Affiliate Marketing Advantages and Disadvantages to Merchants

Affiliate marketing is the marketing of products by agents or affiliates who are appointed by the owner of the products. Upon the purchase of the product by the customer who is introduced by the affiliate, the affiliate is paid a portion of the sales proceed. These affiliates typically use the following methods in promotion:

1. Creating a dedicated product site or an review site to promote the product
2. Using Pay per click advertising or advertising services offered by major search engines
3. Using social network like Facebook and Myspace to network with people who are interested in the products
4. And many other methods.

What are the advantages and disadvantages of having an affiliate marketing program to a merchant?
Advantages

• On his own, the merchant has limited resources like money, time and effort to promote the products. If he starts an affiliate marketing program, he would be able to access the combine resource of a bigger pool.
• The merchant is may be good at things other than marketing for example he may be good at programming. Rather than spend time on marketing these products, he can concentrate on creating updates or new products
• There is a lot of affiliate marketing networks that can one can join in with little cost. They are able to handle the logistic portion of promoting the product. This includes collection of payment and delivery.
• The merchant is the owner of the product. He commands the highest margin and he can observe how his affiliates market his products.Disadvantages
• To interest affiliates to promote the product, the merchant may need to give high commission to the affiliates and maintenance fees to the affiliate marketing networks
• The merchant cannot control how the affiliates go about promoting the product. If they use some black hat methods in promoting the product, it may affect the reputation or branding of the product.
• Though affiliate marketing allows the merchant to free up time to do other things, he would still need to manage it. But not all merchant knows how to set up the right incentive scheme to attract good affiliate marketers to promote his products.
• The merchant would need to package the product in a way that would attract the affiliates marketing.

After evaluating the advantages and disadvantages of internet marketing, the merchants may be worried about pushing the product out to the market. But my take on it is that in business, there is always risk. We just have to increase the odds in business to our advantage.

All the best in the adventure!

Matthew is an internet marketer who shares at http://www.internetcitymarketing.com various internet marketing methods that he uses to promote his websites.