One of the biggest reasons why affiliate marketing newbies fail is because they don’t know how to choose the right affiliate offers to promote! Becoming an affiliate for the wrong product can put you on the path to failure before you even get started.
So, in today’s guide, we’ll look at how to evaluate potential offers with a focus on two main formats: physical products and digital products. These are the pros and cons for affiliate marketing physical vs digital products, plus tips on how to choose between the two!
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Affiliate Marketing Physical vs Digital Products: High-Level Overview
Even before you look at the best affiliate marketing niches to promote, it’s worth considering whether you want to look at digital products or physical products. As an affiliate marketer, you may have a natural affinity toward certain types of products, and finding what’s best for you can help you grow much faster!
Since affiliate marketing today is much more information-based and community-based, most marketers have an email list or group of followers based around a niche or category. The types of followers you have should also play a role when choosing the right product.
For instance, if you’ve been creating content about fitness for years, you’ll want to find products related to fitness, weight loss, or diet and exercise. In this case, both digital or physical products could work here, revolving around the “Health & Fitness” niche.
But whether you’ve picked a niche yet or not, it’s worth looking at the pros and cons of digital vs physical products!
Promoting a Digital Product
Digital products are virtual items that you can access/download by paying a fee (either one-time or subscription-based). Some of the most popular examples of digital products include:
- Video courses
- Membership sites
- Software subscriptions
- Stock assets
In fact, ClickBank ONLY offered digital products until 2014!
And while ClickBank’s physical products business today is massive, our marketplace still features many of the best digital affiliate products in 2022!
Regardless of where you find digital products to promote, though, you should know that the digital products industry is growing at an accelerating pace. One report suggests that the digital goods market will cross $331 billion in 2022! This means that there’s massive opportunity for affiliate marketers to promote digital products.
So, are digital products the right choice for you? I spoke with some of our experts at ClickBank to share these 3 pros and 3 cons of digital affiliate products for affiliates!
The Pros of Promoting Digital Products
1) Digital products tend to convert at a higher rate.
In the direct response space, digital products tend to be more affordable than physical products.
This is a big deal, because a lower price point usually means higher conversion rates from your potential buyers. Customers are usually more willing to take a chance on less-expensive products!
And depending on the digital product you promote, a higher conversion rate can mean more sales for digital goods vs physical ones. This is particularly attractive if you’re an organic affiliate/content publisher with less total traffic to send over – in that case, your odds of generating more sales overall is higher with digital offers.
There’s one more benefit to conversions: digital products are excellent impulse buys, as they combine a lower price point with the ability to access them almost instantly after purchase!
2) Digital products help with testing funnels and setting up passive income streams.
A digital product is almost completely evergreen, which means that you can promote it forever – and you never have to worry about it running out of stock! The evergreen aspect of digital products allows marketers to warm up their audience or even test a funnel without worrying about the traffic going to waste due to inventory issues.
Focusing on evergreen digital products allows you to set up long-term funnels for quality affiliate offers. Successful digital product funnels don’t require much maintenance and can generate profits for years!
3) There’s a wider variety of categories for digital offers.
A good affiliate marketer knows that not every niche can cater to a physical direct response product. The fact is, it’s a whole lot easier to create an info product around a very specific problem.
For instance, if you want to sell to the women’s health niche, and you’re trying to address the pain point of incontinence, there isn’t really a supplement that can help with that – but there is a product like Pelvic Floor Strong to help teach women exercises for a stronger pelvic floor to address incontinence.
For almost any problem your audience might have, it’s likely that someone has packaged valuable information to help solve it – and because information costs less to package and to sell, a lot of info products work better as a direct response offer compared to their physical counterparts.
The Cons of Promoting Digital Products
1) Return rates can be higher with digital products.
Even though end customers often prefer digital products over physical products, your sale can still backfire. Due to the “digital” nature of the product(s), it’s easier for customers to return a digital product – all they have to do is press a button or two.
Compare that to the process of returning a physical product. Usually, you’d have to pack it back up and put it in the mailbox, or even drive it to the post office. This is enough of a hassle that many customers won’t bother trying to return a physical product.
So, if the digital product you promote isn’t top-notch, then you can run the risk of higher refunds. Anyone promoting on RevShare as an affiliate will see those returns eat into their bottom line.
2) Average order value for digital products is (usually) lower.
Most digital products are set at price points of less than $100, except for high-ticket biz opp/e-biz digital offers like Kibocode. This means that if there isn’t a strong upsell flow for these digital products, your potential commission will be lower.
