….so eventually I pulled the plug on this little experiment (it ran for roughly 5 weeks) even though I was still making some money.
One of the negative parts about affiliate marketing I mentioned was the price of Pay-Per-Click varies wildly, especially when people are bidding up keywords. This can be the difference between a profit and loss if you don’t watch out. This happened several times and the cost I had to pay shot up too much to be as profitable.
Basically I got these campaigns running for the experiment, but when I stopped paying attention, most of the good keywords stopped running because they exceeded my set budget. Eventually most traffic died down, a sale was made here and there, but nothing big.
Ultimately I ended up bringing in $727 from the BluCigs campaign and $360 from the GreenSmoke campaign (about 90% of that money was from that first 5 weeks) and paid a total of $166 for Google Adsense.
I could have kept on going, but the amount of effort for a short-term profit wasn’t worth it, especially when I already have profitable businesses of my own that offer a more long term payoff. I can already see some of you trying to signup and start your own experiments with these ;-)
…however…hopefully this experiment demonstrated the POTENTIAL this sort of business model has in a more legitimate form. I wish I knew about it a long time ago when I was an active “financial” blogger.
I learned a lot and made a net profit!
Part 1 Part 2 Part 3 Part 4 Part 5 Part 6: At this point in my little experiment I’ve made some money and learned a few pro’s and con’s about this affiliate marketing industry (at least the low-end type): Pro’s of simple affiliate marketing:
It’s possible to start making money very quickly with relatively little work.
It’s possible to scale up successful campaigns to large levels.
It’s possible to “sell” a product without knowing anything about it.
It’s not hard to see why so many get-rich-quick books teach this very method of making money…because it SEEMS like it could work for anyone. Some people might even have some nominal success trying something like this, but very quickly the con’s start showing their head:
Con’s of simple affiliate marketing:
It’s possible to LOSE those quickly-gained profits very quickly also.
Most successful campaigns you create will start to garner much attention from other affiliate marketers who quickly start copying you.
You have to be hush about your work….you can’t openly talk about what you’re promoting or your methods. This is why many people I talked to about this were so secretive.
By and far the largest con I see with doing this simple type of affiliate marketing is there is no long term value being provided. With my business HouseOfRave for example, everything I do today pays off for months at a time, even years.
With these small affiliate promotions, there is very little value ultimately being imparted to the customer. Ultimately a beginner trying to simply “make money online” with these almost-scam-like promotions will probably end up disappointed.
But screw that, I was now up to $371 in profit with JUST BluCigs and I’d barely spent $70 to get there!
….and this experiment called for finding out how to make a landing and optimize it with Google Website Optimizer, so that was the next step.
Basically what I’m trying to do in this step is have several versions of the same page and measure the effectiveness of each. After X-amount of people cycle through each version, a clear winner is usually identified. This is called an A/B Split Test…and if you do this enough, you can identify which pages convert the most people.
For this I had to do several things:
Make a separate landing page to send traffic (I chose ecigaretterecs.com).
I didn’t say this experiment was going to be pretty, I just wanted to learn the underlying lessons in it, so here goes:
Step 1.) Buy the domain name.
I chose ecigaretterecs.com because all sorts of other combinations were taken. Ultimately it didn’t matter what the domain was. Even I kept forgetting what name I had purchased. I setup the site on my server and was up and running.
Step 2.) Make three versions of the page.
I wanted a basic page that looked sort of like a reviews site, a site where you go to get reviews of a particular genre of product. I actually first purchased a WordPress plugin that makes a fully-functional reviews site, but I wanted this experiment to be extremely quick and dirty so I did it the ghetto home-made way.
Since E-cigarettes are quite new, there are multiple brands people want to look through before choosing one. I would provide this review information for them on this (ghetto and poorly made) page (ecigaretterecs.com).
