The decision to engage in affiliate marketing is indeed a decision to learn. For any new starter, it becomes two projects at once — a business project; and, a learning project — although you will find that they are inseparable: your learn to earn.
Interesting word that one, learn, in which “earn” hides in plain sight within “learn.” May be, therefore, we should rewrite it as” (L)EARN.
Leaving that interesting graphic phenomenon aside, I want to address the business project. What’s the net investment? And how does this investment weigh up against the projected rewards?
Let’s start with the first.
Investment
Investment is anything — time, money — you put into your enterprise. While you may have the time — and the inclination — you have to consider the money. Often this is the biggest roadblock for many people. Even a small investment can make us reluctant. (I have been there myself). How much will it cost? — seems to be eternal question. I for one do not recommend buying anything without trying out something. Not every product or service has the this option, unfortunately.
Affiliate marketing platforms can vary — and fortunately some do offer free starter subscription precisely in anticipation of the consumer’s intrinsic reluctance to part with their money. Yes, you can get a free subscription — Go To: Wealthy Affiliate, then hit the “Pricing” button at the top.
The problem, however, is not whether or not there is a free subscription but how to make use of it effectively, so that when we move to a paid version afterwards (and I recommend it highly), how do we reap the maximum benefits?
Treat the initial subscription, therefore, as a test run. Eventually of course you will have to move to a paid version (the sooner the better if you do not want to stagnate) — without which all the features cannot be activated. However, with the free version you can explore and ask questions about the pertinent issues emerging from your engagement with the platform. The advice is not to hold back anything that arises in your mind — actually, asking questions is a part of the learning process. Treat your starter subscription as an opportunity . . . to LEARN.
Without going into a tedious exploration of learning, let me say, somewhat abruptly, that the best way to expedite the learning process is by formulating questions — how can a platform facilitate my affiliate marketing? — for example.
Now to the next question . . .
How Does The Investment Stack Up Against The Rewards?
The paramount question now of course is to weigh the pros and cons of your investment, also called cost-effectiveness or cost-benefit analysis — another expression may be upside/downside analysis. This is business speak that you will need to acquaint yourself with. While this terminology could be dismissed as jargon or pretentious, as it has been, it is a necessary shorthand, a convenient method of compressing complex notions into neat bundles without our having to recourse to tedious elaborations every time. Every human activity begets its own terminology — it is how a group of people engaged in a common pursuit talk about it. As long as the use of terminology is driven by considerations of brevity and clarity, there need be no qualms about using it.
On the positive side, acquainting yourself with the terminology could actually open up new dimensions in your thought processes because language is inextricably linked to thinking in various ways. Words, phrases, terminologies, language in general — these are essential parts of our conscious existence. Terminology allows us to articulate our questions more conveniently and refine our ideas progressively.
For example, the question we are trying to formulate here is: what is the cost-benefit analysis of affiliate marketing?
Depending on the answer we can make an informed decision at the very outset whether to invest in it or not Simply put, we want to know whether it is going to end up costing us more to run than it will bring us returns — also called return on investment, ROI.
As you may gather, the cost-benefit analysis (however intimidating it may sound) is nothing more than assessing whether the advantages outweigh the disadvantages.
For this cost-benefit analysis we shall — for brevity and clarity — list only three advantages and compare three disadvantages of affiliate marketing. (Caveat: this is only a sample analysis for illustration and does not aim at comprehensiveness, i.e. cover every aspect of the business.)
The Advantages
- Passive income
- Near zero investment
- Near zero risk
The Disadvantages
- The passive income may not be consistent
- It may still require investment of time, effort and money
- The required technology requires constant optimisation
Now in regard to the disadvantages the questions are:
- how consistent? — even if everyday is not profitable, it is the overall profitability that matters
- how much investment will it take? — depends on the platform — find out everything here on Wealthy Affiliate.
- how do you master technology? — the good news is that the platform takes care of it for you.
Therefore, we conclude that the overall advantages of affiliate marketing outweigh the disadvantages (on balance).
How Did We Get Here?
Now taking a step back from the preceding, let us reflect on how we arrived at this conclusion — what steps were taken — so that we understand another basic concept called methodology.
These are the steps we took to arrive at the conclusion above:
- listing the advantages
- listing the disadvantages
- then assessing the overall advantages/disadvantages
In running a business you have to achieve clarity and the best way of achieving this is by making a list and numbering the steps where applicable, so that you have a fully developed system.
Thus apart from exploring the notion of cost-benefit analysis and how it applies to affiliate marketing we have explored how to develop basic, commonsensical strategies for running a business.
Of course not everything will always be as clearcut and simple — and as in life, so in business — it is still better to turn up prepared than to turn up unprepared. We cannot anticipate every development, true . . . “The best laid plans of mice and men often go awry” — Robert Burns (1785). Not to plan is to plan to lose.
What we fear perhaps most is complexity — but complexity, as I like to put it, is nothing but scaled up simplicity. The above analysis is the best example: first we did the basic analysis; then we did the analysis of the analysis, the overall analysis, the meta analysis.
What if you had not only the tools but also mentoring — all in the same place — to venture into affiliate marketing? Imagine, how much less daunting it all could be. Actually, it has been done for you already.
Since our biggest hesitation in investing often is risk, we need to remove it.
One golden rule in investing, therefore, is asking yourself this honest question — how much can I afford to lose?
That should keep you safe.
Cheers.