This is a bedfellow column from Rae Hoffman of Sugarrae.com.
A contempo new appoint had a few questions about associate business afterwards her aboriginal few weeks on the job and back they’re questions I apprehend frequently from new hires, I asked Linda if she ability accept a use for some FAQ’s aimed at new affiliates. Obviously, her acknowledgment was yes. Below is a advertisement of the a lot of accepted questions I get with my answers to them. My ambition is to explain things so they can be calmly accepted by anyone not accustomed with the ins and outs of affiliate marketing.
What is affiliate marketing?
Affiliate business boils down to one basal activity - paying an online administrator (someone who owns and operates a website) a agency for apropos cartage or barter or sales (which accomplishments are paid for are bent by the merchant) to a accommodating merchant’s website. To put it even simpler terms, associate marketers are basically salespeople who don’t in fact plan for the aggregation they accomplish sales for and alone get paid in commissions.
How abundant can anyone accomplish with associate marketing?
It all depends. The honest acknowledgment is, it depends on you. I apprehend about (sorry, can’t bethink where) that something like 90% of affiliates will never accomplish added than 500 dollars with associate programs. While I can’t say for abiding if that’s true, I can acquaint you that the 80/20 rule, at minimum, absolutely applies in associate marketing. That said, associate business can be acutely advantageous for those who do it well.
Earning at atomic an boilerplate assets is actual accepted for the “20″ that do able-bodied in AM. A six amount assets per year for an associate banker is not advised “all-star” and earning a top six amount assets (aka, one that starts with a amount college than 1 or 2) is not exceptional of. While earning a abounding time assets is absolutely the barring and not the rule, there is annihilation preventing you from getting an barring except for arduous drive, alertness to learn, harder plan (and a bit of talent).
What are the a lot of advantageous associate arenas?
Years ago, the associate industry had a “big three” that were advised the big daddy’s of associate revenue; porn, pills and bank (which some humorously referred to as “PPC”). Nowadays, the developed industry is saturated with chargeless agency to “get the goods”, the pills industry is no best a “gray area” in the eyes of the law and the bank industry took a big hit acknowledgment to some U.S. Legislation.
That said, there are still industries accepted for accouterment big revenues if you can rank for the amount keywords aural them. Finance (credit cards, payday loans, insurance, etc.) and telecommunications (cell phones, VoIP, etc.) are two such industries. For me, “lucrative” is all about the ROI. For instance, a website authoritative $2,000 a ages would not be advised a “big acquirement site” by any means.
However, if that website can acquire $2,000 a ages while acute 20 hours to set it up and 4 hours a year to advance it, it ends up earning about $1000 dollars an hour in its aboriginal year and $6000 dollars per hour in consecutive years. While the site’s balance aren’t “lucrative” in a face amount sense, they are in an ROI sense.
The best activity in my eyes is to body sites in both advantageous arenas and advantageous ROI sectors.
What is the aberration amid CPA, CPS, CPL and CPC?
All of these agreement accredit to how the merchant runs their program. Merchants pay their associate marketers on either a CPA, CPS, CPL and CPC basis. CPA, CPS and CPL are actual agnate to one another, while CPC stands out a bit:
CPA stands for Amount Per Activity (and depending on the program, ability aswell be referred to as Amount Per Acquisition). CPA is all encompassing and it artlessly agency the merchant pays you for what is pre-defines as a adapted action. That activity may be a lead, a sale, a bang or whatever added activity the merchant pre-defines.
CPS stands for Amount Per Sale. And that is absolutely what it sounds like. With CPS programs the associate is alone paid for the cartage that in fact buys, behindhand of how abundant cartage they in fact send. If you forward 100 humans and 5 of them accomplish a purchase, you will be paid on those five. If you forward 100 humans and none of them buy, again you won’t get paid any of them.
CPL stands for Amount Per Advance (PPL, or Pay Per Lead, is aswell acclimated in this realm. It artlessly agency the associate is paid per advance instead of apropos to the merchant alone accepting to pay a amount per lead). Basically, CPL is usually acclimated in instances area the merchant may or may not about-face down anyone who wants their artefact (a acclaim agenda for instance) or area the merchant pays for a advance they again will attack to about-face into a chump themselves (a commitment account assurance up for instance). CPL programs usually ascertain a advance as anyone who fills out their advance anatomy with accurate advice and is a “qualified lead” (meaning they accommodated accepted client belief as far as the merchant is concerned). Their payout is aswell about beneath than CPS or CPA programs in the aforementioned space, but the conversions for the associate are aswell easier to get.
