Don’t Fear The Affiliate Link (Affiliate Marketing Incentives)

Last updated: December 27th, 2019

It’s time to address one of the biggest fears of affiliate marketing.

The affiliate link.

What will people think of me when I use affiliate links on my website, social media accounts and email list? Will my community still trust me?

This is how I thought when I first got started building affiliate websites a few years back.

This is how you might still think about affiliate links to this day.

When I first heard about affiliate links, I immediately thought about girls promoting essential oils all over Facebook, and guys pimping web hosting services like Bluehost solely because of the extremely high affiliate commission rates.

One of my earliest web hosts was in fact Sh*thost Bluehost.

I fell for one of those biased web hosting recommendation articles that are rampant across the internet.

This is an example of how I was misled by a trashy affiliate website that was using affiliate marketing with misaligned incentives:

• I signed up for Bluehost web hosting using someone’s affiliate link
• The affiliate website generated a hefty affiliate commission at my expense
• I soon realized Bluehost (EIG) is a trashy web hosting company that exploits affiliate marketing to stay relevant
• I lost trust in the affiliate website that “sold me” on Bluehost web hosting

Millions of people have shared similar experiences. Which I assume is why millions of people distrust affiliate marketing.

But affiliate marketing is not the problem here.

Misaligned incentives are the root cause of the spammy affiliate marketing culture you see all over the internet.

Using my previous example, if the affiliate website had recommended a quality web hosting company rather than Bluehost, here’s what would have happened:

• I would have signed up with a quality web hosting service
• The affiliate website would have still generated a generous affiliate commission from a better affiliate program
• I would have continued to trust the affiliate website
• I would have continued to purchase affiliate products from the affiliate website for years to come
• The affiliate website would be in a more profitable and advantageous position over the long-term

But whoever was running that particular affiliate website had misaligned incentives.

He was only focused on short-term profit maximization, which is only one aspect of a proper incentive structure for building a sustainable online business.

• Maximizing your short-term profit is good
• Ignoring every other aspect of building a proper online business is not sustainable

The guy running this particular affiliate website was either unaware of or didn’t value the other fundamental aspects of building a long-term online business, such as:

• Building a loyal digital community
• Carving out a trustworthy and dominant reputation in your market
• Building superior brand equity for a larger future exit price

Here’s the main thing to keep in mind as an online entrepreneur who leverages affiliate marketing:

When you recommend an affiliate product to someone, that person is probably going to wonder what your incentives are.

Is your incentive to maximize profit in the short-term with total disregard for every other aspect of building a sustainable online business? (misaligned incentives)

Or…

Is your incentive to genuinely solve a person’s pain to the best of your ability, while also maximizing your profit, and boosting your trust, reputation and repeat business over the long-term? (aligned incentives)

The reality is most affiliate marketers start out promoting any acceptable product they can find because they’re literally hungry to make money online. When I use the word literally here I mean it.

New affiliate marketers are oftentimes broke and occasionally even physically starving. I won’t make judgments here, because this is the exact position I was in when I first started building affiliate websites.

Early in my entrepreneurial journey, there were times when I lived off rice for weeks. When you’re physically starving, you’re willing to sell anything just so that you can eat.

The least I can do is tell the truth, and admit that you need properly aligned incentives to leverage affiliate marketing as a monetization method for building a sustainable online business.

Here’s the good news.

I am beginning to see more online entrepreneurs leverage affiliate marketing to build sustainable online businesses.

The future of affiliate marketing revolves around properly aligned short-term and long-term incentives.

You need full spectrum awareness to achieve maximum leverage with affiliate marketing.

Here’s why.

Affiliate marketing is a monetization method, not a business model

Affiliate marketing is a monetization method and not a business model.

I need you to read this again because of how important it is to understand.

Affiliate marketing is simply a method for monetizing a business and not a business model on its own.

You need a business model to achieve maximum leverage with affiliate marketing.

To make the most of affiliate marketing, you need to serve a target demographic with pain-reducing or life-enhancing products at scale.

