Affiliate marketing is second only to adsense for the easiest way to start making money online. I think that all online hustlers try this at some point in time, but most don’t reach the level of success they thought that was possible. A lot of people come into making money online and immediately think that they can start making dollars.
But if you’ve read my other post, it’s easy to start a business but hard to get people to care. With affiliate marketing you have to get people to buy? How do you drive that interaction?
The world of affiliate marketing involves affiliates (me), networks (ie Clickbank) and merchants (ie Fatcow). I explain what these are in this post and give examples of different profit / marketing strategies.
These are the people with websites, forums or followings that sell the products. You can set up a website today based around a type of product and begin selling or promoting it. It’s easy to start an affiliate website, but difficult to make a lot of money or replace your regular income through affiliate sales.
Why do affiliate websites fail?
There are two approaches for promotion. One is to build authority and readership through white hat methods of good content spread across multiple diverse channels (blog, video, social). The other is to game the networks and invest heavily in SEO, Google Adwords or other media buys.
White Hat Affiliate:
Spencer Haws is one of the best examples of pure white hat affiliate marketing. He’s built a large cult like following, developed his own products (LongTailPro) and sells webhosting and other related items in the niche. Through his blog, he’s given people a reason to care, developed trust and therefore people feel comfortable buying the products that he recommends.
Grey Hat Affiliate:
John Chow is a blogger in the internet marketing space. He posts low quality articles that say the same things over and over again. He brings the traffic in from others in the space and from being an authority for a few years. A lot of the products Chow sells are information related, where he’s a master at the marketing funnel for clickbank or other lesser products. Chow doesn’t post income reports, but I bet they’re scary.
Affiliate networks act as middlemen between merchants and affiliates. These networks will take a percentage of each sale from the merchants cut. This makes it very attractive for affiliates to visit these network sites and choose what products or services they would like to sell. Networks rank products by different scoring factors and affiliates can quickly tell what products are rated highest, greatest earning potential and what to avoid.
Affiliate networks have different types of offers available.
CPA networks like MaxBounty are cost per action. The affiliate only gets paid when a lead signs up for a free trial or leaves an email address / contact information. Popular CPA ads include Netflix trials, online college and insurance. Some affiliates will drive traffic through Google Adwords (paid) and then convert those people into a CPA bounty.
Clickbankis the most popular affiliate network for information products. You can login there and see products or systems for winning back your old girlfriend or gaming forex trading. Information products usually pay 70% or more of the purchase price due to the marketing funnel customers go through. They’re offered one upgrade after the next and there is a value assigned to each product on what the average total purchase is.
This video on Clickbank is fascinating.[Commission Junction](http://cj.com/) is probably the top white hat affiliate program that hosts top tier merchants like Home Depot, Walmart or Apple. It often takes approval to gain access to a lot of these programs and for e-commerce they do not have high payouts.
There are also networks set up specifically around certain niches like web hosting, health & beauty, online marketing, etc.
A merchant is the product creator or seller. You have the merchant account that payments are processed through and you developed the information product, are selling the physical good or service (ie webhosting).
Do merchants need to work with affiliates?
Affiliate marketing is a way to generate additional business. The key is knowing your average cost to acquire a customer and their lifetime value. Without knowing these data points, it’s kind of pointless to start because you’re going to be paying out based off of feelings. In business that makes no sense.
For example whenever I refer someone to Fatcow webhosting they pay me $100. The average purchase for webhosting and a domain is around $50, but they know that between the upsells offered and average lifetime value that paying $100 to acquire a new customer is worth it to them.
So think of your affiliate marketing program as an expense to acquire a new customer. You don’t want to pay more than what their worth and you also want to create an attractive offer for maximum exposure.
Building an affiliate program –
You can build an in-house affiliate program using many different types of software that are available. This option is sometimes better because you can manage payouts, track items and make sure that your affiliates are sending good customers your way. If you’re running a CPA program, there will be times when the leads are cheated or fake.
Joining a network –
This is more expensive, but you’re also taking a more hands off approach. When we applied for Commission Junction back in 2011, I went through the whole process of building a program. They charge around 3-5k just to set up an account and then it’s important to do the branding. Accounts could be fully managed by their team or you can handle it in house.
Regardless whenever you launch an affiliate program you want to supply people with fresh information, product updates, banners and other graphics to promote your products. It can be a big undertaking, but possibly more valuable than investing money into SEO or other forms of marketing.
The Affiliate Marketing Strategy That I Recommend For Beginners:
Start by building your niche website first and monetize through Adsense. You won’t make a ton of money at first, but it’s an incredible feeling when you check your account in the morning to see money in there that you made while you were asleep. There will be affiliate opportunities.
If your niche site is about….
- Physical Products – Join Amazon Associates and immediately begin selling related items on your site.
- Services – The merchant may have an existing program or you can join affiliate networks like CJ or Markethealth.
- Random – If you’re getting traffic but can’t exactly sell the product try out MaxBounty.
Before you dive in and say that I’m going to start an affiliate website you need to analyze the market that you’re going into. Affiliate markets with high payouts (dating, insurance, webhosting) are going to be the most competitive. Don’t let competition turn you off though, rather it should challenge you to create something entirely new and unique if you want to compete there.
Blockbuster owned DVD rentals. Netflix came in and now you don’t go to Blockbuster anymore.
You can do this on any scale in any market. You need to do something new and unique though. Don’t expect to repeat the same strategy that someone else is doing in the same market and be successful… do something different and be a little bit reckless.
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