Is affiliate marketing lucrative as a revenue stream for a web publisher?

Worldwide, affiliate marketing is a huge industry with affiliate publishers generating billions of dollars of sales for merchants and the publishers themselves earning millions of dollars. The industry is large enough so as to warrant several hugely-popular events such as the Affiliate Summit. In India, affiliate marketing is yet to really take off to those levels— despite a few affiliate / performance marketing networks already operating in the space. This may be due to the fact that online retail/e-commerce is only now beginning to pick up in India and as e-commerce becomes more widespread, we will begin to see a lot more momentum in the affiliate marketing space in the country.

One of the big challenges for affiliate publishers is the increasing cost of traffic acquisition that they will have to contend with. For web publishers who already have large captive audiences, affiliate marketing offers a very good passive revenue stream. However, for publishers who are setting up solely with the idea of generating revenues from that channel, things may no longer be as easy as they were some time ago. Of course, if the publisher selects a niche that sells high-value products with high margins so that they can use paid advertising to bring in traffic, it may not be too bad. But if the primary traffic acquisition channel is going to be organic search traffic, then it may be quite some time before the affiliate site makes any good revenues.

In fact, Google made an announcement on January 27 that they are likely to penalise affiliate publishers who do not add much value on their websites. Read this to say that affiliate publishers can no longer get by publishing content from the merchant sites or posting product feeds from merchants; they will need to add value to that content if they expect to get organic traffic from Google. Obviously, this means significantly higher content creation efforts, which eats into the margins that one can expect to get from affiliate marketing.

To summarise: thoroughly evaluate the cost-benefit of traffic acquisition in the niche that you are evaluating to generate affiliate commissions. Affiliate marketing can still be a lucrative proposition in high value, decent volume niches.