You also need to be able to do this consistently and reliably if you’d like to make significant money with affiliate marketing on the internet.

Some people leverage affiliate marketing through organic traffic channels. Other people prefer to leverage affiliate marketing through paid traffic sources.

I’ve published a massive blog post on building affiliate websites using a combination of:

• Organic traffic sources
• Properly aligned (“win-win”) incentive structures

Affiliate websites are a simple business model that can potentially cover all of your living expenses when you approach the model with properly aligned incentives.

Here are some other business models that often leverage affiliate marketing as a monetization method:

• Social media influencer (YouTube / Twitter / Pinterest / Instagram)
• Custom built value-add website (i.e. Namechk.com or Kiwi.com)
• Email marketing (build an email-based community)
• Digital media brand (my current business model of choice)

What do all these business models have in common?

You’re connecting a target demographic with affiliate offers they want to buy.

Online business is about serving a community of people who share similar interests.

In online business, you must add value to people’s lives either by solving their pain or increasing their pleasure.

Once you build a community of people who trust you, that’s when you’ll be in a position to present people with affiliate offers that solve their pain or increase their pleasure.

This is how you leverage affiliate marketing to build a profitable and sustainable online business.

Why I transitioned from building affiliate websites to media brands

I recently transitioned from building “affiliate websites” to “media brands.”

I have zero attachment to affiliate marketing at this point, because affiliate marketing is optional to me.

I can build digital media brands and monetize them using private label products, books, educational trainings or properly aligned affiliate deals.

Affiliate marketing is just one monetization method of many.

There are a million different ways for you to make money online.

Right now, I’m focused on building digital media brands because I enjoy operating at a large order of magnitude, and embarking on big and exciting business ventures.

I will continue to promote affiliate marketing as a powerful, scalable monetization method

Affiliate marketing has never been the problem on its own, because affiliate marketing is just a monetization method.

It’s about how you use affiliate marketing that matters most.

Do you want to serve a community of like-minded people and solve their pain or increase their pleasure to the best of your ability?

Are your incentives aligned with building a sustainable online business that can eventually be sold for a large profit?

If you answered “yes” to both of these questions, you would likely benefit from integrating affiliate marketing with your online business model of choice.

The best affiliate products are the products you would recommend with or without an affiliate link

Here’s an easy qualifier to determine whether you should recommend a particular affiliate product or not:

Is this particular affiliate product the best possible option for solving whatever pain my community or prospect is attempting to solve?

Recommending affiliate products is a delicate process because recommending a bad or mediocre affiliate product can actually add more friction to someone’s life.

From my earlier example, when an affiliate website sold me on Bluehost web hosting, I wasted money, energy and time I’ll never get back.

This is why online entrepreneurs who engage in affiliate marketing have a responsibility to recommend preeminent products.

Here’s the Dictionary.com definition of preeminent:

Having paramount rank, dignity, or importance : OUTSTANDING, SUPREME

By recommending preeminent products, you:

• Solve people’s pains
• Increase people’s pleasure
• Build lasting trust
• Attract repeat business
• Build stronger brand equity
• Maximize your company’s revenue over the long-term

You can read my review of the Weaponized Psychology System if you’d like to understand what recommending a preeminent product looks like. Weaponized Psychology System gave me a powerful understanding of incentives, human behavior and psychology. It’s the best affiliate product I’ve recommended. This is a preeminent product that has had an overwhelming influence on the direction of Online Heaven.

Recommending preeminent products as an affiliate is a guilt-free process because you’re solving people’s pains or increasing people’s pleasure to the best of your ability.

How Wirecutter designed the perfect incentive structure for affiliate marketing

Wirecutter is a product review website owned by the New York Times.

From the NYT’s third quarter earnings report for 2018:

Other revenues rose 49.3 percent in the third quarter primarily as a result of growth in our commercial printing operations, four and a half additional floors of rental income from our New York headquarters building and affiliate referral revenue associated with the product review and recommendation website, Wirecutter.

