“Is affiliate marketing dead?”
“Is affiliate marketing still worth it?

I’ve always hated these questions, and I’ve been hearing them since 2007.

I hate these questions because they feel like excuses.

It’s kinda like seeing someone half-assing it at the gym. Then seeing them blame their gym equipment for their lack of results.

But now it’s 2021—things have changed over the years.

Rules and regulations have gotten stronger.
Competition became fiercer.
Costs of acquisition keep going up.
And you have more ways of making money online than ever before.

Affiliate marketing is not the same anymore. 

People are still asking me if affiliate marketing is dead or if it’s still worth pursuing in 2021.

Here’s my answer:

Affiliate marketing isn’t dead yet, but it’s past its glory days. For the vast majority of people, it’s not worth entering the affiliate marketing industry in 2021.

I’ve dedicated so much of my life to this industry. I’ve written countless articles promoting this industry.

So it hurts for me to say that the industry has been declining.

Here are some signals I’ve observed:

• Affiliate networks have been quietly going out of business for the past several years.
  The joke used to be that there’s a new affiliate network popping up every week. Now it’s the opposite.
• There isn’t much conversation about affiliate marketing. Take the STM forum for example. STM’s always been a go-to place for talking about the industry. The level of activity there has dropped drastically over the past few years.
  (You could argue that it’s because there are more alternatives such as Facebook groups, Telegram, and Slack. But I believe the primary cause is the decline of the industry itself.)
• Not many people identify themselves as “super affiliates” anymore. I just looked through my Facebook friends list. Everyone’s in either eCommerce, cryptocurrency, investing, or running an agency. So many network owners and affiliate managers have moved on. 
• There hasn’t been any innovation in years. There have always been new trends to hop on for affiliates. The industry went through phases with Nutra/skin trials, Facebook, mobile pops, adult dating, native ads, etc.

  Innovation is an indicator of growth.

  There was always a sense of excitement over trying to figure out what’s next. Now it feels like the industry has been stuck in time since 2017 trying to make push ads hot.

The affiliate marketing industry doesn’t have the same level of excitement that it used to.

So why am I writing about this?

I’m no longer active in affiliate marketing.

It’s because I’m still getting messages from people. They’re frustrated.

They’ve tried their best, and they’re still unprofitable. They want to know what’s going on in the industry in 2021 and they can’t seem to get an honest answer from anyone. 

This article is designed to help you understand the changes in this industry. Through understanding, you can make a more informed decision whether you want to enter it or not. 

Let’s get into it.

Note: Let’s make sure we’re on the same page. Affiliate marketing is a broad term.

This article refers to affiliate marketing where you spend your own money to buy traffic, in order to profit from promoting an offer. People usually refer to this as performance or CPA marketing (Cost Per Action). This is the type of affiliate marketing I’ve been writing about for years.

This article does not refer to promoting offers where you own the distribution channel. For example, you own a cooking blog and promote cookware. Or creating an affiliate program for influencers to promote your product.

What Made Affiliate Marketing So Great?

I’m going to take you back to the “make money online” landscape back in 2007.

What attracted me to this space in the first place?

First, people were making bank. I remember when someone posted a $25k revenue a month screenshot on the WickedFire forum.

The other guys were roasting him for making so little.

Next, there weren’t a ton of viable options for making money online.

It was either SEO or affiliate marketing. ECommerce DID exist back then, but there was so much friction back then.

Shopify wasn’t as developed. Their app store was non-existent. Every change had to be custom coded back then.

Creating a product from scratch was such a mystery.  

Finally, affiliate marketing simplified business.

“I fear not the man who has practiced 10,000 kicks once, but the master who has practiced one kick 10,000 times.” – Bruce Lee

I didn’t want to deal with customer service. I didn’t have enough “credit” to get merchant processing. Trying to source products from China was like the wild west!

I chose affiliate marketing, and it was the best decision of my life.

How Affiliate Marketing Changed From 2010–2020

Every industry goes through changes. But not every industry changes at the same rate.

I remember joking with my affiliate manager once: “Affiliate marketing ages like a dog. One year in affiliate marketing is the same as seven in the real world.”

