If you’ve recently embarked on a journey to create and monetize your own website, then you’ve likely seen the terms “affiliate marketing” and “lead generation” thrown around all over the place.
Since the two concepts cover similar territory, it’s worth diving into their precise definitions, the similarities and differences between them, and the pros and cons of enlisting them as monetization strategies.
Let’s start with some simple definitions:
- Affiliate marketing – this strategy involves referring people to products or services via a link on your website or social media page. You will receive a commission every time someone makes a purchase or takes the desired action via your link. This “desired action” could be sharing their contact details with the company or signing up for a free trial.
- Lead generation – with lead generation, you take information from people on your website and then either use it to market your own products and services or sell the information to a company for which they’re an ideal customer. Here, you’re getting paid for the qualified lead, regardless of whether the person ends up becoming a paying customer.
The first thing that should be clear from this is the fact that, if you have your own products or services to offer, lead generation is the strategy you’ll need to boost engagement and drive sales. Though you may wish to support brands offering complementary products via affiliate marketing, for the most part, you’ll want to focus on developing a strong lead generation strategy.
If you don’t have your own products or services on offer, then you can consider both affiliate marketing and generating leads for other companies as effective strategies for monetizing your website.
To help you determine whether you’d like to work with either or both of these revenue generating options, let’s now have a look at the strengths and weaknesses of each.
Affiliate marketing: benefits and challenges
Affiliate marketing is probably the term you’ve heard more often if you’ve been researching blog monetization strategies and you don’t have your own products or services to sell.
The strategy is simple enough to implement. The challenges lie in actually getting people to engage with your content and follow your affiliate links.
The benefits of affiliate marketing
1. The internet is full of quality brands to work with
You may be surprised to learn that affiliate marketing has been around for almost as long as the internet itself. It kicked off in the 1990s alongside the rise of eCommerce and cookie tracking.
It has grown steadily ever since, gaining traction as one of the internet’s most effective marketing strategies. Legislators have had to play catch-up with the rapid changes, making it important for affiliate marketers to stay up-to-date with the legal requirements.
This growth has also led to an uptake of affiliate marketing by almost every industry imaginable. This means that, whatever your niche happens to exist in, you’ll have a smorgasbord of brands to choose from.
The more affiliate programs you sign up with, the more your choices will expand. Not only does this allow you to be selective in the brands you support, but it also allows you to drop any programs that aren’t working for you in favor of those that are getting results.
If an affiliate program shuts up shop or changes its commission structure in a way that negatively impacts you, it’s good to know that you’re not just stuck with it. You have room to move due to the sheer volume of companies offering affiliate programs.
2. It’s super easy to get started
Signing up with an affiliate marketing program is as easy as filling out an online application, waiting for your approval, then creating content in which to add your affiliate links.
Though you do need to put work into marketing your website and sharing your content, in terms of the affiliate link, once it’s set up, it’s primed to be making you money every time someone follows it and makes a purchase.
The hard part isn’t getting started. Rather, your difficulties will lie in building up your web traffic, gaining loyal followers, and creating the kind of content that incentivizes them to click through and buy the products or services you’re recommending.
3. Easy referral tracking
As an affiliate marketer, you’re blind without data to analyze. Thankfully, there’s plenty of technology available to make this aspect of the work a breeze; and for the most part, this tech is built into the affiliate programs you’ll be joining.
Some of the major affiliate networks include:
4. Affiliate links can go everywhere (so long as you follow the rules)
Your affiliate links, discount links, and coupon codes can be dropped outside of your website too. You can include them in guest posts you write for other blogs, social media posts, and newsletters (though Amazon doesn’t allow affiliate links in emails at the time of writing).
The challenges of affiliate marketing
1. The dreaded cookie monster
In most cases, link tracking relies on cookies that are generated on the user’s computer once they click through. If they’re blocking cookies, or if they clear their cache before they end up making a purchase, there’s a chance that the connection between your link and the sale will be lost, thus robbing you of your commission.
To combat this, the big affiliate programs employ alternative tracking methods. If you want to ensure you get paid what you deserve, it’s worth taking some time to check up on the backup tracking methods used by the affiliate program you’re considering signing up with.
This will also fill you in on the timeframes each company has in place. Though it may seem a bit unfair, some cookies only have a set duration, and if the customer buys even just a few minutes outside of that window, you may not get paid.
It’s speculated within the affiliate marketing community that some companies analyze their data to see how long customers deliberate before buying, and then set their cookie durations to fall just outside the average. Though this is only speculation, it’s still something to be aware of.
2. You’re kinda stuck with the set commission rates and rules
Sadly, even if you think a company’s cookie duration is unreasonably short, as a new affiliate marketer, you’re not in a position to negotiate. The same goes for low commissions. Even those who’ve proven their worth by sending through plenty of customers often struggle to negotiate higher rates.
The companies are also free to change their terms of service at will, meaning if you’ve been doing well, you could find that a company decreases their cookie duration, and all of a sudden your steady income dries up. For this reason, it’s worth having a diverse range of website monetization strategies in place. For the vast majority of people. affiliate marketing is far too volatile to be their only source of income.
