Diorex

In response to some recent Twitter comments (@Diorex if you care to follow along at home…) about trying to disintermiediate networks and working directly with the advertiser I was surprised at the number or DMs, IMs and Emails that I received from people about how they are having a hard time finding contact information for the offer they are running.

This got me thinking… Advertisers are in the business of finding affiliates. If they are making it tough to find and contact them it really makes me question why?

If an advertiser is hiding behind a private whois, is unwilling to post an email or phone number for customer service or will not give a customer service call center a contact number for legitimate queries - what are they hiding from?

Sure lots of advertisers are afraid of the FTC because they are running offers of questionable legality - but the FTC can pierce these minor veils almost immediately if they want - going after payment processors or server hosting facilities or tracing credit cards or other financial transactions to the source. And if an advertiser is seriously worried about the FTC, then why aren’t you? You think if the FTC knocks on his door that you are gonna get paid?

Other advertisers try to keep a low profile because they don’t have a real business presence. Setting up an office, getting a phone and having someone to answer it are pretty basic principles of those serious about running a business. Some successful internet businesses are run out of garages and off cellphones, but not that many. I can see not being terribly proud of working out of your mom’s basement but as an affiliate why would you work with someone who is unwilling to make even the slightest investment in their business? What makes you think they care at all about yours?

The main reason I see advertisers hiding is because they are up to no good - they dont want people to know they are the same guys who skipped out on another network and owe hundreds of thousands. Just rebrand, relaunch and you are on your way again. Every successful affiliate I know of has been screwed at least once by an advertiser not paying a network and then the network not paying them.

In essence the real question in my mind is why would you even consider running traffic and spending money investing in someone elses business if they are hiding or making it hard to have a business conversation with them?

Maybe there is a very legitimate reason an advertiser has for staying in the shadows, but for the life of me I cannot figure it out.

Have yet to really see anyone screaming about this, but then again I have not been looking that hard…

I was in SF this week meeting with both Google and Facebook and as a throwaway Google dropped the bomb that they are no longer allowing multiple domains in the same adgroup. Adwords Blog talks about it here.

What this means to the average affiliate marketer is that you no longer can test which Display URL (DURL) works best for you.

Lets take an extreme made up example of a dating site with the goal of a credit card sign-up.

If your DURL is FreeSex.com then you will get lots and lots of clicks which Google loves and thus your CPC will go way down but your conversion rate will be horrible since the DURL implies free when a sign-up is required.

What about a DURL of FatUglyChicks.com? You probably get very few clicks, meaning your CPC goes up, but someone desperate enough to click on that ad is probably pretty likely to convert since they have been somewhat pre-qualified.

This is nothing more complicated than an algebra problem - does lots of cheap clicks with a bad conversion work better than more expensive clicks with great conversion. As a marketer you really only care about the bottom line here.

This is an extreme example, but for a dating site there are literally millions of different possible combinations for URLs - some of which are naturally more likely to succeed than others.

Google used to allow you to test lots of URLs in a single adgroup and rotate those ads to get equal impression so that you could determine which URL worked best for your metrics.

The new revised version of the DURL policy now requires you to set up different URLs in different adgroups - meaning that even though you might be bidding on the same keyword that Google’s algorithm now decides your quality score and will not evenly rotate them and ultimately end up serving the ad that meets Google’s best interest.

Unfortunately this is short sighted for Google. I have a URL that is awful - no one would think it would win in a test, yet for some reason it resonates well with consumers and qualifies them and induces them to click frequently as well as convert - great combination.  Without testing, we never would have found this hidden gem that allows us to pay Google millions of dollars per month. Without testing, Google would have chosen a better clicking DURL and I would have never optimized my business - which ultimately optimizes Google’s business.

Any one else concerned about this change?

Well I finally made it back home from Affiliate Summit, had a good time and glad I was finally able to meet some of you guys. Lots more asked to meet-up but I just ran out of time. Hopefully next time.

I spent very little time at the conference and attended exactly zero sessions so I dont have much to comment on there - I basically spent 5 minutes walking around the show floor and then went back to meetings.