I decided I would make three very different versions: 1 stylish, 1 simple and plan, 1 supper-ghetto:
(This was the “stylish” one…shut up, don’t make fun of my web design skilzz).
(This was “plain and simple”).
(This was the bare-bones and ugly one).
…the point of this is to simply test out different versions and see if there was any statistical difference in how each of them converted into sales. Sometimes the data is very surprising. I find from many friends who do this on a large scale that ugly and simply is often better.
NOTE: An A/B Split Test doesn’t need to have versions that are so dramatically different like this experiment, it can simply be a different picture or different headline text for each version.
Step 3.) Enter into Google Website Optimizer
I went through the Google Optimizer process and outfitted each version of the page with special snippets of code (keep in mind this is something almost ANYONE can do) and set all the links to go to the affiliate sites I earlier created with the custom headers.
Now when someone lands on the webpage ecigaretterecs.com, it randomly selects which version of that page to show the visitor. So if you look at that page from your computer and your friend views it from a different computer, there is a good chance you will see a completely different page.
Google Website Optimizer then collects information over time and tracks the conversion rates to see if there is a statistically “better” version. When I ended up pulling the plug on this experiment there were 190 page visits, but no statistical variance shown (you usually need around 50 conversions per variant before conclusions can be drawn).
I didn’t get the final results before I pulled the plug on this experiment, but I didn’t care. I had learned how to A/B Split Test which was the important thing….now I can use it to make already-profitable pages more profitable.
So far I’ve accomplished almost everything I set out to learn with this experiment, and I even made some money.
I was still making money, so why did I finally end up pulling the plug on this experiment?
At the beginning of this month one of my goals was to make a blog post every 2 days on this blog…well my last one was THREE days ago, so I need to make up (Carnaval in Austin definitely got in the way)!
I have 12 minutes to write/edit/publish this post before the security guard at the library kicks me out, so here goes:
I just read a post by Dave (brought my attention by Adam’s Twitter stream) about his transition from having a job to owning a business. I always like it when people take that leap, even if it doesn’t work out, I’m sure they will learn a massive amount.
It made me reflect on my own experience with this. I’ve never had a job except one in college where I did NOTHING but work on my own businesses then promptly quit when they made me do work.
After college I never got a job…I didn’t (still don’t) even have a resume. I simply continued running my businesses I had already started. It’s really the only way of working I’ve ever known, and I must say…I like it. Judging by the way most people talk about their jobs, it seems I’ve made the correct choice.
One thing I really like about owning a business, aside from all the fun stuff like being able to label your own role or change what you do by starting a new business….all your success depends entirely on you.
In ten years if I’m homeless and living on the side of the road, you can point directly at the person whose fault that was. I like that responsibility because it puts you in charge of your destiny a little more than working for someone else. In a sense, they control your future. If they go out of business, you do too.
I know people who worked for Dell at the right time in history who made millions on stock options, and people who worked the same jobs a few years later who weren’t quite as fortunate. That irks me. It’s kind of a lottery you play. You COULD get successful, but your involvement doesn’t dictate it.
Ok, the guard is giving me the stink-eye, time to jet!
Part 1 Part 2 Part 3 Part 4 Part 5: …so now I had a very simple yet profitable affiliate campaign running. The next step was to try out some of the other e-cigarette companies with affiliate programs. I found another seemingly good e-cig company called GreenSmoke and joined their affiliate program. I already knew what to do (and not to do) thanks to my prior BluCigs experiment, so I quickly setup my GreenSmoke campaign:
I registered a domain called BuyGreenSmokes.com
PhotoShopped a custom frames header for it that made it seem like part of the GreenSmoke website.
I made the framed header like I BluCigsStore site and got the new site running.
Immediately posted some Google AdWords pointing towards it.