Let’s look at the industry’s changes through two categories:

/1 Ease of Profitability:  

How difficult would it be for a newbie to get their first profitable campaign?
If you are profitable, how hard is it to sustain the profits?

/2 The Viability of Options:

Are people still profitable from campaigns? Yes. 
Is it possible for a newbie to still earn a profit from affiliate marketing? Yes. 

However, every decision has an opportunity cost. The decision has to be evaluated in comparison to all the other opportunities available.

Here’s a visual I made. It demonstrates these two traits over the years.
You can see that 2010–2017 was an amazing time for affiliate marketing from my eyes.

Let’s dive deeper into the ease of profitability and the viability of options.

The Ease of Profitability

This refers to how easy it is to make a campaign profitable. It’s no secret that affiliate marketing has become increasingly difficult.

But what are the market forces that caused this?

/1 There’s More Competition Than Ever Before

In the early days, affiliates were buying a majority of the traffic online. Your competition was other affiliates.

Now you’re competing against everyone for traffic.

a. Reduced Barriers of Entry

A big reason is that the traffic platforms reduced the barriers of entry. Media buying stopped looking so scary.

Some examples of this: 

• Media buying education improved with free resources such as the Facebook Blueprint and Grow with Google.
• Throw a rock at a Traffic & Conversion Summit and you’ll hit three different Facebook Agency owners. More agencies meant companies could easily outsource media buying.
• Traffic platforms developed technologies such as look-alike audiences and smart campaigns. Companies could utilize the platform’s machine learning to get results WITHOUT mastering media buying.

Before, affiliates were fighting with each other over traffic. Then the competition became the Samsungs, Disneys, and political campaigns of the world.

b. The Affiliate Ecosystem

Everyone had their own role in the affiliate ecosystem.

Affiliates drive traffic.
Affiliate networks are the middlemen. They float cash.
Advertisers optimize the offer and focus on the backend.
Traffic sources deliver the traffic.

Then there was a shift where everyone else started media buying on their own.

Some affiliate networks started their own internal media buying teams.
Some traffic platforms started promoting affiliate offers themselves.
Some advertisers started buying their own media.

They didn’t have to master media buying like affiliates did. For one, they were working with way better margins. And second, it wasn’t a fair fight.

Affiliate networks could see the top performing affiliate landing pages and use them.
Traffic sources knew which publishers converted the best based off of affiliates taking the risk.

Of course, they denied it.

We started fighting against versions of ourselves in the Matrix, but they had stronger weapons.

c. The Rise of eCommerce

ECommerce has been around since the 1990s.

But there was a shift around 2015. Every affiliate marketer started taking notice of Shopify.

Dropshipping became the rage. 

It solved some of the frustrations people had with affiliate marketing. It was considered “white hat.” Facebook loved it at the time. And people felt that they owned a business for the first time.

Dropshipping is a shitty business model. No customers are happy waiting a month for their items to arrive from China.

Dropshipping declined. But many people pivoted into creating their own brands, and leaving the affiliate space forever.

Around this time was when DTC (Direct to Consumer brands) skyrocketed. Brands like Native, Allbirds, and Warby Parker ramped up their media spending. And these guys knew how to buy traffic just as good as affiliates.

The difference? Strong eCommerce brands have more profit levers to pull compared to an affiliate marketer. (Also, some of them were flush with millions from venture capital.)

Affiliates:

• Must profit on first contact
• There’s no “lifetime customer value”
• Don’t own any data
• Dealing with a world that started hating affiliates.

ECommerce:

• Can afford to lose money on the first sale. (they can make up for it on the backend)
• They own data. This data can allow them to profit more through email and SMS marketing.
• They can increase the average order value through tactics such as bundling, payment plans, live chat, cross-sells, subscriptions, etc.

More and more competition started buying traffic. This drove traffic prices up.

The affiliate marketing model of being a middleman means we’re limited on our profit margins.

Whoever can afford to pay the most, wins.

/2 Rules, Regulations, and Bans Have Become More Prevalent

Affiliates were always at a disadvantage since we had smaller profit margins to work with. So how were affiliates competitive for so many years?