If you went to this (or any) conference with the idea of what were the best parties to attend or who are the coolest people to hang out with, I would suggest that your focus is a little off. Yet almost every one of my blog readers I met with or talked to was intent on trying to see what parties I would be attending etc.

Interestingly in the 15-20 other meetings I had that were about real business this did not come up a single time!

Not suggesting you should not attend parties etc, but I had 2 or 3 conversations about how great this or that party was or how they wished they could get invited to X party followed up with how much someone was struggling in the business.

I try not to be critical, but it is hard to have a lot of sympathy for someone who comes to these conferences and their primary concern is getting party invites. Several of the struggling “party” people had zero business meetings other than a few forum-type meet-ups.

Conferences like Ad-tech and Affiliate Summit can and should be fun, but the primary purpose of them is to meet as many people as you can who can help to make you more money. Sometimes that will happen at a party, more often that is a scheduled meeting.

Just my $.02 but that was one of the insights of my experience at the conference, those I met who were banking were far less concerned with partying than those I met that were struggling.

I will be in Vegas Sunday and Monday for affiliate summit, mostly in meetings with clients. Would love to try and arrange a few times to meet with those of you who will be there - drop me an email or leave a comment and hopefully we can arrange to grab a drink.

I am very frequently asked “what is the best niche for a newbie?” or “What is the best niche to expand to once I have had some success?” or even “What is the next hot niche?”

I feel like I have been writing about this almost since the start, but it seems people just seem to miss it or I am getting senile.

The best niche is one that no one else is in and there are literally thousands of them left.

If you start by looking on CJ or ShareaSale then that is better than looking on a CPA network where apparently there are only like 5 verticals - credit, diet, dating, auto, and zip submits… (or so it seems). Even better would be to go the local flea market or hobbyist convention and see what people there are talking about or selling - maybe even check out the obscure listings in Ebay - look around for the booths or listings with people at them (or bids) - is it gumballs or bowling shoes or designer picture frames who cares as long as it does not scream affiliate marketing…

If you can do a search and find 2 or 3 paid ads, none of which are affiliate links now you may have found your niche. It means there is enough online interest in the product for people to be doing business, but not so much that CPC is bid up to unprofitable levels. Find a local company that can provide the product cheaply - or maybe you are aggressive and go straight to a national distributor and arrange a drop ship arrangement or even start as an affiliate of an existing business (after you explain what that is to the 45 year old guy running the company).

Retail markups are typically fairly large and in a less competitive space you dont have to give away all that much to be a good price, plus the inefficiencies of your competitors when it comes to internet marketing mean that even though you might not have the best prices you will still outmarket them if you have half a clue, because most of them arent even aware there are clues to be had.

Once a decent product with decent search volume is located, immediately begin seeking out the best domain name possible don’t buy TheBest-Niche_website.biz when you can be Niche.com for a few thousand dollars. The domain name lends instant credibility and allows you to be more professional than the guys you compete with.

It is my opinion that you can almost certainly learn 85% as much about the niche as those who have been doing it for decades in a matter of months while at the same time out marketing these Niche specialists by a huge margin. You will understand technology and the importance of tracking analytics and testing (if not please unsubscribe from my blog), understand Google and Yahoo and MSN plus have heard of Facebook and MySpace. You will understand Ebay and possible Amazons marketplace. You will have a clue on how to best collect and use email, plus maybe have some insight into the idea of coupon codes and Free Shipping or design of web pages or any of a dozen other things that increase sales. In no time at all you should own that niche and be the major player, with no competition.

Face it, almost no one reading this blog has a shot at starting a mortgage lead company or building a competitor to proflowers or cars.com making tens of millions a year. Just because you cannot own a $100 million dollar niche does not mean you cannot own a $5 million one… or even own several of them.

Bottom line, if you are looking for your path to fame and fortune through internet marketing and are starting on a CPA network you have probably already lost the game.

Lots of marketers, both affiliate and otherwise have been encouraged, bribed, cajoled or otherwise convinced to use Google Analytics to track their campaigns. I actually suspect that Google reps are incentivized to get advertisers to use the product.

