My Affiliate Marketing Experiment – Part 2

Part 1
Part 2:

….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:

  1. Someone is selling a product.
  2. You help promote that product.
  3. When someone buys a product through your recommendation, you get paid a percentage of the sale.

SIMPLE.

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?

Just like the bottled water idea or homeless experiment, I decided to find out by simply trying it out….

Go to Part 3

Blog posted on: February 13, 2010

6 comments on “My Affiliate Marketing Experiment – Part 2

  1. John

    Hey Nev,
    I saw your post about Affiliate marketing and thought that I would look into it a bit further myself.
    I signed up for a number of different programs. They all seem rather weird in terms of signing up. Feels like I have to jump through more hoops to sign up than I did to buy my house.
    But anyway I found one that seems good and easy to use. I have decked out my blog with some ads to see how they compare with Google.
    Out of the ones I have tried I would recommend giving http://www.cj.com/ a try.

    John.

    Reply
  2. Pingback: My Affiliate Marketing Experiment – Part 1 - Neville's Financial Blog

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