SWOT Analysis of Affiliate Marketing to know its strengths, identify the weaknesses, look for opportunities and be prepared for the threats.
You will read everywhere on the Internet that affiliate marketing is something where you can make truckloads of money, and though it is true to a certain extent, it is not as easy as you read them. So what are the Strengths, Weaknesses, Opportunities, and Threats or SWOT analysis of affiliate marketing?
I have been getting a lot of emails and comments about my Amazon Check that they have tried almost all autopilot software. Nothing seems to work for them and wants me to suggest—something where they don’t need to be doing anything, and it can create a cash machine online. Pluck the money whenever they want and whatever amount they want.
The truth of the matter is, it is not the reality of affiliate marketing.
What is SWOT Analysis?
SWOT Analysis is an acronym of Strengths, Weaknesses, Opportunities, and Threats. It helps us analyze the same (Strengths, Weaknesses, Opportunities, and Threats) of a project or person or business or partnerships. You can read about SWOT Analysis on Wikipedia in more detail.
So let us look at the SWOT analysis of affiliate marketing.
Let us consider the strengths of affiliate marketing for SWOT analysis. Let’s see why so many webmasters try and prefer affiliate marketing online.
The biggest strength of affiliate marketing is – the very pure form of marketing. By the pure form of marketing, I mean the marketer isn’t part of developing the product or providing the after-sales support for the product or does not need to be doing a lot of customer management hassles.
As an expert in marketing and sales, the marketer can focus purely on generating sales. One of the prime reasons the newbie webmasters are being attracted to it.
Moreover, as the expense related to development, support, and after-sales management is out of the picture, the affiliates can have really fat profit margins. To add to profit margins, the affiliates can offer multiple products to the same customer.
If we take an example of web hosting affiliates, you will see that there are a lot of web hosting review sites. The prime reason being that many host offer as high as 150% as an affiliate commission for driving sales.
So instead of setting up a web hosting business and managing sales and customer service, affiliate marketing to sell the hosting of some of the well-known hosts is a preferred choice.
The next in line for SWOT analysis of affiliate marketing are weaknesses. So, let’s consider the shortcomings of affiliate marketing and understand why it is not all-glittering gold.
As the affiliate is not promoting his product, there is very little he can control.
The quality of the product, sales, and after-sale services is the responsibility of the product owner to serve the customer properly. As an affiliate, if you are referring your blog readers or existing customers to other products, you should make sure the other product owner treats your referrals well.
Otherwise, your blog readers or customer can think that you are not referring to quality products. And want to make quick bucks as sales commission, and your reputation can be at stake.
The other point I consider as weakness is – A website not only needs decent traffic to make a decent income from affiliate marketing it also needs to have the right kind of users who are ready to take action or make a purchase.
If you don’t have the right kind of users, you may not make a lot of sales to make anything significant from affiliate marketing.
When it comes to making money from ads on the website, you can start accumulating tiny amounts in ads almost instantly. However, for making money with affiliate marketing, it can take time to make the first sale if you don’t have the right type of audience.
Many affiliates are doing affiliate marketing only for money without adequate knowledge. They want to become overnight millionaires. So it means they try to trick their users into buying things under them without verifying the genuineness of products.
The next in line for SWOT analysis of affiliate marketing are Opportunities. So, let’s look into endless opportunities that affiliate marketing offers if done the right way.
There are millions of products that an affiliate can promote.
Just to cite an example – Amazon has hundreds of thousands of products one can promote as an affiliate.
The exponential growth of the Internet and eCommerce is making affiliate marketing even more lively. I am sure I don’t need to cite stats and numbers for the growth of Internet usage and online eCommerce.
There are affiliate offers where you get paid as long as the customer keeps paying – recurring affiliate commissions for the product he or she purchased. It opens up the concept of real passive income online. I am not a fan of believing in passive income, but the still recurring commission for making a sale once can be considered as passive income.
Last but the most important section of SWOT analysis of affiliate marketing are threats. I think every affiliate should be aware of them. So let’s look at the threats in affiliate marketing.
The biggest threat to affiliate marketing is you can be making thousands per month and one email can make it zero the next morning.
Recent such email was from 2CheckOut and though I never promoted 2CheckOut as payment methods in India and so had no impact on my earning though
But a similar thing happened to my RackSpace Cloud Hosting Affiliate Account and iContact referral account in the past.
I was making a decent recurring commission every month for customers referred to them. One day got an email that they are moving to a new and improved system, and they discontinuing the current recurring referral system.
I was told that I would get the last payment on some date. Next, I need to refer new customers to the new system, and old recurring commission for existing customers will discontinue. Moreover, they switched from recurring commissions to one-time payments.
My view is, the next biggest threat to affiliate marketing is no entry barrier. So anyone can start a blog and compete with you. Product owners only pay for verified sales. So they don’t mind having anybody and everybody as their affiliate who follow their promotion terms of services. So it makes fierce competition among the affiliates.
Last but by no means the least threat to affiliate marketing is the source of the traffic to affiliate sites. Google Organic search has a clear focus on removing affiliate sites to a large extent. Moreover, pay per click marketing is also moving away for affiliate offers. Earlier Pay Per Click Marketing in Google Adwords, and Facebook Ads did allow affiliate links. It is all changing thick and fast to disallow affiliates.
Graphical Representation of SWOT Analysis of Affiliate Marketing