Relentless action.
Thousands and thousands of split tests.
A never-give-up attitude.

Oh, and we were shady. We were willing to get more aggressive to get the conversion. Affiliates kept pushing the lines.

Here are some examples of tactics affiliates used:

• Misleading claims on what a product could do, or which celebrity was using it. Asking people to “spin a wheel” to win an iPhone that we weren’t was legit.
• Aggressive scripts such as back button redirect.
• Account banned? Just come back with another one.
• Saying people’s phones/computers had viruses when they didn’t.

There were levels to how aggressive some people were. Some of the worst ones I saw were criminal.

No one wakes up wanting to use misleading claims in their marketing. But when everyone else is doing it, you’re at a disadvantage if you don’t.

If that’s the difference between being unprofitable or not, ethics can easily fly out the window.

I’m not trying to make excuses—the actions were wrong. But I’m giving insights into how greyhat marketing can be such a slippery slope.

This aggressiveness benefited the affiliate pocketbooks, but hurt the rest of the ecosystem:

• Affiliate networks become a magnet for lawsuits.
• Platforms such as Facebook developed a bad reputation for user experience.
• Merchant processors caught heat for more aggressive billing practices such as 1-click mobile flows or trial offers.

Actions have consequences.

Use a misleading claim? Now you’re running the risk of not getting paid if you’re caught by the advertiser / network.

Got banned on Facebook? Their technology and processes have improved towards banning people.  

Aggressive offers such as 1-click mobile flows disappeared. Nutra trials are rare.

Affiliate marketers don’t have a lot of profitability levers, especially when creative assets can be so easily stolen. One profitability lever was being misleading. The rest of the ecosystem has worked hard against this.

The markets became more efficient. If there’s an “exploit” in a video game, then the developers are going to patch it.

/3 The “Monkey See, Monkey Do” Mentality

Affiliates have always copied each other’s creative assets (landing pages, angles, and ads).  

It was a pain in the ass for my team to manage so many spreadsheets of our competitors. Then, spy tools came out.

These tools automated everything and made it easier for affiliates to copy each other.

The downside? These tools automated everything and made it easier for affiliates to copy each other.

Everyone was constantly ripping off and stealing from each other. It felt like the marketing version of The Human Centipede.

This killed the drive to innovate. What’s the point of coming out with a unique landing page if it’s going to be stolen within hours?

If everyone’s running the same type of creatives, then it becomes a race to the bottom. The only winner is the traffic source.

The Viability of Alternatives

Every decision has an opportunity cost.

Being an affiliate marketer means you think that this is the best business model for you to pursue.

I mentioned that I felt SEO and affiliate marketing were my only options when I started.

Over the past decade, the floodgates have opened. Now there’s unlimited businesses for you to pursue, and they’re easier than ever to operate.

/1 The Barriers of Owning an Offer Have Lowered

I can confidently say that it’s at least 10x easier to create your own offer compared to before 2010.  

Seriously, I can have a brand up and running within days.

• Customer service can be easily outsourced to Upwork + Zendesk.
• You now have a variety of fulfillment options such as Amazon FBA and ShipBob.
• Product sourcing is so much easier due to AliExpress.
• Shopify itself has grown and made things so much easier.
• Shopify Apps make everything easier. You don’t need to hire a custom coder.
• You can hire all the help you want through Fiverr and Upwork. Need knowledge? There’s Clarity.fm.

That’s just products. What about all the other options?

You can go down the influencer path. Start a podcast or YouTube Channel.
It’s never been easier to become a creator. Create a course using Teachable. Start a newsletter using SubStack.

Bitcoin wasn’t even invented when I started affiliate marketing! Now there’s an entire economy around cryptocurrency and NFTs.

Create an App or a SAAS. I’m not a coder. But now, I’d feel comfortable starting a SAAS company even though I’m not a coder. There’s plenty of “no code” solutions. I can hire competent talent from a place like TopTal. You’d be surprised at how many SAAS companies are started these days by non-technical founders.

Timing is the most underrated component of business.