Plus, your traffic options might not be as plentiful. With a lower average payout per sale, you can’t afford to invest heavily in traffic sources like paid ads or even a lot of quality organic content like SEO blog posts. In the end, the price point has to make sense for you to put the time and money into any given campaign.
3) Digital products don’t work with every pain point and audience.
One of the biggest drawbacks to digital products is that your target audience tends to be limited.
For one thing, prospects need to be at least a little tech savvy! Your customers need to know how to get online and order products through the web. (Yes, there are still plenty of people around the world who don’t buy and access products online very much, if at all).
By the same token, some people just don’t trust online retailers. These are potential customers you may not be able to convince to make a digital product purchase.
Another big issue? Digital products tend to be extremely niche in nature! This is both good and bad, but it means that you may have a difficult time finding the right audience for a specific ebook, for example – or finding a big enough audience to justify your effort.
Lastly, not all pain points have a digital solution. Back to our women’s health example, if you looked at the pain point of easing period cramps, an ebook may not sell like a portable heating pad would!
Digital Products Summary
Because digital products have real pros and cons, it’s important to weigh them against each other and see if it makes sense to focus on promoting digital products as an affiliate.
You may also want to consider other factors, including the marketing dollars you’ll have to invest, your knowledge of the product(s), and the relevance of these products to your audience.
Promoting a Physical Product
Physical products can be categorized as any tangible product that must be shipped to a physical address. These products can essentially be broken down into consumables, such as supplements, cookies, protein powders, and gummies – or non-consumables, such as clothing, fitness equipment, furniture, and electronics.
The affiliate marketing industry for physical products is massive! In fact, 16% of all e-commerce revenue comes through affiliate marketing!
That being said, not all affiliates should promote physical products. As mentioned earlier, there are multiple variables that you need to think about before you make that decision.
Here are 3 pros and 3 cons of promoting a physical product!
The Pros of Selling Physical Products
1) Physical products convert well on paid media like Facebook and YouTube.
We’ve seen plenty of evidence over the years that physical products tend to convert well on paid social channels like Facebook, Instagram, and YouTube!
Part of this is due to the potential for detailed targeting, though this is less prevalent after Apple’s iOS 14 update over privacy concerns.
Since your target audience is already present on these platforms and consume content on the daily, an effective marketing strategy and good-quality content creation can catch the attention of thousands of potential buyers.
2) Many physical products work for a broader audience.
It’s important to figure out what your approach to audience targeting is. As we mentioned earlier, the biggest benefit to a digital offer is how niche it can be – but on the other hand, your potential audience for a super specific product is also going to be smaller.
Many physical products, on the other hand, are perfect for mass consumers. Items like apparel, electronics, weight loss supplements, kitchen appliances, or fitness equipment are applicable to just about anyone. This means that your target audience can sometimes be, well, everyone!
Since most physical products are used by so many people, you have a wide audience to target, which means more opportunity to optimize and scale a working campaign.
3) You can scale to the moon with physical products.
Speaking of scaling, once you’ve chosen the physical products space as an affiliate, your scaling opportunities are almost limitless!
The primary goal of media buyer affiliates who want to get paid traffic for affiliate marketing is to find a winning recipe of offer, ad, and audience that makes more money than they spend on it – and then scale it so the more they spend, the more they make.
At ClickBank, close to 100% of our top clients scale to six figures or more by selling physical products, many in the health and fitness space. This doesn’t mean that scaling paid ads for physical products is the right move for ALL affiliates, but we do have plenty of evidence that physical products are a good option for media buyers looking to scale!
The Cons of Selling Physical Products
1) High CPCs for paid ads on this type of product.
The cost per click for physical products is high, more often than not.
This is because there’s more competition to rank for those keywords, partly because the price point for these products can be on the higher end too, meaning higher commissions and more affiliates are competing for that sale.
2) Commission payouts may be lower because of higher costs.
Unlike digital offers, most physical products have a higher selling cost per unit, including COGS, fulfillment, and shipping. Then, what’s leftover has to be further split between the seller and affiliate.
Physical products are also usually produced in bulk, stored in a warehouse, and packaged with care. Due to these additional costs, your commissions may suffer unless the seller has all of their numbers dialed in just right!
The only saving grace is that physical products tend to fetch a higher overall price, so you can still make a smaller commission on a higher price work out. But don’t be surprised to see a lower margin and commission percentage for many physical affiliate offers.
3) Inventory concerns can hamper big physical offers.
Imagine you’re an affiliate who’s sending a ton of traffic to a high-converting physical offer, and then you start seeing a bunch of refunds because everyone is on back order.
