How Does Affiliate Marketing Affect Traditional Advertising?
How Does Affiliate Marketing Affect Traditional Advertising?
When online commerce was very much in its infancy, many commentators seriously doubted its ability to ever become a viable, sustainable business model. Now, ten years later, we can see from the burgeoning growth it has enjoyed, that online commerce will be a massive factor in not only the near future, but also as far into the future as one can see.
Not only has standard commerce become established, with virtually every big business in the world now enjoying an online presence, but new models of business have evolved from this amazing growth. One of the most successful of all of these models is affiliate marketing.
Because of the fact that merchants have no need to employ staff to do selling for them, and no need to do any paid advertising in order to find customers, affiliate marketing is very popular with them. The big difference is that when you employ staff, the staff must be paid, whether or not you sell any products or services.
Advertising must be paid for, irrespective of its efficacy. With promotion by affiliate, you only ever pay when sales are made. The only downside of this, of course, is that commissions must be paid, which are often sizeable, especially when the products are digital downloads.
Traditional advertising expenses can be absolutely enormous. For a large company, mass advertising in popular media such as the national press and on television may be sustainable, but it will certainly eat very much into the potential profits, and in the case of these media, especially television, campaigns often have to be designed and paid for in advance.
If a product just does not sell, or a campaign is proving to be totally ineffective, there is no way to avoid the embarrassing and painful losses that will ensue. It is easy to see why an affiliate marketing model is so appealing in this case. Yes, you still have the expenses of product development, and the expense of customer service, but with the affiliate marketing model, risk is cut to the minimum because it costs nothing to recruit the affiliate, and you pay nothing to the affiliate unless sales are made.
Given that, you might have expected that traditional advertising would be greatly suffering from the emergence of the affiliate marketing model. In practice, most of the major companies are still paying as much as ever for traditional forms of advertising. If they stop, and just rely on affiliates, sales drop.
There is still a need for each company to get its brand well known, and get its name out in front of the buying public. Internet affiliate marketing is mainly seen as an addition to, not a replacement for, traditional advertising. The future for traditional advertising remains as rosy as ever.
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Tags: internet advertising, affiliate marketing, online advertising, affiliate programs, online commerce
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September 23rd, 2008 at 8:47 pm
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