Since I already knew what to do, within about 1 hour I completed most of this work. When BuyGreenSmokes.com went live it looked like:
So just like the BluCigs page I made, anytime someone gets to this page through my link and buys something, I make money. Speaking of the BluCigs experiment, whilst I was making the GreenSmoke page and signing up for other affiliate programs, this small little experiment of mine had been working. I had been making 1-2 sales per day from the Blu campaign, and within a few days here was my revenue:
At this time for every dollar I spent on AdWords, I was making $6 back. So a 6X Return on Investment. At this point I had never seen the product I sold or promoted, didn’t know anything about them and wasn’t particularly “helping” anyone. In fact the people who came through my links never knew who I was or that they were coming through an affiliate.
However in about a week I earned my first check:
This is a very simple affiliate experiment, and probably against the rules of most affiliate offers. You see, I’m not ACTUALLY adding any value to the companies whose products I’m promoting. They probably would’ve made these sales regardless if I was in the picture or not.
Now lets say I owned a large forum for smokers to talk about smoking….then I write an article about how great BluCigs or GreenSmoke electronic cigarettes are. If those articles contained affiliate links that people followed then purchased products, THAT would be of great value to the companies….they just made sales they probably wouldn’t have without you.
REWIND BACK to the first post of this experiment, I was talking about why a lot of affiliate marketers seemed shady:
“I can tell them I own a rave store and sell light up stuff online. It’s pretty straightforward, and they can even see the website for themselves. Why were these people acting so shady? They were obviously hiding something or lying about something.”
From this little experiment the answer became pretty obvious: They don’t want competition.
If I told someone “I’m doing this easy affiliate program for BluCigs and making 6X my money” ….what do you think would happen REALLY soon??
That’s right, tons of people copying you. Cool…a little competition never hurt. But what’s different now is since there are other people bidding for your same keywords on your ads, the PRICE GOES UP. Now instead of making 6X my money, I’m down to 2X all of a sudden….and if more people start bidding the price up, I might even start losing money soon.
So all of a sudden I’m making tons of cash, then one week later that same campaign isLOSING money. No wonder people keep their mouth shut.
Now I wanted to learn about making a good landing page using Google Website Optimizer. This could be something I could use on my other businesses to make more money. All the while I was learning all these new things, I was still collecting about $100+ per week in commissions from this small-time experiment….
So for the first part of this experiment I decided to try something really simple that could just be a proof of concept….just to if it could work. I wanted to do a simple campaign where I promote an affiliate link over Google Adwords. When someone clicks through to the ad and buys, I get a commission. So long as I spend less to buy the ads than my commissions ad up to, I make money. It works in theory, now to see if it works in action….
Step 1.) I had to find something to promote:
I could’ve either joined something like CJ.com or ClickBank.com to find affiliate offers to promote or find one myself. I decided to steer clear of the affiliate networks for this simple experiment solely to find something easy to promote without tons of competition doing the same thing.
I had seen some videos about this new thing called “electronic cigarettes” becoming popular in bars, and started Googling. I’m not a smoker, but this e-cig concept seemed like a brand new industry which has the potential to become big, but hasn’t yet.
I did a little research on e-cigarettes and first joined the BluCigs.com affiliate program simply because they had the best looking marketing material and easiest-to-buy-from website (See that link for BluCigs in the previous sentence? THAT’S an affiliate link in action! If you buy after clicking that link, I make a commission).
Whenever you click that link, it takes you directly to the BluCigs website and if you make a purchase after you click that link, I make a commission! Simple affiliate marketing in action. Understand?
I now have something to promote….e-cigarettes…and I don’t even know a damn thing about them.
Step 2.) Get some people to click that link!
I could either make my own ecigarettes site and build up a readership over time, but this is supposed to be a quick experiment, so the best way to get traffic is to BUY IT.
Since e-cigarettes aren’t such a massively popular keyword at this point, the traffic is was dirt cheap. I could pay $0.05 per click and still be in the top results (or only result) for many keywords.
