Is Affiliate Marketing A Sustainable Business Model

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Affiliate Marketing is the business model of the future!

Let me explain to you WHY ...

As more and more goods are sold and shipped in the online space, the online market evolved and finally last year on Black Friday, online sales volume has been higher than the traditional business of shopping in malls and stores in the US.

Fact is: We are not going back! The digital economy is progressing in the fast lane!

Traditional stores are dying rapidly and concepts like those of Amazon are the winners in the big game as they build their business on top of the internet and online infrastructure. 

Do you agree so far?

What is the consequence for the markets?
Goods are still being sold, just differently.

Traditional stores are normally resellers, right? They do not produce Lewis Jeans or Nike Shoes or Coca-Cola. Not even the brands produce through their own factories. Normally they are not even involved in the process of production.

Stores are Middlemen!

Let's analyze the process:
• Stores buy the goods from the brands and brands buy them from the producers. This is what is called B2B market (Business to Business).
• Then stores sell the goods to their clients. This is called B2C (Business to Client)

This is the VALUE CHAIN, building our economy!

THE DISRUPTED VALUE CHAIN

Now in the digital economy, the VALUE CHAIN gets disrupted!
But WHY?

The reason for the disruption can be found first of all in the marketing sector.

Clients are bombed with promotions all day when surfing the internet. This results in an enormous clutter for everybody.

Traditional Advertising

Billboards on highways, TV promotions, Newspaper advertising, Flyers, and so many more traditional marketing channels just stop working in a global environment, where everybody is consuming digital media on the internet.

Don't get me wrong, they still work and a business might still get customers from these channels. Also, marketing agencies still sell them to the clients but there are 2 main issues:
• They are too expensive in comparison
• Their reach is too small 

Traditional Marketing Agencies

Marketing Agencies in the traditional space are producing polished promotions for their clients and use their project budget to place these promotions. So they have reached people through the traditional advertising channels.

Marketing in the Online Space

These methods still work in the online space. Now modern advertising agencies place promotions for their clients in Facebook, Twitter, Google, Youtube, Instagram, SnapChat and all the new media channels and they try to pay influencers to spread their promotions even further.

Back To The Producers And Platforms

In the modern online world, there is Alibaba, providing a platform for producers to sell their goods to brands and these brands place their merchandise on Amazon.

Platforms provide these services and charge a fee. This is their business model.

Alibaba and Amazon produce and sell nothing! There are also no marketing agencies involved to present these giants to us.

How does it work then?

THE AFFILIATE BUSINESS MODEL

Amazon gets clients for the products on their platform through people who promote the products on the platform and pays an AFFILIATE FEE to everybody who brings clients to their marketplace!

Every AFFILIATE can choose the products he wants to promote aligned with his interests.
I am a filmmaker, so I use cameras and video gear and promoting these products aligns with my interests and my brand.

My clients, consuming my video work will more likely react to promotions from me, as they know that I am using the products myself and I am a professional and specialist.

Let's take Walmart as an example.

Walmart is losing clients to Amazon, due to the change in progress, described above.

But Walmart is not giving up like Toys r us! Too much is at stake!

Maybe it works out if they build an affiliate system and pay a little more than Amazon to their affiliates?

What do you think will happen?

I explained the concept concerning traditional good and by using some specific players in the market, but in the space of digital products, the model is even more powerful!

For the VALUE CHAIN this means more and more importance of C2C (Client to Client) selling ...

IS AFFILIATE MARKETING SUSTAINABLE? Get your own conclusions!

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BY THE WAY, THEY PAY BETTER FEES TO THEIR AFFILIATES THEN AMAZON :-)

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