CPC can angle for two abstracted things. The aboriginal is Amount Per Conversion, which is artlessly addition way of adage CPA. The additional stands for Amount Per Click. Way aback in the day, you could get paid for sending traffic, behindhand of whether or not in converted, to some associate affairs merchants. Now a canicule though, getting paid for clicks you forward behindhand of their about-face is usually alone begin in contextual advertising.
How do you find affiliate programs?
Every marketer is going to have a different method. For newer affiliates, I’d recommend staying within the bigger affiliate networks (Commission Junction, Linkshare, Shareasale, Pepperjam Network, etc) at first. The bigger networks will make sure the proper tax forms are filed and that checks are issued on a regular basis.
A lot of seasoned affiliate marketers like what are commonly referred to as “indie programs” (which stands for independent, meaning it is run by the merchant themselves). You can use a search engine to run searches for “[brand or store you like here] affiliate program” or “[brand or store you like here] affiliate” or “[generic item here] affiliate program” or “[generic item here] affiliate” to find indie programs in your arena.
The problem with indie programs for new affiliate marketers is that unless you know what to look for (and what should throw up red flags) in an affiliate program’s offerings, you could get taken for a ride. Additionally, unless you know another affiliate utilizing the indie program, it means possibly taking chances on actually receiving a check. Neither of these are chances most brand new affiliates want to take.
The advantage to using an indie program and assuming the above risks (and why a lot of seasoned affiliates prefer them) is that it cuts out the “middle man” (which is essentially what the big networks are) and means that the commission a merchant using a network has to pay to the network can instead be passed on to you.
Is a multi-tier program like a pyramid scheme?
No. Typically in a pyramid scheme, you make your money primarily from the cost someone pays to sign up or join the program. So, the scheme will charge 500 dollars to join the business and the person who signs them up gets a commission from their sign up fee. The new sign up will then need to do the same to recoup their money. There may be an actual “product” but those in the “know” don’t sell the product and simply sell folks on the “opportunity” to get the commissions from sign ups.
In a multi-tier affiliate program, you make money whenever an affiliate you referred to the program (who is then placed one level (aka tier) under you) makes a sale. Since there is no cost to sign up with (legit) affiliate programs, the only way you can make money from sub affiliates (what affiliates under you are called) is if they actually make money first.
How do you choose which affiliate program to work with?
Let’s assume that you’ve found a few affiliate programs offering products that would work with your audience. How do you decide which one to use? Whichever one offers the most commission right? Wrong.
Just because an affiliate program offers the highest commissions doesn’t mean that they are definitely the merchant you make the most money with. For example:
Merchant A pays $20 per sale
Merchant B pays $30 per sale
At face value, merchant B looks like the clear winner. But then you contact both merchants and find out that Merchant A has a 4 percent conversion rate on their main site while Merchant B has a 1 percent conversion rate. Let’s say you send 3000 people to both websites. Assuming the typical conversions:
Merchant A converts 4% of those 3000 visitors, or 120 of them, into sales. At $20 commission per sale, your check will be for $2400.
Merchant B converts 1% of those 3000 visitors, or 30 of them, into sales. At $30 dollars commission per sale, your check will be for $900.
So, in the above example, even though Merchant B pays $10 more per sale, you made $1500 dollars more with Merchant A because they had a better conversion rate.
When comparing merchants to decide which affiliate program to use, I usually look at base commissions combined with conversion rates of their main website (some affiliate programs won’t give out this info, some will - if they won’t give it to you, you’ll have to test it yourself) as well as linking options (if one merchant allows you to create links to specific products and another only has links to main category pages, the first makes it much easier to pre-sell leads).
Rae Hoffman is a veteran affiliate marketer, online marketing consultant, industry speaker and the owner of the often controversial Sugarrae Marketing blog.
For more affiliate marketing insight you can subscribe to her mailing list, see her speak at Affiliate Summit West or follow her on Twitter (warning: contains very colorful language).
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