Think at least five years out. If you’re figuring out a market, think about where it’s going to be a few years from now.

Some industries with tailwind (growing): Cryptocurrency, the creator economy, cloud kitchens, eSports, eCommerce, higher education alternatives, work-from-home clothing,

Some industries with headwind (dying): restaurants, newspapers, commercial real estate.

Affiliate marketing doesn’t have the tailwind that it used to.

One of my favorite laws from the 22 Immutable Laws of Marketing is:

“It’s better to be first, than it is to be better.”

It’s so much easier to make money when you’re in a trending industry. If the industry you’re in is declining, then it makes sense to pivot to a different one.

/2 There Are No Moats as an Affiliate

A moat is a distinct competitive advantage that makes it hard for a competitor to copy.

Coca Cola’s moat is its brand. You can create a copycat formula, but people still want the red can.

One of Shopify’s moats is its app store. There are plenty of Shopify alternatives, but none of them can match the utility of its app store.

What’s stopping someone else from ripping off your campaign? Ads, angles, and landing pages can easily be stolen without any repercussions.  

Exclusive offers? Kinda. It’s rare for an affiliate marketer to have a truly exclusive offer. Advertisers want scale. And it’s risky for them to have all their eggs on a single affiliate.

It becomes increasingly frustrating over time to operate a business without a moat. It feels like you’re on a hamster wheel year after year.

This has always been the affiliate marketing model. So why am I bringing this up now? Because it wasn’t a big deal as long as easy profits were coming in.

As campaigns became harder, operating without moats became more frustrating.

/3 Exit Value

Affiliate marketing is great for generating cash.

Let’s say you make $1 million in profit from affiliate marketing. What’s the business worth? Whatever’s in the bank. That’s pretty much it.

Other businesses can have a multiplier depending on the type of business.

You create a brand that does $1 million profit. But let’s say it has a 5x multiple depending on the business. That business can be sold for $5 million.

You make 5x more just because it’s a different type of business model.

Most affiliate marketers got their first taste of business through this industry. As affiliates became more business savvy, they realized they wanted “more” than just cash.

/4 Affiliates Got Bored

Me and most of my affiliate friends entered the industry in our 20s.
Now most of us are in our 30s.

Your priorities change as you get older.

Most people entered the industry looking to make some cash and travel. But after you made some cash and lived The Four Hour Work Week lifestyle, you’re left wondering “What’s next?”

I had to ask myself, “Do I want to be running campaigns in my 40s?”

You want more stability when you’re starting a family.

Affiliate marketing is challenging. But the challenges of account bans or unstable offers get tiring.

There are challenges in every business, but some headaches are more fun to deal with than others.

I felt frustrated that I didn’t build anything bigger than a campaign. I have this intrinsic motivation to build something bigger than me.

It’s not about money. It’s about minimizing regret. I want to know that I kept swinging for bigger homeruns, rather than staying with what’s comfortable.

After around two years of being a full-timer, the pace of learning slows down. You launch, run a few split tests, and repeat. Some people left because they want a bigger challenge. There’s something to be said about building something tangible.

Businesses tend to become better overtime due to a flywheel effect. More sales means more reviews. More sales means lower cost of goods due to economies of scale.

Campaigns feel like you’re always starting from scratch every year.

Who Should Pursue Affiliate Marketing in 2021?

I want to talk about why someone would WANT to be an affiliate marketer these days.

I don’t want anyone to leave thinking this is the worst industry in the world. (That would be whoever’s involved with Netflix’s Cuties film.)

Here are some good reasons for joining the affiliate marketing space:

You Love Media Buying and HATE everything else. Affiliate marketing is a simple business. You don’t ever have to deal with customers. You don’t have to worry about merchant processing issues or your inventory getting stuck in customs.

You want to market certain verticals. It’s easy to private label a supplement line these days. What about going vertical and owning a car insurance company? Not so easy. Or maybe you’re into promoting EDU offers.

You don’t like commitment. Starting an agency is commitment. Starting an eCommerce brand is commitment. You might feel that those commitments mean you’re putting all your eggs in one basket. Running affiliate marketing campaigns can keep you diversified.

