How Economic Cycles Effect Affiliates
As a relative newcomer to affiliate marketing, one thing I’ve learned pretty quickly is that most niches are subject to the ebbs and flows of economic cycles. Take the credit card industry for example. For a long while, credit card companies basically had a mandate from share holders to increase their market share of the industry by offering great deals (e.g. 0% balance transfers, 5% cash back, etc.) These great deals made it easy for affiliate marketers to close the deal, primarily because the deals were attractive.
There was so much low-hanging fruit in this industry that persistent, entrepreneurs (yes, even one-man shows) were able to compete for search results with the big companies, and come out way ahead. One such company, Bankaholic, managed to rank on the front page of Google for the term “credit cards” and for that reason (his ability to rank and therefore convert), imho, was able to negotiate a $15 million sale to the large online company Bankrate.
Times have changed though. Anyone working in the credit card affiliate niche knows that credit card companies have tightened up. With the credit crunch firmly in place, most card companies are now more focused on reducing their own sub-prime ratios, which some have estimated to upwards of 25%. Because the driving force behind the credit card industry is no longer customer acquisition at any cost, the deals that card companies offer are no longer sugar-sweet. And because the deals that card companies offer are not as sweet, affiliates get less conversions.
So, there are really two ways that a new affiliate marketer can react to such bad news: either give up or get strategical about economic cycles. It would be easy to just give up, as the motivation for new affiliates is “potential” – the stories you hear about the massive amounts of money to be made. And when you see a few conversions, then a few more, you get excited and it motivates you to keep on pushing. But when you run into a brick wall like the credit crunch, it can be debilitating.
On the other hand, if you want to get strategical about economic cycles, there are two important ideas to keep in mind. Let’s use a farming analogy to make better sense of the ideas:
1) If it’s not the season to harvest the crop, then you might as well start planting and nourishing the seeds in anticipation for when harvest time comes.
2) Different crops can have have different harvest times. Diversify your crops and you’ll have more opportunities to harvest, and less times of “hunger”
So even if something is out of season in the economic cycle, you can use that time to prepare yourself for the next time that product or service comes back into season. Plus, you can minimize the effects of economic cycles by diversifying your marketing efforts to include things that compliment each other throughout the cycle.
Share your thoughts!!!