Unless you’ve been living in a cave for the past six months, or you’ve hidden yourself away in your bedroom trying to become the next ’super affiliate’, then you won’t have failed to notice that the economy is looking a little grim. And it’s not just in the UK, globally there’s been a massive downturn in borrowing, unemployment is on the rise, banks are being nationalised – it’s in a bit of a state. Even the government has acknowledged that we are heading for, if not already feeling, a recession (so it must be nearly over!).

Many small businesses are already feeling the effects; staff are being made redundant or, worse still, businesses are going under completely sometimes after years and years of trading. Even some larger businesses are going under too as the credit crunch (are you as sick of that expression as I am?) is well and truly paralysing them and their customers. This might seem like a worrying time for all involved but affiliate marketing may be one of the few professions that is able to withstand it. It is a little unclear how it will be affected, this is the first global recession since the Internet really took off and affiliate marketing came into being, but online business is looking like it’s the way forward — even more so at a time like this. There’s a theory that as petrol prices remain high, despite the drop in oil charges, many consumers simply can’t afford to fill their cars up to take a trip to the shops. This, coupled with the recent boom in online consumerism over the past few years anyway is actually good news for us online folk.

The fact that affiliate marketing is one of the rare revenue generating mechanisms that is ‘paid on performance’ is also a great benefit. It does exactly what it says on the tin, affiliates only get paid for the traffic they send that converts into sales so if they’re not performing very well then they don’t receive any money. This pushes affiliates to work harder on their conversion rates, which in the long run will make more money but it also means that merchants don’t have to pay affiliates a penny unless they make them money. Thus if a merchant is struggling it hasn’t got to worry about paying out to the affiiliates and similarly if the affiliates are doing well for them, the merchants will, by definition, have the funds to pay them

There are a couple of negative impacts, which are to be expected. Affiliate marketing isn’t entirely recession-proof understandably, although it’s closer to it than most sectors. Online sales may be better than high street sales but they will still be lower. Similarly, the demand for luxury goods generally drops during difficult financial times so if you sell products such as games consoles or perhaps top-of-the-range technology goods you may see a drop. This may be further compounded by market saturation — as anyone stocking or promoting Plasma and LCD TVs will probably testify. But if you have links with essential products such as food or toiletries, for obvious reasons, the demand will in all likelihood be higher. The affiliate marketing business also has very low overheads or staff costs which affords affiliate a degree of scalability during tougher times that merchants can only dream of.

There are a number of things you can do to minimise or pre-empt any drop in sales and offer people an incentive to still buy your products. The first being that where possible you should push merchants with strong guarantees on their products harder. Consumers prefer to make ‘no-risk’ purchases when times are particularly tight. It will also do wonders for your customer service rating and building that all important trust with your visitors. Secondly, promote merchants that provide discounts on bulk ordering, or certain goods as people can’t resist thinking they’re getting a bargain; they feel that they can justify spending money on such items. The explosive growth of the vouchers and offers space is a testament to this although do ensure that you adhere to the latest IAB guidelines when promoting voucher codes and offers (more on this soon!). Finally, make sure you stress how good the products you represent are. The most successful affiliate marketers will only sell products they think are high in quality or in which they believe wholeheartedly — so this shouldn’t be difficult and consumers are more likely to buy them again if they think there’s minimal risk involved.

For those of you promoting smaller merchants and merchants in notoriously ‘tough’ categories such as consumer electronics, mobile phones, brown goods and any sector related to DIY and home ownership, it is perhaps worth staying in close touch with the affiliate network account managers and also seeing what information you can gather from Companies House regards their financial status. Sadly, recession will drive some merchants to the wall and you need to be sure your vital Christmas traffic isn’t being sent in a direction that may not ultimately result in a cheque! Watch out for the warning signs: ridiculously high discounts; an over-the-top flurry of voucher codes and offers even by seasonal standards; forum postings on A4U and elsewhere that indicate prior or current payment issues. It is in everyones’ interests to keep the dialogues open in this area.

It’s inevitable that the market won’t see the kind of growth it’s seen over the past few years as the economy slows down but by keeping an eye on trends, putting in the extra work with your PPC campaigns and SEO work and riding the affiliate wave a little more cautiously there is no reason that you can’t continue to make money through affiliate marketing. And if your day job is looking a little fragile then upping your affiliate marketing game could see you coming through these difficult times with a smile on your face

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