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Drop Servicing vs Affiliate Marketing: Introduction
Today we are going to talk about Drop Servicing vs Affiliate Marketing. Why?
These 2 business models are by far the easiest online businesses to start. With that being said, they are very different.
In affiliate marketing, we sell other businesses products through our tracking link when a sale is made we earn a commission. When we are drop servicing, we are selling services that we buy from freelancers at a cheaper price. The difference is our profit.
There are a few key differences between drop servicing and affiliate marketing which include:
Drop Servicing requires a payment processor
Drop Servicing usually requires a shorter time to succeed
Drop Servicing requires fewer skills
Affiliate Marketing is more scalable
Affiliate marketing requires a smaller budget
Throughout this guide, we will be talking about these points in more depth to help you find the right business for you.
We will be comparing these two business models in categories including:
Time To Success
Let’s get into the comparison!
Firstly, we are going to be looking at the entry barrier for both of these business models.
This one will be pretty easy, as they are both identical. Why?
For both of these businesses, there is no entry barrier. In terms of affiliate marketing, there are many affiliate programs that don’t even require approval.
If you are starting a drop servicing business, you can buy services and sell them as your own. There is no copyright or anything like that on services. However, I would always recommend letting the seller know that you are selling the service on, just so that you are on the safe side of things.
An entry barrier for both of these businesses does not exist, so let’s move onto the next category.
In terms of skills required, these businesses differ a little from each other.
Let’s start with drop servicing. Drop servicing requires you to be able to build a sales funnel or an online store where you sell your service. Thanks to technology today, this is really easy as most pieces of software have drag and drop builders.
The cheapest and recommended option is GetResponse, their prices start at just $15 per month. They also offer a 30-day free trial. Apart from building your store, you will only have to be able to pick out services to sell (for example, from Fiverr) and do keyword research.
Now, let’s talk about the skills required for affiliate marketing.
There are many different methods for affiliate marketing, you could start a blog, you could start a YouTube channel or you could run paid ads.
All of these different methods require different skills. However, I would say that one of the main skills for affiliate marketing is content creation.
Or if you purely want to focus on paid ads, you would have to learn paid ads, keyword research, and email marketing. Again, in terms of collecting emails, you can do this with GetResponse. The same goes for email marketing.
So, in terms of skills, although they are pretty close, I would say that drop servicing requires a little fewer skills. However, it really depends on the affiliate marketing method you choose.
Next, we are going to have a look at the budget required to start these two businesses. In the examples below, we will be having a look at the bare minimum for starting these businesses. I would always advise starting with more.
Drop Servicing Budget
When you are starting a drop servicing business, you will only need a basic GetResponse plan that costs $15 per month. The rest of the budget all goes to ad spend.
In order to be successful, I would recommend using a budget as high as possible. However, with very good keyword research, you could use ad spend as little as $100. However, if you are using a budget this small, then you will have to do very good keyword research as well as competitor analysis.
Here are some factors to research for your drop servicing business:
CPC of keywords you want to target
How much does your competitor charge?
Search volume of keywords
Other data about competitor
If you plan a campaign well, taking into account all of these factors, then you can start with as little as $100. However, I wouldn’t recommend starting with an amount that small as it could always go wrong.
In total, you are looking at $15 per month and your ad budget. Additionally, you will probably need some more depending on your payment processor as you will have to buy the service after you make a sale.
Affiliate Marketing Budget
In affiliate marketing, there are many different methods that you can use, as I mentioned earlier.
So, I decided that instead of giving you a number that would only be accurate for one method, I would give you a table. The table below contains the minimum for each method.
If you are very skilled in paid ads, $400. I would rather recommend a monthly budget
The reason, I say you shouldn’t start with less than $1000 if you are focusing on paid ads, is that you will always have to test a little. Especially, with affiliate marketing as other affiliates are promoting the same products so there will be competition. Additionally, you will usually only receive 50% commissions which mean 50% less profit of a normal advertising campaign.
In terms of budget, affiliate marketing through content creation will require a smaller budget. If you want to use paid ads, then drop servicing will usually require a smaller budget.
Time To Succeed
Next, I wanted to talk about the time to succeed.
Now, this factor has a lot of variables including:
Time & Effort put in
However, I will still guide you through the differences between both of these business models.
Drop Servicing – Time To Succeed
Drop Servicing will usually require a smaller time to succeed. To become profitable, will usually only take around 30 days or even less. However, this number of days does assume that you put a lot of time and effort into the business. Additionally, you should also have a decent-sized budget depending on your keywords and niche.
To earn a substantial extra income off drop serving can take anywhere from 30 days to 90 days. Again, this assumes that you are putting in a great effort.
Affiliate Marketing – Time To Succeed
With affiliate marketing, things get a little bit more complicated.
If you are going down the recommended content creation path, then things will usually take around 6 months to start gaining some traction. Often, this number can be more if you are blogging. If you are creating YouTube videos, this number can be less.
With that being said, you must know it depends on so many different variables that it’s impossible to say.
In terms of paid ads, it can take anywhere from 30 days to 6 months. There are so many variables and it depends on your campaign.
Affiliate marketing through content creation will always take a lot longer than paid ads. However, it is less risky, evergreen and free. The time to succeed in drop servicing is definitely quicker than when you are promoting affiliate products with paid ads.
Affiliate marketing is more scalable.
You will be able to have more customers and these customers will buy multiple products. Not only that, but you will also have other ways of monetizing by selling your own info product and other methods.
Not only this, but you can also branch out into different niches too, so the sky is the limit.
With drop servicing, things are a little more complicated, but it’s scalable too. However, I would argue that it’s not quite as scalable as affiliate marketing as there are only so many businesses looking for a specific service.
That doesn’t mean that you can’t scale. You can scale a drop servicing business into many little agencies for different purposes.
For example, you could have 5 different agencies:
E-Book creation agency
Video Editing & Creation Agency
Of course, this would be a bit later down the line, but you can build yourself up a real agency through drop servicing. In fact, you could build yourself multiple agencies that all do a decent amount of revenue.
Other but important
Lastly, I wanted to talk about things that don’t fit into the categories above, but yet.
1. Policies, Terms & Conditions and Disclaimers
This is something that you will have to research yourself. For both of these business models you will need privacy policies and terms and conditions. Additionally, you will need affiliate disclaimers as an affiliate. If you are starting a drop servicing business, you will also need a refund policy for certain scenarios.
2. Payment Processor
As I mentioned earlier, you will need a payment processor if you start a drop servicing business. So, make sure to go and research which ones would work for you.
3. Business Licenses & Taxes
Again, something that you need to research yourself. This depends on your country, your state, and your situation. So, you will have to research these things yourself. Make sure to do this, before entering any business model.
4. Risk Of Paid Advertising
Paid advertising carries risks. You should always only invest amounts that you can lose, or even are willing to lose. Each paid advertising campaign always needs planning, usually, it needs testing too. So, make sure to be sure about those risks involved.
If you strongly want to go into paid advertising, I would recommend drop servicing. As somebody who does both of these business models, I have almost completely stopped running paid ads for affiliate marketing. Paid ads for drop servicing are a lot more effective. Especially, if you target businesses who are looking for these services that you are selling.
Both of these businesses are incredibly easy, compared to other business models.
I hope that this article has helped you find the right business model for you. They are both great business models, so either choice is great. Personally, I like to do both, as I enjoy both of them.
If you are in doubt, you should just read another few articles, go look at what some different content creators say until you can make a definite choice. Below are some recommended resources on both of these businesses that will help you get started.