I immediately made a couple of Google AdWords ads and posted them. Here was one of them:
Once again…Whenever you click that sponsored link, it takes you directly to the BluCigs website and if you make a purchase after you click that link, I make a commission! Simple affiliate marketing in action. Understand?
Step 3.) Make some moola
So now I just sit back and waste money on buying traffic to see if I make a sale. I thought this would take longer than it did, but sure enough in about 2 days (or maybe less, I didn’t check) I made my first sale! The BluCigs program gives me 20% of each sale, and it was a $59.95 sale, netting me $11.99 in commission….so far I’d only spent about $0.50 in ads! Pretty good return on investment!
This 24X return on investment was on an extremely small scale, so I was excited to see if that pace would keep up. However if it does, you see how certain people can make lots of money with very little?
A day or two later, I made ANOTHER SALE for $104.95, netting me a total of $20.99 in commissions! Even though this isn’t a whole lot of money, I was excited my dinky little experiment was giving a good ROI (return on investment). Using less than $5 I now made $32.98 back. At this point I still didn’t even really know what an e-cigarette was, but I was making money off them.
Step 4.) Get caught
Google first slapped my hand in the beginning of this experiment and and pulled my ad since cigarette-related terms cannot be advertised. I changed the text so it never says “cigarette” or any closely-related term:
This worked for two days, then Google denied the ad again saying the link-to URL was different than what was advertised (I guess since I had the referral link in it) so they asked me to change it. Unfortunately I couldn’t get Google to accept my ad anymore…..I’ve been doing an affiliate marketing experiment for only a few days and ALREADY I was caught for doing something shady! :-)
Well, Google has a fair policy to ensure quality, so I decided an alternate and perfectly OK way of doing this….
Step 5.) Make my own domain
I bought a domain called BluCigsStore.com (if you recall the actually website is called BluCigs.com, without the suffix “Store”) and made an auto-direct script for the page to forward to my affiliate link. I immediately changed the banned ad to BluCigsStore.com and Google accepted the changes, I was back in business! This cost me about $19 to privately register the domain name (so my name is not immediately associated with it).
A problem I noticed earlier was if people browsed around the internet researching these BluCigs, they would invariably click on several affiliate links. Whoever was the LAST affiliate link gets the commission.
To help improve my odds of being that person, I made a simple frames page (just used a template in Microsoft FrontPage since I can’t even write simple HTML). Nothing shady or illegal about this, and it actually added some value to the customer because it makes it easier for them to navigate. I used Photoshop to make the graphic for the frame header, and FrontPage to create the simple frames page and picture-link the graphic.
Now when you go to BluCigsStore.com you see the normal store with a static header on it that doesn’t move. When you click around the site, that header stays up. If you want to navigate home, it has a button for that. It also has an EXIT button that is a link to my affiliate link:
Using the frame bar on my own browser made it easier to navigate the site for me, so I’m guessing other people probably found it helpful (and probably never expected it was an affiliate tactic…just part of the normal site).
So Google once again approved my ads and I started making more money….
My favorite method of learning something is jumping into it. I’ll usually start by reading all I can about a subject, then quickly try a real life version of something simple, then something more advanced….an “experiment” so to say.
So I wanted to try an affiliate marketing experiment in order to learn all about this industry. From what I understood, a lot of affiliate marketing had to do with creating effective landing pages and making people want to buy or take action. Basically that means out of 100 visitors to a web page, how many of them can you make buy/signup whatever. Since I run an e-commerce store, this appealed to me. Perhaps learning some of this affiliate marketing could help me increase the effectiveness of my own business.
For the month of October 2009 I decided to embark on this affiliate marketing experiment in my spare time. I first made a written list of things I wanted to learn from it:
Learn why most affiliate marketers don’t go into much detail about their work.
Learn more about what all this affiliate marketing stuff is about.
Further understand how to optimize paid keywords and conversion rates.
Even if my real life experiment lost money, this list contains some pretty valuable skills that could add much benefit to my own business. So it was decided, the month of October 2009 I would try an affiliate marketing experiment to see how this all works.