3. Affiliate links can mess up your SEO if you’re not careful
When affiliate marketing is done in an ethical way, it benefits you, the companies you work with, and the customers you send their way. However, there are so many people being spammy with it that search engines like Google tend to down-rank pages containing affiliate links.
So, if every page of your website is stacked with affiliate links, your search engine ranking will suffer, no matter how on top of the SEO game you are. Though this may seem frustrating at first, it’s actually a good thing as it encourages you to keep on track with creating content that’s genuinely engaging and valuable to your users.
4. No purchase = no money (in most cases)
As we mentioned earlier, the hardest part of affiliate marketing is incentivizing people to not just follow your link but to make the purchase. Statistics show that affiliate links only have a 1% conversion rate. Though this may seem dishearteningly low, you can work with this figure. In fact, at just a 2% or 3% conversion rate, you can be making decent coin.
Lead generation: benefits and challenges
In the introduction, we learned that lead generation differs from affiliate marketing in that you’re the one collecting customer data, and you get paid for their information, regardless of whether they end up purchasing anything. Though this sounds like a fantastic deal, there are plenty of challenges that go along with the benefits of this monetization strategy.
The benefits of lead generation
1. There’s scope for higher profits
Lead generation is only available in a select few industries (more on this to come in the challenges section!). The benefit with this lies in the fact that these industries tend to earn more from each successful sale, translating to higher commissions for you.
Some of the key industries that will pay you for qualified leads include:
- Legal practices
- Many insurance companies
- Builders, architects, and interior designers
- Credit card companies
- Mortgage brokers
- Dating websites
- Colleges and universities
- Plastic surgeons, massage therapists, and cosmetic dentists
This list is not exhaustive, but you can see that the companies that pay for qualified leads tend to also be the ones that charge a high price for their products and services.
2. No purchase = you still get paid!
While affiliate marketers must struggle with that 1% conversion rate we mentioned earlier, your lead generation efforts won’t be affected by this. All you need to do is have potential customers fill out the information required to meet the company’s definition of a qualified lead, and you’re eligible to be paid.
3. Technology is on your side
You have plenty of choices when it comes to creating your forms and tracking your progress with lead generation. WordPress plugins like Thrive Themes and software like Optin Monster offer you easy to use templates which you can embed in a page or turn into a pop-up, depending on your approach.
These tools are so sophisticated you can actually adjust how they appear to different visitors based on the information known about them (the most common metric being their geo-location).
You can also monitor the success of different methods and then change your approach to suit. Maybe the pop-ups weren’t working but people were happy to fill out embedded forms, or vice versa. Keep an eye on what’s hitting home and what’s not with your target market, and adjust your approach as needed.
4. You have room to negotiate your rates
While affiliate marketers are, for the most part, stuck with whatever the affiliate programs are offering, you may work directly with each company you sell leads to or you may sell via a lead aggregator. Either way, you get a benefit and a trade-off.
Go through a lead aggregator, and the whole process is streamlined and pre-arranged for you. Sell directly to the companies you work with, and you’re in a stronger position to negotiate a better commission per lead.
If you’re someone who loves the thrill of making big sales, this aspect of lead generation will probably be the most exciting thing you read in this article. Establish good relationships with the companies you work with, follow through with plenty of qualified leads, track and analyze your data, and you’ll be in an excellent position to put your persuasive speaking skills to the test and negotiate lucrative deals.
The challenges of lead generation
1. Not all industries will be open to you
Though you’ll be able to work with some high-end companies, you’ll be more limited than affiliate marketers. In a lot of industries, it simply isn’t worth their while to pay for a qualified lead when there’s no guarantee that the person will buy.
2. Qualified leads only
The criteria for a qualified lead will likely be different for each company you work with. Miss a key piece of information on your form, and you won’t get paid.
A potential customer’s geo-location is usually one of the most important pieces of information because it doesn’t matter how motivated they are to buy, if they’re nowhere near the business, there’s no point in connecting them.
As with affiliate marketing, it falls on you to be ethical in bridging the gap between your website visitors and the companies you work with. It works out in everyone’s favor if you use your website to connect people who have a need or a problem with reputable companies who can solve it for them. Keep an “everyone wins” mentality, and you’ll set yourself up for success.
3. Payment issues
This is an issue for pretty much every freelancer, contractor, and small business owner. Since you provide the service first, you’re at the mercy of your clients in terms of when they decide to pay your invoice.
To save yourself the stress and dramas involved in chasing people for payments, it’s important that you set clear criteria up-front and then put measures in place to ensure you’re paid on time, every time.
Where to next with affiliate marketing and lead generation?
Depending on your niche, you may be able to work both affiliate marketing and lead generation into your website monetiztion strategy.
If you’re leaning more towards lead gen, check out our top tips and strategies for lead generation success.
If you think affiliate marketing will be more appropriate for your niche, then take a look at these insider secrets to mastering the art of affiliate marketing.
As always, if you have any questions, please feel free to drop us a comment below. We’re more than happy to help out.