which I often do - to shorten links and allow more accurate tracking Google will likely see that redirect as a 404 error even though it is working properly. Google sees nearly all framed content as 404 errors... likely including iframes (I haven't bothered to test this lately).
This creates multiple problems the first being the cookie can be stripped out and no commission rewarded, the second being Google is really hammering on sites with Broken links. I have a site which uses a lot of affiliate redirects and it's getting hammered in Organic Search. This is well established site that is over 10 years old!
eBay is switching to RSS 2 which may cause older scripts to hang or crash.
The list just goes on and on. Google controls search, and without a viable non organic marketing plan (Social Networking, Word of Mouth, Paid Inclusion, etc.) your business as an affiliate marketer doesn't stand a chance.
So if you can sell your own product that is definitely the way to go. In my best estimation affiliates are "lucky" to collect on 30% of the revenues earned via their marketing efforts. Can you afford to work so hard for 1/3rd of the commissions you earned?
So if you are still trying to make money as an Independent Affiliate Marketer you had better make sure your cookies are tracking, your sites are error free and do not contain broken links, and you are very lightly using advertising "above the fold". I am going to very soon eliminate all redirects and cut way back on the use of affiliate links per site. And of course text, text, text.
Times are definitely changing.
FYI: If you think that just getting a lot of links is going to make a difference in your efforts you are mistaken. Google is measuring on site Metrics like Time on Site, Entrance and Exist Pages, Where you were BEFORE you visited, and Where you go AFTER you visit a site to help determine what they will display.
Figure it all out and you'll be just fine... UNTIL NEXT WEEK WHEN THEY MAKE YET ANOTHER CHANGE!
Build your BRAND!
So I have a question then... if you think affiliate marketing is a no-go anymore... then what do you recommend? Just Adsense and selling your own products?
The Adsense and Search Teams at Google remain separate (Meaning you can't trust Adsense advice vs Search Advice)... search traffic is more important so trust the search information. However you can bet there will not be a search penalty on sites that use Adsense under the terms of the TOS. So Adsense is a safe bet. And you should be doing it if you want to make money writing articles on any site you own or on Hubpages. There are tips that will help but this is not the place, I've written about them before. Key being matching ads to user intentions. I have made a lot of money with Adsense over the past 9 years now.
The "problem" with Adsense is you are sending people away from your offer who will likely never return. So you had better be getting a high pay per click to make it worth doing. Meaning be very careful when mixing adsense with affiliate. Don't kill a $100 sale for a 5 cent click
Selling your own products - digital or otherwise is the way to go if you can do it.
My recommendation for affiliate marketers who want to keep doing affiliate for commision is FOCUS on creating an audience and recommending products via review. And TEST EVERYTHING to make sure you get paid.
This is a model that works for HubPages. And be sure your reviews are honest and "hands on". I just did a review on a flashlight I bought off of Amazon. I wanted it, and I wanted to be able to endorse Amazon as a purchase vehicle - plant the seed that it is a good deal because I bought from them and it was a good deal for me.
I can not emphasize enough that you test your links from the entrance to your page all the way to the last click at the checkout. I found out the hard way that some of the links I had cloaked were hanging up the vendors shopping cart. So just checking to see if it goes to the site is not enough, make sure you can buy it through your link... even if you don't you need to go clear through the process.
Let me give you an example of a tight niche that can work for an affiliate. Something that I promote and anyone can chose to promote although it is highly competitive.
Protein Powder
Your niche can be any sport related activity you like. Protein powder can be integrated into your writing on a lot of levels. You can find one quality source. You can buy from that source first to make sure it's good - you can write about your purchase experience, the time of delivery, the condition of the package, photo graph the unboxing - unboxing reviews are big on Youtube. You should be doing Youtube by the way. And you can talk about he price, the protein per serving, the taste, the flavor, recipes you like.
You could later integrate other tightly related products. Say Creatine. Explain the benefits in addition to the protein. Tie them together.
You end up building a niche around your own experiences and expertise. You focus on that one reliable vendor and when they prove to make you money you keep replicating what you have done with new products that they carry.
