Among the different ways to start making money on the internet the are two very popular which I want to address here – they are based on either attracting visitors by shaping up a blog that offers interesting and useful information, thus creating revenue out of ads placed on your website, or trying affiliate marketing and sell all sort of products. But what is affiliate marketing? Let me introduce you to the world of William J. Tobin. Who he is you’ll find out shortly.
The main idea behind affiliate marketing is simple and effective – you create revenues by selling other companies’ products through your own website. In other words, affiliate marketing is a type of performance-based marketing in which the seller (affiliate) is financially rewarded by the merchant (brand) for each customer that had purchased a product from his website. In that sense, this industry, we can call it that, relies on four major members – the retailer or the brand, the network – which basically puts the offers on the table and also manages payments, the publisher (affiliate), and, last but not least, the customer.
This whole concept was put together and patented by William J. Tobin – founder of PC Flowers & Gifts. His company was launched on the Prodigy Network (back in 1989) and managed to produce sales of over $6 million a year by 1993! Moreover, PC Flower & Gifts was the first to establish a new business model on the Internet (that was happening in 1998) that of paying commission for sales on the aforementioned network.
More than often affiliates use the same methods in order to advertise their business – that is organic search engine optimization (SEO), paid search engine marketing (also known as PPC – pay per click), content marketing and e-mail marketing, so have that in mind and do your research on each of these approaches.
Affiliate marketing has grown fast and steady since its creation, and it’s become the merchants’ favored method of selling for one reason – they pay the publisher based on his performance, cutting their losses to a minimum. One report shows that affiliate networks generated sales of 2.16 billion pounds (in 2006) in the UK alone, nearly double from what it was sold in 2005 (1.35 billion pounds). In addition, 2006 showed that the most active sectors of affiliate marketing were the adult, gambling, file-sharing and retail industries. Then came websites based on the Web 2.0 concept, and that includes blogs and online communities. In that sense, bloggers, writers, independent businesses have all profited from affiliate marketing throughout the years, and they still do. The favored compensation methods are pay per sale (PPS) – 80% of affiliate programs use it -, cost per action (CPA) – 19% of affiliate programs use it -, while the remaining 1% use cost per click (CPC) and cost per mile (CPM).
There are many types of affiliate websites out there, and I’m only going to sum up the most popular ones: niche market websites and content websites, weblogs and personal websites, e-mail marketing, websites that use adbars (for example Google’s AdSense), and file-sharing websites.
Some of the most successful online retailers are Amazon and ClickBank, with the first being regarded as the largest online retailer in the world.
Amazon started out as an online bookstore back in 1995, but it quickly grew into something bigger. It now sells various products, including VHS tapes, DVDs, CDs, different software programs, electronics, video games, food, jewelry, toys, clothes, and video and mp3 downloads/streaming. In addition, Amazon is offering a separate marketplace (Amazon Marketplace) for both new and used products of all kinds, besides their regular offers. The marketplace is available in more than 60 countries.
Jeff Bezos’s business (founder of Amazon) has retail websites throughout the world, including France, Italy, Spain, the United States, the United Kingdom, Canada, Germany, Brazil, Japan and China, India and Mexico. Furthermore, his intentions are to expand to Sri Lanka and other South East Asian countries.
“There’s nothing about our model that can’t be copied over time. But you know, McDonald’s got copied. And it still built a huge, multibillion-dollar company. A lot of it comes down to the brand name. Brand names are more important online than they are in the physical world,” Jeff said in an interview.
But Amazon didn’t stop here; in August 2007, the company launched AmazonFresh, an online grocery service that offered both perishable and nonperishable foods for residents of Mercer Island, Washington. Later on, the service expanded to several other ZIP codes in Seattle (where Amazon’s HQ is). In 2012, yet another Amazon subsidiary was started – vine.com. Here, customers can find various household items, apparel and groceries. Last but not least, in 2013 Amazon has launched a website dedicated to India (amazon.in), where people can buy pretty much anything, from electronic goods to jewelry, shoes and clothing, books and video games, pretty much everything you might need.
ClickBank, on the other hand, is an online marketplace for those who are interested in digital information products. The company’s goal was to create a bridge between digital content creators and affiliate marketers. The idea was great and rewarded by the Revenue Magazine, in 2011, who called ClickBank the top affiliate network in the US. The company, which is a subsidiary of Keynetics, was founded by Tim and Eileen Barber back in 1998. Three years ago, ClickBank managed to appeal to more than 1.5 million affiliate marketers, paying them and the vendors over $1.8 billion. Their estimated revenue is $350 million a year.
Simply put, choosing one of these two giants as your affiliate programs can be lucrative, to say the least. For example, ClickBank’s commissions can reach as high as 75%! Why? Because their products are digital (and they include e-books, games, software programs and services, etc.), thus easy to sell, and there are no distribution costs. So, you basically have to create a website (mind the graphics, colors and, in principle, anything that you may think of to attract more visitors), host it to a service of your choosing, and then pick an affiliate market.
For the sake of the argument, let’s say that you want to choose ClickBank as your affiliate market. Go to their website, click on Marketplace and you’ll see a more than generous list of products that you can sell. I chose Computers/Internet, and here’s what the website showed:
Card Recovery Professional – Recover Lost Or Deleted Files In 3 Steps. 100% Risk Free! Support All Camera Memory Card, Such As Sd Card, Xd Card, Cf Card, Etc. Support All Camera Brands And Almost All Raw File Formats.
However, pay attention to the stats below the product of your choosing in order to have an accurate idea of what you can earn – eg: for the product above the stats are as shown: Initial $/sale: $10.23 | Avg %/sale: 25.0% | Avg Rebill Total: $0.32 | Avg %/rebill: 1.0% | Grav: 14.32.
As you can see, the initial sale’s status is way lower than the average sale. The AVG sale determines the AVG commission for the product, which, in this case, is 25%. The Avg Rebill Total is basically your earning, but keep in mind that revenues come not just from your sale, but also from customer re-bills. On the long-term, this is good news for you and your business.
So, once you’ve decided on the product you want to sell, just click the green button that reads “Promote”. Next you will need to enter your account name and tracking ID (which is optional). ClickBank then automatically adds your ID to your affiliate website so that you can trail all the sales you will make. Finally, click Create and you’ll receive a link that you can use to promote the product on your website. You can promote your business through not just a niche website, but also through social media websites, e-mail marketing, article marketing and banners.
Word of advice – don’t look at the earnings per sale, because some products are not even worth looking into. Instead, focus on their quality and usefulness. I find it appropriate to purchase the product myself, test it, and only after it passed the quality test to promote it. That way you will reflect confidence and trust to your customers.
Don’t want to sell their products, but instead sell your own digital goods through ClickBank? No problem, it can be done. All you have to do is to upload what you want to sell on your website, create a sales page and then sign up to be a vendor yourself. There’s a one-time fee of $49. Also, ClickBank will take 7% of each sale you make. Set the price of the product and choose what percentage you want to give to your affiliates. Once you see your product on ClickBank’s marketplace, your affiliate links are created automatically.
As final tips of the chapter on how to grow and improve your online business, first remember that the most important thing when it comes to online sales is the image of your website. Optimize it to the maximum by adding product feeds, voucher codes, ads. Extend your affiliate business to mobile platforms. Manage your affiliate programs by keeping track of your sales and payments. Provide your affiliates with text links and banners. Research is also important, so be on the lookout for your competitors, learn from what they know. Think like and affiliate – that means you should consider the commission rate, the average order value and the conversion rate so that you will be able accurately estimate how much money you can make per click/sale.
Now go get affiliated!