Affiliate Marketing Has High Turnover and Low Chance of Success?

The September 2011 issue of Website Magazine — which was distributed to every Affiliate Summit East 2011 attendee just a few days ago — has an interesting article where Peter Prestipino, the magazine’s Editor-in-Chief and good friend of mine, analyzes the affiliate marketing industry in light of data from 2011 AffStat Report released earlier this summer. It’s a solid article, but there’s one thing in it that I do not agree with. On pages 32-33 we read:

High Turnover Plagues the Industry

Know at the outset that affiliate marketing is difficult. Perhaps the most disconcerting aspect of the report is that the turnover is unusually high.

Forty percent of affiliate marketers have been involved for less that three years, and 32 percent have been involved for four to six years. That, of course, leaves 28 percent that have been involved for seven years or more.

A highly critical analyst might predict that the chances of success are low with such a rate of turnover. But for those who have achieved some success, they stick with it as the returns are measurable and can be extremely positive.

I would disagree with that analyst. So we see:

• less than 3 years — 40%
• 4-6 years — 32%
• 7 years or more – 28%

Per a 2008 study by JupiterResearch, affiliate marketing was expected to grow “at a compound annual growth rate (CAGR) of 13 percent” between 2007 and 2012 [source]. Its revised version, which was published by Forrester Research in Fall of 2009, forecasted “the affiliate marketing industry to grow from $1.9 billion in 2009 to $4 billion by 2014” [source]… And the industry has been developing this fast not only in the recent years. Back in 1994 out of mainstream online retailers it was only CDNow.com that had an affiliate program. In July 1996 Amazon.com started theirs… Today nearly all online retailers from the Internet Retailer’s Top 500 list have affiliate marketing programs in place. And looking just at the top affiliate networks we see around 20,000 affiliate network-based programs with hundreds of thousands of affiliates involved… No, the above stats isn’t implying high turnover rates — while, of course, there are both affiliates, and merchants who try it and drop it; but in most cases I tie this to their own approach(es) — or low chance of success. It’s more or less mirroring how the industry has been developing over the past 7-10 years.

Whether you agree or disagree with the above, I’d love to hear your thoughts on this one too. Please use the “Comments” function below to add your take on this.