Damn that's awesome! I've been wanting to get out of the rAt race 9-5 lately but it's like hard to decide where to start again. I have a squdioo lens that's ranked #1 for best bass guitar pedals. It doesn't make me much but I haven't touched it since 2009. It's been making me more money consistently now since Jan 2012. I just don't know if bum marketing is still in these days but I definitely want to get back into it. Do you recommend just starting out over again using stuff like Hubpages and Squidoo to implement affiliate marketing? Also I knew about the whole not mixing Adsense and affiliate marketing but I guess knowing now how Google Panda is slapping a lot of sites and pages and content now is REALLY becoming king do you still suggest people to use article marketing as a means to make an income?
Also I think it was super cool of you to response with a full explanation man. Thank you so much for that. If you were in Florida I'd definitely buy you a beer (if you're a beer lover of course). :)
I have managed to escape nearly all of Google Panda's updates except for one in Mid April on one site. But on the 24th they released "Penguin" and I got hammered. And so did a whole lot of other people. I've never been a black hatter so the "why" is escaping me (and others).
You should read both of these articles:
http://searchengineland.com/google-launches-update
http://searchengineland.com/did-googles-search-res
http://marketingland.com/is-googles-over-optimizat
2 days ago I pulled about 90% of all outgoing links off of a site of mine I started in the late 90's that has never been caught up in anything until "Penguin". The site has 1 block of Adsense and that's about it. I expect by the end of the month to know if anything on the site itself is the culprit. If the ranking return I will assume that onsite factors are at play. But if the ranking does not return I will know that it is the links pointing to the site that are the real problem.
And that opens a whole new can of worms. Rand Fishkin recently challenged people to try and take his site down by pointing links to it from other bad sites. There is speculation that this is effecting ranking.
Think about the ramifications from that. Imagine a whole new world of Negative SEO where companies intentionally sabotage their competition with linking schemes. That's what many believe is now going on.
This will paint Google in a very negative light and that's bad for profits. I suspect Google is going to have to pull back or at least reduce the threshold on this latest algorithm change.
Bottom line is you can not depend on Google to make a living. HubPages itself got hammered bad last year by Panda which is why they pushed everything to SubDomains (Google told them to do that). Essentially Google told them "Your content is crap... move that content to subdomains so your better content will still rank. That's what they did and it works so far.
So where does that leave the Affiliate Marketer? It leaves them out in the cold. Because Google views affiliate content as junk content. It's super easy for them to filter affiliate links. But they will not kill them all together because they know there are quality sites that do work with advertisers. Which is why I suggest that you focus tightly on the affiliate products you are selling and keep those links tight. And don't use many of them. I certainly wouldn't use more than 1 or 2 maximum on a page.
Personally I don't follow Squidoo, I find it is harder to rank there but I know people have made money with them. I don't have the time to do both so I chose Hubpages over Squidoo. Easier to do, better rankings.
Beyond that I don't know what to say because I'm in the same boat as the "Experts"... baffled by what Google is doing recently. I also don't see search improving as a result, but I am reading about a lot of legitimate small business people and affiliate marketers getting hammered.
If you run a small business site then Google Local and local Social Media is your best bet.
BTW: Google makes is incredibly difficult to report actual spam because they want to do everything with software (Cheaper than people), but it isn't working.
Yeah I'm kind of freaked out because I do freelance link building and that's why I lost my salary. I was demoted to a freelance link builder now which is a blessing in disguise but yeah the company I worked for pretty much to see more organic hyper linking and now freelance writers are in even higher demand now. It kind of sucks but it's one of the big reasons why I'm looking to expand my knowledge more on social media marketing with affiliate marketing or...... Get better at writing which I hate and start freelance writing. :/
Dolores Monet Level 7 Commenter 2 years ago
Well, I really don't have much to worry about. I have not made enough money to tax. But give the little guys a break, sheesh! Why should the Big Guys get all the free ads and sales, while the promoters (us) get zilch? It stinks.