The affiliate marketing landscape is changing rapidly, with companies like LTK and ShopMy building their business models around closed platforms. These companies have created what many call “walled gardens” – controlled ecosystems where they connect influencers, brands, and consumers while taking a cut of the transactions. But I’m increasingly skeptical about the long-term viability of this approach.
As someone who has watched digital business models evolve over decades, I’ve seen how walled gardens initially thrive but often struggle to maintain their position when market dynamics shift. The current affiliate marketing model shows concerning signs of vulnerability.
The Current Affiliate Ecosystem
Affiliate marketing platforms like LTK (formerly rewardStyle) and ShopMy have positioned themselves as essential middlemen in the creator economy. They provide the infrastructure that allows influencers to monetize their content through product recommendations while giving brands access to targeted audiences.
The value proposition seems straightforward:
- Influencers get tools to create shoppable content and track their earnings
- Brands gain access to influencer networks without managing individual relationships
- Consumers find products through trusted recommendations
- The platform takes a percentage from each transaction
This model has worked well in recent years, with some platforms reporting billions in sales. But the foundation is shakier than it appears.
Why These Walled Gardens Are Vulnerable
The biggest threat to these platforms comes from the very stakeholders they serve. Both creators and brands have strong incentives to bypass the middleman once relationships are established. Why should an influencer continue sharing revenue with a platform when they could direct followers to their own affiliate links or negotiate direct deals with brands?
Social media platforms themselves present another existential threat. Instagram, TikTok, and YouTube have all introduced native shopping features that allow creators to monetize directly within the app. These social giants have far more user data and engagement than any third-party affiliate platform could hope to match.
Affiliate companies like LTK and ShopMy rely on the platform to help drive revenue, but is the walled garden built to last?
This question gets to the heart of the matter. These walled gardens exist in an increasingly competitive space where their walls may be their greatest weakness rather than their strength.
The Coming Disruption
I predict several shifts that will challenge the current affiliate platform model:
- Direct creator-to-brand relationships will become more common as both sides seek to maximize profits
- Social platforms will continue expanding their native shopping capabilities
- New commission-free or lower-fee alternatives will emerge to undercut established players
- Blockchain and smart contract technology may eliminate the need for trusted third parties
The most successful creators are already building their own websites and apps where they can control the entire shopping experience without sharing revenue with multiple intermediaries.
For brands, the data and relationships locked within these walled gardens become less valuable as they develop their own creator relationship management systems and direct marketing channels.
Adapting to Survive
To remain relevant, affiliate platforms must evolve beyond their current role as transaction facilitators. They need to provide value that creators and brands can’t easily replicate themselves.
This might include offering advanced analytics, cross-platform promotion tools, or exclusive access to premium brand partnerships. Some platforms are already moving in this direction, but many are still too dependent on their commission-based revenue model.
The platforms that survive will be those that transform from gatekeepers into genuine service providers. They’ll need to justify their fees through unique capabilities rather than merely controlling access.
The affiliate marketing industry isn’t disappearing, but its current structure is ripe for disruption. Companies clinging to the walled garden approach may find themselves increasingly irrelevant as creators and brands forge direct connections and social platforms integrate commerce more deeply into their offerings.
For investors and industry participants, now is the time to question whether these platforms are building moats that can withstand the coming changes or simply enjoying temporary advantages that will erode as the market matures.
