UNDERSTANDING AFFILIATE MARKETING
First, we must have a firm grasp of the essence of affiliate marketing. The specifics might be different from niche to niche, however, the core principles are the same. Affiliate marketing is simply a symbiotic relationship between a marketer or a content maker known as an affiliate (or publisher), and a supplier of goods and services, most often in the form of a brand. Publishers have audiences, brands – the goods. In an affiliate offer, a brand strikes a deal with an affiliate, in which the latter agrees to promote the brand to its audience in return for commission, discounts, or other material gains.
In the recent decade, affiliate marketing has boomed as the proliferation of social media ensured more people becoming publishers, making it profitable for brands to use them as affiliates.
Indeed, if you are a content maker, be it on YouTube, Instagram, or even TikTok, you can try your luck in affiliate marketing too. Chances – provided you have enough audience – there are brands awaiting your input and willing to share significant bonuses for your promotion.
There are a few caveats. First, brands seek affiliates from a similar or close niche to push their products. For instance, if you make videos about cars, you might not be that interesting to a skincare company. The automobile industry, on the other hand, might be willing to strike an agreement.
Another constraint in answering how much affiliate marketing cost is a GEO, short for geolocation. Companies often seek to promote their products to consumers in specific locations, and they need affiliates with an audience from these places too. GEOs are divided into Tiers by the economic situation and income of their dwellers, which we will discuss further.
AFFILIATE MARKETING COST
The initial costs of embarking on an affiliate marketing journey can vary widely, ranging from no investment to several hundred to thousands of dollars, contingent upon the type of traffic and online assets utilized to reach the target audience. However, for most people interested in affiliate careers, thousands of dollars worth of initial investment would be simply an unrealistic condition. On the other hand, no investment at all may hinder any progress in commercializing initial content making output. Out interest lies in finding the Goldilocks zone, or the optimal value to spend on the most effective affiliate marketing rise.
But first, let's explore the expenses that might be required from an upstart affiliate to understand how much does affiliate marketing cost:
Purchasing Traffic
For affiliate marketers, acquiring traffic is crucial to reaching potential customers. This traffic can be obtained through various means, including paid advertising, search engine optimization (SEO), or social media. The cost of purchasing traffic depends on factors such as the chosen platform, target audience, and competitiveness of the niche. While those with substantial organic traffic may not incur immediate expenses, CPA marketers or affiliates utilizing paid advertising channels need to allocate funds for testing and optimization. A budget of approximately $300 is recommended for running initial tests targeting Tier-3 GEOs, allowing for experimentation and potential earnings.
Affiliate Networks
Affiliate networks serve as intermediaries between affiliates and advertisers, providing access to a wide range of offers across different verticals. Joining a reputable affiliate network is essential for accessing high-quality offers and receiving timely payments. However, some networks may have stringent acceptance criteria and sizable fees, requiring an additional investment into access to high-payout offers.
Tracking Tools
Effective tracking is essential for monitoring the performance of your affiliate campaigns. While some affiliate networks provide built-in statistics dashboards, investing in a separate tracking tool offers more flexibility and advanced features. Expect to allocate around $100 per month for a reliable tracking tool, though exclusive discounts and promo codes may be available through affiliate network partnerships.
Creative Content
Compelling visuals play a significant role in capturing audience attention and driving engagement. While some affiliates start as content makers, others can find it difficult to create original captivating content. As AI tools become more widespread, affiliate can explore more option in creating promotional content from pictures, to videos, to text. In the most basic form, creative needs can be covered by tools like ChatGPT, requiring a budget of around $20 per month for subscription.
Website Creation
If you don't already have a website, budgeting for website creation and maintenance is necessary. Costs for building a basic website typically include domain registration, hosting, SSL certificates, website templates or themes, apps and integrations, and SEO and marketing tools. Upfront costs for website creation range from $200 to over $5,000, depending on the chosen platform and level of customization.
VERTICALS AND GEOS
The traffic investment is the most important affiliate marketing cost. However, the initial amount is dependent on the vertical and the geo where the affiliate operates.
For traffic, there are usually 3 types of entry barriers for affiliates: low, medium and advanced.
The low barrier niches include sweepstakes and mobile downloads, as they offer low-payout offers that are easier to convert, making them suitable for affiliates with limited budgets and resources. With proper targeting and optimization, it's possible to generate profits quickly in these niches.
Travel, streaming, dating, and cameos are all considered medium barrier niches. The competition and standards here are not as high as in advanced but conversion is still trickier than in low barriers niches.
Finally, the advanced niche includes iGaming, fitness, nutrition, health, finance and other hot topics. These niches are characterized by significant competition, stringent regulations, and complex conversion funnels. Affiliates operating in these niches often require substantial expertise, resources, and a high affiliate marketing cost.
Traffic tiers refer to segmented groups of GEOs categorized according to the purchasing power and consumer behavior prevalent in each region. Advertisers utilize traffic tiers to tailor their marketing strategies and allocate resources effectively. The three primary traffic tiers are as follows:
Tier 1
GEOs with the highest purchasing power and active buyer base. These countries typically boast advanced technological infrastructure, fast internet connectivity, and widespread adoption of online payment methods. Examples of Tier 1 countries include the United States, Canada, the United Kingdom, Germany, and Australia. While Tier 1 GEOs offer profitable opportunities for affiliate marketers, they also pose heightened competition due to the saturation of offers and ads targeting these regions.
Tier 2
GEOs are characterized by moderate purchasing power and consumer activity levels. These countries are generally less competitive than Tier 1 regions and may exhibit slower adoption of online shopping habits. Examples of Tier 2 countries include Brazil, Mexico, India, Russia, and South Africa. While affiliate marketers may encounter less competition in Tier 2 GEOs, they should adjust their strategies to cater to the unique preferences and behaviors of consumers in these regions.
Tier 3
GEOs encompass developing countries undergoing rapid technological advancement and transitioning to digital lifestyles. While these regions may experience growing access to 4G/LTE connectivity and internet infrastructure, consumer activity levels and purchasing power are typically lower compared to Tier 1 and Tier 2 countries. Examples of Tier 3 countries include various nations in Southeast Asia, Africa, and Latin America. Affiliate marketers targeting Tier 3 GEOs should focus on offers with straightforward conversion flows, avoiding complex requirements such as deposits or credit card submissions.
As we have shown, the amount of money required to kickstart your affiliate marketing journey hinges on the chosen offer, traffic source, tools employed, and testing budget. As a rule of thumb, it's recommended to allocate a testing budget of around $100 per day for 3-5 days when starting a new campaign. This budget allows for sufficient testing and optimization without risking significant financial losses.
While it's possible to start with an even smaller investment in certain niches, achieving sustained success will require a strategic approach and allocation of a budget comparable to the initial expected income.
And though it is good to have a general understanding of the industry, you can only make a profitable affiliate venture by leaning into specific niches and learning the investment costs and strategies required for optimal profits.
