The September 2011 issue of Website Magazine — which was distributed to every Affiliate Summit East 2011 attendee just a few days ago — has an interesting article where Peter Prestipino, the magazine’s Editor-in-Chief and good friend of mine, analyzes the affiliate marketing industry in light of data from 2011 AffStat Report released earlier this summer. It’s a solid article, but there’s one thing in it that I do not agree with. On pages 32-33 we read:
High Turnover Plagues the Industry
Know at the outset that affiliate marketing is difficult. Perhaps the most disconcerting aspect of the report is that the turnover is unusually high.
Forty percent of affiliate marketers have been involved for less that three years, and 32 percent have been involved for four to six years. That, of course, leaves 28 percent that have been involved for seven years or more.
A highly critical analyst might predict that the chances of success are low with such a rate of turnover. But for those who have achieved some success, they stick with it as the returns are measurable and can be extremely positive.
I would disagree with that analyst. So we see:
- less than 3 years — 40%
- 4-6 years — 32%
- 7 years or more – 28%
Per a 2008 study by JupiterResearch, affiliate marketing was expected to grow “at a compound annual growth rate (CAGR) of 13 percent” between 2007 and 2012 [source]. Its revised version, which was published by Forrester Research in Fall of 2009, forecasted “the affiliate marketing industry to grow from $1.9 billion in 2009 to $4 billion by 2014” [source]… And the industry has been developing this fast not only in the recent years. Back in 1994 out of mainstream online retailers it was only CDNow.com that had an affiliate program. In July 1996 Amazon.com started theirs… Today nearly all online retailers from the Internet Retailer’s Top 500 list have affiliate marketing programs in place. And looking just at the top affiliate networks we see around 20,000 affiliate network-based programs with hundreds of thousands of affiliates involved… No, the above stats isn’t implying high turnover rates — while, of course, there are both affiliates, and merchants who try it and drop it; but in most cases I tie this to their own approach(es) — or low chance of success. It’s more or less mirroring how the industry has been developing over the past 7-10 years.
Whether you agree or disagree with the above, I’d love to hear your thoughts on this one too. Please use the “Comments” function below to add your take on this.
9 thoughts on “Affiliate Marketing Has High Turnover and Low Chance of Success?”
While I agree that there are some people who try it out and it is not for them, I completely disagree with the interpretation of these statistics that there is a high turnover rate. I agree much more with your analysis regarding an increase in the overall business model in the last couple of years. More merchants are embracing affiliate marketing as a sales channel. More bloggers are trying affiliate marketing for revenue generation. Add to that the increase in online coupon use, new mobile affiliate marketing opportunities, etc. The “chances of success are low” only if you don’t take it seriously.
Thanks for your comment, Tricia. It’s good to read an affiliate’s take on the subject.
I would have to say that the growth of the industry and the newness of the affiliate marketing business would lead to similar statistics as is claimed to support high turnover.
I guess so, Steve.
Considering that most businesses in general have a much higher turnover rate within the first year (I believe restaurants have almost a 90% failure rate with the first year or two), I don’t think the affiliate business has that high of a turnover rate as he said. Running any business is hard, and I would challenge anyone to find a business that has a higher success rate than the stats given. If there is, I need to get into that business 😉 Honestly, the success of your business (affiliate or not) is not determined by the turnover rate, but the willingness to succeed. If you have the motivation, you can get into an industry with a 1% success rate and still do well. If you’re lazy, you can get into an industry with a 99% chance of success, and still be a failure.
Truer words never spoken, Jason (re determination, self-motivation and “willingness to succeed”)! Thank you for taking the time to comment.
Great post, Geno. Jason’s observation is spot on.
Any business is difficult to startup, operate and become successful long-term. It takes time and dedication to be a pro in the affiliate marketing business, just like in any other industry. And while laziness may be one reason why so many people quit, I think that lack of education, and the absence of a business plan or strategy from the onset are also reasons why people are challenged in this industry.
Useful, but brief discussion: I am trying to determine whether to add an affiliate marketing arm to my brand, and looking for resources to help me do so?
What is the usual ROI for merchants who establish such programs? Is it like restaurants, as above, for all comers?
What should I expect in return for a program set up fee and monthly management fee, and which affilate managers take risk as well as reward?
John, thank you for your questions. Solidly-built affiliate programs bring in positive ROI, and it is definitely an area to explore. I would be happy to consult with you if you want to reach me at 1-888-588-8866 or via email. Alternatively my Online Guide to Affiliate Marketing [for Merchants] compilation as well as my newest book should give you answers to your questions.