Why affiliate marketing is still awesome:  

• It’s a simple business model. You only focus on marketing.
• It’s doable with a single person. You don’t need to hire a team like you would in an agency or eCommerce operation.  
• It’s easy to scale. Sometimes scaling a campaign is as simple as increasing the budget.  
• It’s easy to diversify. You can run campaigns on different traffic sources and different verticals.
• You get rapid feedback. Because you’re so focused on paid marketing, you develop this skill faster than other people.

I want to point out that there’s a difference between being an affiliate marketer on paper and the reality of it.

Affiliate Marketing’s Actually Doing Well?

I want to point out some possible counterarguments along with my thoughts on them. Being able to understand the other side makes for a stronger case.

By the way, I want you to question everything that I’m saying. Think for yourself. Draw your own conclusions.  

/1 “Blank says Affiliate Marketing is doing well!”

Does this person profit from you being an affiliate marketer?

Don’t ask a real estate agent if it’s a good time to buy a house. 

If you’re talking to your affiliate manager, then of course they’re going to say affiliate marketing is killing it. What’s in it for them? 

/2 “But I heard that there are still affiliates making money”

Of course there are – I’m not saying that the industry’s 100% dead. 

However, the majority of them built their skills from a different era. Using them as examples is  survivorship bias.

(From Wiki: Survivorship bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility.)

Think about starting a YouTube channel in 2021. I don’t know if it’s still a good idea or not. But you can’t say it’s a great idea because Mr. Beast and PewDiePie are making a ton of money. 

1. They’re outliers.
2. They started in a different time period.

You have to ask, “Who has started YouTube channels in the past two years. How are they doing? What is the average rate of success. Is YouTube the best platform for me to start with?“

You might conclude that most new YouTubers are struggling. But you notice that there have been so many overnight successes who started on TikTok instead. 

Let’s bring this back to affiliate marketing. I can’t say I’ve seen too many new affiliate marketing success stories in the past few years.

/3 “But the Data shows that Affiliate Marketing is Rising”

Google trends data shows that interest in affiliate marketing hasn’t lowered at all. In fact, it has increased since 2016.

This is a false positive because affiliate marketing is a broad term.

• Interest in affiliate coupon sites is growing.
• Interest in joining affiliate programs such as Amazon’s is growing. 
• Interest in influencer marketing is growing (some of which use affiliate codes)

But none of these are the type of affiliate marketing that I’m describing.

What Should I Do to Make Money Online Instead of Affiliate Marketing?

I’m glad you asked!

Affiliate marketing is declining. But there’s one industry that is BOOMING! I’ll tell you for one low payment of $1,497!

(That was sarcasm in case it doesn’t translate well)

Here’s the thing: I don’t know what leverage you have.

Opportunities should be pursued based on your resources, skills, and passions. So it’s hard for me to say what you should be doing. 

But I’ll try to answer it anyways since people hate “theory” answers. Here are some opportunities I see if you’re new and on a budget:

• eCommerce – it’s where most affiliate marketers ended up transitioning to. 
• Crypto / NFT – education and marketplaces. 
• Paid communities – it blows my mind how engaged some Facebook groups are. But FB groups themselves are pretty shit. I’d try to BUY a Facebook group and offer a paid community upgrade to a platform like Circle.  
• Boutique agencies –  Go niche. Specialize in marketing for Crypto. Specialize in Snapchat / TikTok marketing. Don’t just be another Facebook or Funnel specialist. There’s too much competition. 

There’s so much opportunity out there. 

What IS Affiliate Marketing?

I view affiliate marketing as a mindset.

It’s a relentless focus on testing.
It’s getting results through creativity rather than brute force spending.
It’s a willingness to push the boundaries to get that conversion (hopefully ethically).
It’s being on the cutting edge of media buying.

The methods have changed. But many affiliates have moved on to build bigger companies. I can see so many affiliate marketing methods and influences in everything they touch.

Affiliate marketing will still live on in that sense.

But the affiliate marketing that I knew and loved is gone.

Photo by Ahmed Adly from Pexels