The NYT’s “other revenues” equaled $37.8 million in 3Q18 which was a 49.3% increase from 3Q17.

There’s either been a massive increase in “commercial printing operations” at the NYT, or Wirecutter is generating explosive affiliate referral revenue. Considering Wirecutter has over 100 remote and in-house staff I’m going with the latter.

Wirecutter is a great example of an online business that solves people’s pains first and foremost, and leverages affiliate marketing to generate north of $20 million in revenue annually.

Have you ever researched a product you were thinking about buying, and soon realized you were going down a deep rabbit hole of biased product recommendations?

This is a huge pain in digital media that’s causing consumers to filter between biased product recommendations and genuine product recommendations.

Luckily, pain leads to opportunity in the world of online entrepreneurship.

Wirecutter solves the biased product recommendation pain by offering genuine product reviews and recommendations paired with properly aligned incentives.

From Wirecutter’s about page:

Up front: Our writers and editors are never made aware of which companies may have established affiliate relationships with our business team prior to making their picks. If readers choose to buy the products we recommend as a result of our research, analysis, interviews, and testing, our work is often (but not always) supported through an affiliate commission from the retailer when they make a purchase. If readers return their purchases because they’re dissatisfied or the recommendation is bad, we make nothing. There’s no incentive for us to pick inferior products or respond to pressure from manufacturers—in fact, it’s quite the opposite. We think that’s a pretty fair system that keeps us committed to serving our readers first.

Wirecutter has separated their editorial team from their business team (money team).

Wirecutter writers do not know whether a product review will generate revenue or not. There’s no incentive for Wirecutter to inject bias into a product review for any reason.

This is a smart system with perfectly aligned incentives which makes affiliate marketing a win-win for consumers and Wirecutter.

• Consumers trust Wirecutter
• Wirecutter is experiencing explosive growth in affiliate referral revenue because consumers trust Wirecutter

Now, I know what you’re thinking.

Most online entrepreneurs aren’t in a position to create an incentive structure like Wirecutter’s.

You might not have an editorial staff or business team of your own just yet.

Luckily, there’s a simple way for you to generate explosive affiliate referral revenue like Wirecutter regardless of which stage of online entrepreneurship you’re at.

Be trustworthy

The most important thing to keep in mind is that trust is clearly the future of affiliate marketing.

Affiliate marketing becomes a powerful monetization method after you:

• Clearly define how you’re going to solve a target demographic’s pain or increase their pleasure over the long-term
• Build trust with your community
• Set up a properly aligned (“win-win”) incentive structure similar to Wirecutter’s
• Commit to recommending preeminent products

When you approach affiliate marketing from this perspective, there’s absolutely no reason to hide the fact that you use affiliate links.

The more transparent you are about affiliate marketing, the more your community will trust you, and have confidence in your affiliate product recommendations.

Most of the large digital media companies that depend on affiliate marketing make it abundantly clear to their communities that they use affiliate links to better serve readers.

Because, when implemented properly, affiliate marketing is a win-win system that:

• Reduces or eliminates traditional display advertising
• Keeps web content 100% free (no paywalls necessary)
• Helps consumers make preeminent purchasing decisions
• Helps online entrepreneurs build thriving digital businesses

Last but not least, affiliate marketing is optional. No one is forcing consumers to purchase affiliate products. Affiliate marketing helps consumers purchase awesome products if they want to buy them.

In online business, ordinary people hold the power.

Online entrepreneurs serve people according to how people like to be served.

Google won’t judge you either

One last thing.

There’s absolutely no reason to believe that Google “judges” your website for using affiliate links.

You don’t need to manage the number of affiliate links you use for SEO purposes or anything like that.

Building genuine trust with your community is more important than worrying about what Google thinks of your affiliate links.

Mainstream media companies like Business Insider, Buzzfeed and the New York Times all use thousands of affiliate links across their digital assets, and you can do the same exact thing.

Build trust and relationships with your online community.

Solve people’s pain or increase people’s pleasure.

Recommend preeminent affiliate offers.

And the revenue will follow.

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