One of the big decision to make in internet marketing is whether to do affiliate marketing, and promote other people’s products or to make your own damn products! They are very different approaches and you need to consider this choice carefully. This article will help guide you in the affiliate marketing versus product creation decision.
Let’s make sure you understand affiliate marketing first. It just means you are promoting other people’s products. So you send someone a link or show someone an ad (for a third party product or service). And if that person buys, you get a share or commission of the sale. There are some easy affiliate marketplaces and affiliate programs to get started with.
The rate of commission can vary, from just a few percent (for most Amazon products) up to 50 or 75% (for most digital products on Warrior Plus, JVZoo or Clickbank). Or sometimes even 100% (for the frontend of some low price digital products, or for the whole funnel if you buy a product with full resell rights, which can be a good idea).
So product creation is the other side of the coin – you create the products and other affiliates sell them for you. You can sell them yourself too, of course, and keep 100% of the sales (minus sales or platform / marketplace costs of course).
Well as always, it depends. Let’s consider each one first.
It seems great on paper to be an affiliate. Someone else does all the work – researches the audience, designs the product, builds the product. Writes the sales page or video letter (or pays a copywriter a big pile of money to do it), Comes up with the headlines, swipes, JV page. Organises all the affiliate outreach, competition, product hosting and marketplace integration.
All that is a hell of a lot of work! And it creates a lot of skills or you to pay people who have those skills a lot of money.
The affiliate doesn’t have to do anything, just promote! The product owner does 99% of the work, and you get to keep 50% (or more, maybe 75%!) of the money for every sale you make.
This is obviously a great deal and a reason why there are so many people trying at affiliate marketing, including myself.
So if the product owner does almost all of the work and only gets to keep 25% of the money, why on earth would they do it? There are a few reasons.
There are actually huge benefits to being a product creator.
First off, you might get only 25% from an affiliate sale, but you get 25% of the sales of one affiliate, and 25% of the sales of another affiliate, and the next, and the next, and the next. If each affiliate is selling 100 copies of your product, you might only get 25% of the sales of each one. But if you have 20 or 50 (or 100 or 1000!) affiliates selling your product, you can see where this goes. We are talking crazy money.
If you are the vendor of a really successful product, you can actually make way more than an affiliate. Now I have to quickly add, that their costs are much higher. They have to pay a copywriter thousands of dollars to do the sales page, they have to get quality images and videos, and so on. All that costs money.
So it is a bit of a risk. If the product flops, they can actually make nothing, or lose money. But if it succeeds, they can make a fortune.
Making and selling a product is actually harder than affiliate marketing. Because a vendor needs all the affiliate marketing skills as well (networking, traffic, funnels, content, etc.), plus making the actual product, and organising the JV.
And as I showed it is riskier. Affiliates have little upfront investment, especially if they are doing free traffic. They just keep researching and promoting products, growing their list and traffic sources and hoping to hit that one offer that converts like crazy.
Affiliates spread their cost and risk out. They can promote 10 or 50 or 100 products in a year and it doesn’t matter if most of them bomb. They put only a small investment into each one.
A product vendor can’t create 100 products a year – they’re lucky if they can do five or six. And each one is a sizeable investment of time, money and energy. Some of them only do one a year (or less).
So it ultimately comes down to a risk versus reward thing. Product owners put more work and risk into a product, but if it works, they can do very well. Affiliates make smaller investments and get smaller rewards.
There’s another big factor that not a lot of people realise though. It’s not really about the commissions at all, especially for lower-priced front-end funnels.
What product vendors really want to do is build up a good big list, a buyer’s list. Actually, it’s what everybody wants. And then they can sell big high-ticket items (their own or other people’s) to that list.
And being a product vendor is the best way to build up a buyer’s list. Because you automatically get the email address (a real email address, that’s how they get their product) of everyone who buys the product.
That’s why vendors are happy paying 75% or even 100% commissions on product front-ends. The front-end is just the tip of the iceberg. Who cares about what proportion you’re sharing of $5 or $10 on a front-end product, when you’re going to sell them a $1K or $2K offer once they’re on the list?
There is no list like a buyer’s list and there is no better way to build a buyer’s list than to build and sell your own product.
That’s why so many products have two or three or four faces on them. Often it was just built by one person, but the other people jumped on board (sometimes paying a big fee!) to be a “co-producer” or “business partner” of the actual product vendor. And all the official product creators (to whatever extent they were really involved) get the emails of people who buy the product.
So that’s what a lot of the low-priced items on Clickbank, JVZoo and Warrior Plus are really about – building a list. And instead of paying to build the list, you get paid to build the list! Pretty neat.
Unless you have a great idea for a product (backed up by case studies and research), I wouldn’t start in product creation. I would end up there.
That’s my plan. I’m starting with affiliate marketing to earn some money and learn the ropes. Make some connections. Build up some skills.
Then I’ll move into product creation. I already have a few planned out – it’s just a matter of finding the time and connections to make them all happen. Stay tuned!
I hope you found this article on affiliate marketing versus product creation helpful. Do you have any more questions? Are you still unsure which one to do? Let me know in the comments!