Pros and Cons of Pros and Cons of Business Models Business Models

By Val A. Slastnikov,By Val A. Slastnikov,

Business Models ExpertBusiness Models Expert© 2010 Digitizer Group. All rights reserved© 2010 Digitizer Group. All rights reserved

PART SIXPART SIX(Pros and Cons (Pros and Cons

Of Affiliate Of Affiliate Model)Model)

What is an Affiliate What is an Affiliate Marketing?Marketing?

Affiliate marketingAffiliate marketing is a marketing is a marketing practice in which a business rewards practice in which a business rewards one or more affiliates for each visitor one or more affiliates for each visitor or customer brought about by the or customer brought about by the affiliate's marketing efforts.affiliate's marketing efforts.Is Affiliate Marketing for Is Affiliate Marketing for

you?you?

Who belongs in this Who belongs in this category?category?

Internet and MLM (Network/Referral) Internet and MLM (Network/Referral) Marketers, Independent Associates, Independent Marketers, Independent Associates, Independent

Distributors, Agents, etc.Distributors, Agents, etc.

Do you have what it takes Do you have what it takes to be an Affiliate to be an Affiliate

Marketer?Marketer?

““Affiliate Marketing” Affiliate Marketing” Pros Pros

Affiliate

Startup Costs:

Low

Carrying Costs:

Low

Multiple Income

Streams:Yes

Leverage:

Yes

Parent Biz Sub-Affiliates

Replicability:

Yes

““Affiliate Marketing” Affiliate Marketing” Cons Cons

Affiliate

Control:Low

Customer Base:Limited

Scalability: Limited

BrandingRestrictions

MarketingRestrictions

MediaRestrictions

GrowthPotential:

LimitedProfitability:

Low

““Affiliate” Business Affiliate” Business ModelModel

Pros: Pros: 55 Cons:Cons: 5 5

Level of Effectiveness = 50%Level of Effectiveness = 50%

Affiliate

Startup Costs:

Low

Carrying Costs:Low

Multiple Income

Streams:Yes

Leverage:

Yes

Parent BizSub-

Affiliates

Replicability:

Yes

Affiliate

Control:Low

Customer Base:Limited

Scalability: Limited

BrandingRestrictions

MarketingRestrictions

MediaRestrictions

GrowthPotential:

LimitedProfitability:

Low

AnalysisAnalysis

Internet Marketing Facts:Internet Marketing Facts:

Internet Marketing is the talk of the town. Internet Marketing is the talk of the town.

Businesses see the importance of Internet Businesses see the importance of Internet Marketing. Marketing.

Internet Marketing has made its mark in Internet Marketing has made its mark in terms of providing successful online terms of providing successful online presence. presence.

AnalysisAnalysis

Advantages of Internet Marketing:Advantages of Internet Marketing:

Internet marketing is a low cost Internet marketing is a low cost promotional strategy.promotional strategy.

Internet marketing is the easiest Internet marketing is the easiest way to reach a global market.way to reach a global market.

AnalysisAnalysis

Disadvantages of Internet Disadvantages of Internet Marketing:Marketing:

Internet Marketing does not build Internet Marketing does not build trust instantly.trust instantly.

Internet marketing is a tough Internet marketing is a tough competition.competition.

Analysis Analysis

MLM (Referral Marketing or Network MLM (Referral Marketing or Network Marketing)Marketing)

Multi-level marketing is a system of marketing Multi-level marketing is a system of marketing which puts more emphasis upon the recruiting of which puts more emphasis upon the recruiting of

distributors than on the selling of products. As distributors than on the selling of products. As such, it is intrinsically flawed. MLM is very such, it is intrinsically flawed. MLM is very

attractive, however, because it sells hope and attractive, however, because it sells hope and appears to be outside the mainstream of business appears to be outside the mainstream of business

as usual. as usual. It promises wealth and independence to all. It promises wealth and independence to all.

AnalysisAnalysis

Advantages of MLM (Network) Advantages of MLM (Network) Marketing:Marketing:

You get certain tax write-offs. You get certain tax write-offs. You get to buy products, some of which you You get to buy products, some of which you

will be happy with. will be happy with. You get to go to inspirational meetings, You get to go to inspirational meetings,

some of which will make you feel good. some of which will make you feel good. You may meet new friends and you may You may meet new friends and you may

even make a few bucks. even make a few bucks.

AnalysisAnalysis

Disadvantages of MLM (Network) Disadvantages of MLM (Network) Marketing:Marketing:

You may end up alienating some family and friends. You may end up alienating some family and friends. You may end up buying more stuff than you sell. You may end up buying more stuff than you sell. You will learn a lot about deceiving yourself and others. You will learn a lot about deceiving yourself and others. You won't be allowed to tell anyone how you are really You won't be allowed to tell anyone how you are really

doing. doing. You will always have to think positive, even if that means You will always have to think positive, even if that means

lying. lying. You will have to tell anyone who asks that you are doing You will have to tell anyone who asks that you are doing

great, that business is wonderful, that you've never seen great, that business is wonderful, that you've never seen anything go so fast and bring you income so quickly, even if anything go so fast and bring you income so quickly, even if it isn't true.it isn't true.

TakeawaysTakeaways

The biggest obstacles in Affiliate business The biggest obstacles in Affiliate business model are:model are:

You don’t own the business, so you You don’t own the business, so you can’t improve it. can’t improve it. Because you can’t improve it, Because you can’t improve it, your success is limited.your success is limited. You can only make a fraction of what You can only make a fraction of what the business owner makes. the business owner makes. If you consider yourself a true entrepreneur, If you consider yourself a true entrepreneur, you might as well start a business that you you might as well start a business that you

own.own.

Where do you go from Where do you go from here?here?

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PART SEVEN