This may not be a common occurrence, but it can happen if the seller isn’t managing their inventory well, or is having some kind of supply chain issues.
While there are ways to reduce the risk of overpromoting a physical affiilate offer, this isn’t a problem at all on the digital side – so be aware of inventory if you’re making plans to scale an offer. At the very least, you’ll want to stay in touch with the product owner to make sure they have the stock to fulfill all of the orders you generate in a timely manner.
Physical Products Summary
Physical products are tangible and real, which gives them an inherent value that some digital offers lack. But they also cost more to produce and ship.
Can you find a physical offer that your audience wants, that pays out more than your typical promotion costs, and that you believe in?
Another Major Factor: CPA vs RevShare
Now that we’ve shared the biggest pros and cons of promoting digital vs physical products on ClickBank, I want to mention this important caveat: the details can shift depending on if you’re promoting via CPA or RevShare commissions!
The CPA commission structure refers to cost-per-action, where the affiliate marketer makes a commission for every successful “action” (which, on ClickBank and other affiliate networks, is typically a successful sale). With CPA, you’re paid a flat dollar amount for every sale, no matter what the order value is.
On the other hand, the standard RevShare model means revenue share, where you make an agreed-upon % of the total order value for each sale. This means that your commission will directly depend upon the total order value of the products you’ve promoted – unlike the CPA model, where all your commission amounts are predetermined.
But the biggest difference here is whether you’re responsible for paying back any sales that get refunded. With CPA, you get paid no matter what – but on RevShare, your commission on a sale will be paid back in the event of a refund.
To see the full picture, check out our deep dive into the CPA vs RevShare commission structures.
What’s the Verdict?
So, should you promote physical or digital products?
The broad answer, of course, is that “it depends.”
Before you can make a decision, there are some important questions to ask yourself:
- What niche are you operating in?
- What are the most common pain points of your current audience?
- Which traffic source are you using to reach your audience?
- Is your audience well-defined in terms of age, interests, lifestyle, and other factors?
- Does your audience find value in your product(s) of choice?
Remember that paid media traffic sources require a high enough affiliate payout to cover the cost of your ads, so lower-AOV digital offers typically won’t work well on paid media.
Further, email allows for almost any type of offer, digital or physical – our affiliates have seen great success with both!
And then there are plenty of “hybrid offers” out there. These are offers with both physical and digital products in the upsell flow, making them a perfect option for driving higher cart value and getting paid higher commissions!
As for actual numbers, we currently see a LOT of supplements that pay our affiliates in the $150-300 range per sale, while a front-end digital/info product might pay $80. So, you should watch for products with a strong upsell flow that can earn you commissions higher than that front-end product price. You just have to find the right offers and present them to a relevant target audience!
If you don’t have an audience yet for a chosen offer, but still want to promote the product, you can always build a new audience! However, this will require an investment in terms of not only money, but time and patience as well.
How to Find the Best Products
Even when a product looks interesting, it may not necessarily be the best choice for your situation. To find the ideal fit for your business as an online marketer, you need to figure out which niche fits with your target audience!
For instance, if your audience is primarily men between the ages of 21 and 40, you’ll want to look at products like gadgets, electronics, fitness gear, survival, and male dating offers.
You’ll also want to figure out the format your audience prefer (physical or digital) and where they tend to congregate online, so you can target them effectively.
It’s all about knowing your audience. Put yourself in their shoes… What would actually help them?
For Physical Products
If you’re looking at physical products, ask yourself the following questions:
- How long does shipping take?
- Are there reviews of the product, unboxings, etc.?
- Do they have supply chain issues?
- If I can push hundreds of sales a day, can the seller keep up with that increase in sales without delays?
- What will be my promotion cost vs. my average payout be?
For Digital/info Products
If you’re leaning towards digital products, here are some questions to ask:
- Does this product have any reviews or testimonials?
- What is the refund rate or quality return rate for this product?
- Is this a high-ticket or low-ticket product?
- Is this product valuable to my audience?
- What will be my promotion cost vs. my average payout be?
Even though many new affiliate marketers have a tough time figuring out the “winning” path, it’s a lot easier to do when you have the right information!
The biggest takeaway is that your chosen offers can be physical, digital, or both, depending on your niche and audience. If you’re focused on promoting products as an affiliate, the kind of product (physical, info, high-ticket, low-ticket, etc.) is less important than which ones are converting well with your actual customers.
Ultimately, you want to solve a specific pain point for your audience using the highest-converting product you can find. That is the only surefire way to make a sale!
For more information on picking the right products to promote and generating traffic to those offers, be sure to check out Spark By ClickBank!