Almost everyone who uses the internet has interacted with affiliate marketing in some way, though you might not have realized it. Affiliate marketing enables merchants to partner with a third party, or affiliate, to promote their products and services. It seems like a match made in heaven: the merchant gets free advertising, and the affiliate makes a commission on each sales. And in many ways, it is a perfect set-up. But before you jump in with both feet, make sure you’re making an informed decision.

The Good: A Beneficial Partnership

Both merchants and affiliates can reap huge benefits from an affiliate marketing program. Amazon, one of the largest affiliate marketers in the world, has more than a million affiliates happily making money from their ads. Let’s take a look at the pros for both parties:

• Merchant Benefits: Free ad space, broader audience, greater brand exposure, and—did I mention?—free ad space. Merchants benefit from placing their ads on a wide variety of website types, reaching a much broader audience than they otherwise could—all for free (mostly—see below).
• Affiliate Benefits: Cash, cash, and cash. Affiliates can make money at home, at work, on the golf course, or on the beach. Just by devoting a small square of their website to advertising.

The Bad: A Risky Proposition

Just as both sides can benefit from affiliate marketing, both sides assume some risk as well. Don’t assume that affiliate marketing is all a bed of roses. Grit your teeth and take a look at the cons:

• Merchant Cons: False advertising and commission costs. An unscrupulous affiliate can use shady methods to promote your advertisement, causing significant damage to your brand’s reputation. Merchants can also take a hit in the commission department, especially if the advertisements require significant investment of time and resources to create and maintain.
• Affiliate Cons: No cash, low cash, stolen cash. Fraudulent merchants may end the affiliate program without warning and refuse to pay what they promised. They might also hook affiliates into the program by promising high commission rates and paying less than promised. Finally, affiliates face the risk of getting hacked and having their commissions stolen.

The Ugly: Schemers and Scammers

Because affiliate marketing offers potentially high dividends, it has become a target for nefarious internet bandits. Schemes and scams abound, but if you do your homework and know the risk, you can still benefit greatly from entering into an affiliate marketing agreement.

While affiliate marketing does carry risks, the potential for earning money and gaining exposure far outweigh the negatives. The key is to know as much as you can about the company you’re dealing with and talk to people who have dealt with them before in order to avoid the scammers.

Are you currently an affiliate marketer or a merchant who offers an affilate program?  If so, please share your tips and experiences with us below.