Now to start a real life experiment promoting something……
….so the first thing I did was research the term “Affiliate Marketing” and printed out all the articles I could find. I read them all and took notes on a plane ride somewhere.
I read the Wikipedia article and a bunch of other search results, and the most basic idea behind Affiliate Marketing is:
Someone is selling a product.
You help promote that product.
When someone buys a product through your recommendation, you get paid a percentage of the sale.
I thought about this for a second and realized there are many successful companies that heavily use affiliate marketing in a non-shady way. These include Amazon, eBay and so many others. Amway and other companies also use an affiliate structure. Even car dealerships to a small extent seemed like “affiliates” of their larger companies.
The easiest example I can give of a super-simple affiliate marketing experiment is my books reviews page. If you click one of those book links and buy from Amazon, I get a small portion of the sale. Amazon is willing to do this because I helped drive a sale to their site through my review. If it weren’t for me, they probably wouldn’t have made that sale.
So THAT was affiliate marketing?? Not completely.
A lot of people I met talked about buying ads to promote their affiliate products….this was part of the term “Pay-Per-Click Arbitrage” I heard so much about. Some of the more intelligent people in the internet marketing group I attend made a lot of their money this way. I found out what some of these people do is:
Signup for an affiliate program for a product.
Buy ads on Google, Yahoo, banner ads etc promoting these products.
Clicks get sent directly to the product page or their own webpage promoting the product.
Whenever a sale is made from that action, they get a percentage of the sale.
This is a frequently touted method of getting rich quick by many crappy eBooks out there. In essence it makes sense. For Example:
If you buy paid clicks from Google costing $0.10/click…..
You send all that traffic to a webpage that offers an affiliate product/service/signup…whatever.
That service pays you $2 per transaction that succeeds.
If 1 out of every ten people completes that offer, that costs you $1.00 at Google.
So for every dollar you spend, you make two dollars.
So long as your spending is less than your earnings, you’re making money.
The math behind this actually works, and some people legitimately make a lot of money doing this….and that’s why people buying get-rich-quick schemes believe in these methods.
I thought this affiliate marketing world was a good model at its essence, so why was everyone I met in this world always so shady? If these people were making money doing arbitrage, why didn’t they share details?
Spending a lot of time online I run across the term “Affiliate Marketing” all the time. I even go to an “internet marketing” event once a month here in Austin to meet other entrepreneurs, but always found some of the people doing affiliate marketing a little perplexing (and sort of shady).
When prying into what they do, they never gave me CLEAR answers. They would always say things like, “I do lead generation” or “performance marketing” or “sell an online product” and other buzzwords I didn’t fully understand. I’d ask, “Ok, give me an example of a product you generate leads for” and they’d state a general industry at most (such as insurance, health or real estate). Some of the people said they do “PPC arbitrage” and that they “promote products” but wouldn’t go much further into detail about their business.
I was never satisfied with these responses and just presumed these people were really shady (which some of them are).
So here I am trying to find out what these people do and they keep skirting around the actual details…WHAT THE HELL?
I can tell them I own a rave store and sell light up stuff online. It’s a pretty straightforward, and they can even see the website for themselves. Why were these people acting so shady? They were obviously hiding something or lying about something.
Many of the people I met in the affiliate marketing world seemed to sell herbal pills online or get rich quick schemes for the masses. Most of the products they were promoting seemed relatively useless once purchased, and most had “interesting” billing plans.
In my mind, I saw “affiliate marketing” as referring to a website that promises to get you rich quick…something like this kind of crap:
(You should be PUNCHED if you even TRY to click that image).
I’ve read many bloggers like John Chow and other guys who make their living from blogging and they frequently talk about affiliate marketing. I kept wondering what exactly it was, especially since they correlate so much of their income to it…..so I decided to do some research and find out…..