Carving a career in affiliate marketing is seen by many as the first fingertip on the entrepreneurial ladder. It’s high risk work with a suitably high reward. Perhaps it should be no surprise that at a time when stock markets are riddled with fear, and savings accounts are bordering on useless, our industry is the subject of much interest from anybody with money to burn.

I’ve grown to see affiliate marketing not so much as a long term business, but as a source of easy capital for the company I want to build. It funds my bigger picture. Yet every so often I get to speak to individuals who see the industry from an outsider’s perspective. They don’t view affiliate marketing as the cold blooded arbitrage it usually is. They see it as an investment opportunity.

To them, affiliate marketing is the goose that lays the golden egg. It carries the legendary hook of ‘doubling your money‘, even if those words are rammed home by experts with as much integrity as a broken record. Many smart affiliates are harvesting small fortunes from our industry, that much is true. When you hear such a constant barrage of rags to riches tales, there has to be some truth to the idea that affiliate marketing is one of the quickest methods of doubling, trebling and quadrupling your money.

One glance at the typical UK savings account and you will find that annual returns greater than 4% are a rarity, especially if you require direct access to your money. By the time inflation is taken in to account, your newfound spending power raises some tough questions. “Should I continue buying Iceland-range cheesy wotsits by the multipack? Or can I afford to upgrade to Kettles?”

Decisions, decisions.

Affiliate marketing, to anybody sick of calculating the scant difference between 3% and 4% returns, is full of bold promises. It teases with countless fables of got rich quick stories, those that defy everything taught in Business Studies class.

I’ve never hidden my preference for running campaigns that achieve at least a 75% ROI. It’s a remnant of the shoestring budget I started with. To most business minds, immediate 75% returns are the sort of bullshit fantasies peddled by first-time entrepreneurs with their figures in a twist (forgetting to pay themselves, for example). But they do exist.

So does the golden carrot of potentially skyrocketing profits make affiliate marketing a suitable investment strategy? Or is it, to steal a particularly tasty lyric, a siren singing you to shipwreck?

If you found £100,000 to invest and had never touched an affiliate campaign, could you realistically expect to double your money? Does money buy you a better shot at success?

Well, ROI is deceptive, particularly in a field like affiliate marketing. The juiciest profit margins are a distant third in our importance stakes, trailing both scalability and sustainability.

Let’s say you have £100,000 to invest. You despise the typical savings accounts. You’re looking for a much greater return than the 4% which the proletarians live and die by.

Many people assume that as long as there are affiliates comfortably rocking 75% ROIs, it should be a walk in the park to beat the typical savings rates. If 75% is possible, 4% should be achievable while wearing a blindfold with your balls in the jacuzzi. Right? No, wrong. You’re assuming:

A. You will launch campaigns that actually make a profit.
B. You will invest the entire £100,000.

B cannot happen without A, unless your stupidity knows no bounds. And A cannot happen unless you’re naturally acclimatised to the industry.

On paper it looks pretty easy for an affiliate marketer to pummel that £100,000; to reap massive profits that are beyond the scope of banks, or even the stock market. But the percentages are skewed.

4% return on £100,000 leaves you with £104,000 at the end of the year. That’s a profit of £4,000. On par with a typical savings account

But what if you only get enough campaigns profitable to spend £10,000? In that case, you’d need to hit a 40% ROI to match the savings account rates.

Of course, there’s no reason why you can’t use a savings account and work on affiliate campaigns. Except that in most cases, you would erase your gains. As an investment source of infinite growth, the system is flawed. You’re throwing money at arbitrage, which is hardly a value investment.

The purpose of a savings account is to make all your money work for you. The mechanics of an affiliate business are completely different. Many would argue that having £10,000 to invest is just as good as having £100,000. Plenty of networks will pay you weekly so the cashflow is irrelevant. We aim to invest externally, not internally.

Every wise investor should make a habit out of reading the market before he shoves his dick in it. And what happens when you read between the lines of our industry? You hear, over and over again, that affiliate marketers are rushing to invest their money away from affiliate marketing. What does that tell you?

Even though we can sniff the delights of a 75% ROI, or taste the doubling of our money in an afternoon’s work, we know that like any market experiencing rapid growth – the bubble will inevitably burst.

Unlike the stock market, which specialises in exaggerated panic-stricken meltdowns, affiliate bubbles are burst every day.

It could be a Facebook account getting banned, the collapse of a top offer, or the bankruptcy of a once-great network. Our business plans collectively resemble a trip through the Chessington Bubbleworks; fragile and a little bit whimsical, to say the bloody least.

My advice to anybody looking to throw their money at affiliate marketing as a means of investment is simple: don’t do it. Use your capital to build assets that the rest of us are in this very business to fund.

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