The main selling point is that it ties into Adwords and uses tracking to determine your cost per lead/sale/whatever back to each keyword with little or no effort on your behalf. If you know which keywords perform good or bad you can then improve your ROI and become more efficient in managing your campaigns. The pitch is perfect for affiliates since they are typically both lazy and like the pricepoint of free.

Google recently bought Doubleclick and there was this huge uproar that they might be in the business of selling rankings via their Performics unit (which they said they would be selling that part of the company), but it turns out performics is also an affiliate marketing network.

Yesterday Google announced that they had renamed the affiliate network to the Google Affiliate Network.

Seems innocuous enough… NOT!

Heres why I think this is a major red flag… If you are an affiliate marketer using Analytics for a product through another network where you are driving traffic via search and Google also has that or a similar offer on their network, then they can simply arbitrage your conversion data and use it to identify the best converting keywords etc.

Say you sell Widgets and Google’s free analytics tool say that the keyword ‘blue widgets’ converts for you at a cost of $6 a sale, yet the widget manufacturer has an affiliate listing through Performics
paying $12 a sale. Your 100% ROI profit is in danger of becoming a $12 profit for Google.  Why should they share that with you? afterall it was their visitor in the first place. Your free analytics tool has now cost you 100% of your profit!

Think Google will not do it? The last time I read their terms and conditions, there is nowhere that it says they cant do this. They will make oral statements saying things like “If we did that we would lose the trust of our advertisers and go out of business”, but they have refused to put that in writing in any way, shape or form. In other words, they can do it.

Something to think about next time you take the easy way out and throw Google Analytics on your pages. There is no such thing as a free lunch.

It is Father’s Day weekend and as part of my gift, my kids and I went to see KungFu Panda. Pretty funny movie that I enjoyed and so did my kids.

Like many of the kids movies, this one had a pretty simple moral underlying the humor. That moral was basically that “there is no secret ingredient”.

Again and again in life, I have seen people who are on the outside of an industry trying to get inside looking for the secret to how to do something.

Affiliate/Internet marketing is no different. Read on boards or blogs and it seems that most people are looking for the secret of how to make money out of nothing with no effort.

The truth of life and internet marketing is that there are rarely secret ingredients. The people who succeed do so as a result of hard work, perseverance, intelligence and a little bit of luck - not because they have some secret keyword list or way to scam Google or that hidden niche that noone knows about.

Cannot tell you how often I get a PM or email or AIM message from someone who says they just cannot figure out how to scale or make any money, that all the campaigns seem so saturated, <insert excuse here>.

First thing I always ask is what kinds of things they are they testing - not the offer, but rather A/B type tests? Invariably the answer is a variation of “I plan to start once I find something with a really good conversion rate.”

I am here to say that Conversion rate is not born, it is grown - very slowly over time, with hard work.

Lets take an example of how someone can make a difference by testing.

• Start with a 3% CR which is considered about the industry average…
• Assume $.60 CPC which seems absurdly low to me, but lots of you guys are paying a lot less…
• Assume a payout of $20 per sale - seems fairly generic, lots of products pay more, lots less…
• If these numbers seem totally wrong to you, just set something up at breakeven for what you are seeing and build a spreadsheet…

After 100 clicks, you would expect to have 3 sales with $60 in revenue and $60 in cost - a total waste of time, right? Just move on to the next thing is what almost all people would do.

But the affiliate who likes to test might try a new headline, maybe some new ad copy, different hero shot or calls to action or any of 100 other things…

Say that this affiliate was able to increase conversion through testing by just 5% each month.

So the 2nd month, you would earn $3 more than you spend for each 100 clicks - a 3% ROI. Not going to quit the day job, but positive progress. At the end of the year, just finding one 5% increase each month the ROI on this “breakeven” campaign works out to be 42% which is almost certainly worth keeping.

This assumes that you do not manage to increase your CTR or quality score or otherwise lower your CPC which is very doable through testing.

Now say, we have a very clever affiliate who manages to find 10% conversion rate increases each month rather than 5%. At the end of the year, this guy has a 185% ROI from the campaign most of you would have walked away from.

Now if you are getting that kind of ROI, you have probably passed up the affiliate network and gone direct, which will be a free 10% lift, plus increased their payout above where they started, potentially significantly, which allows you to pay more, thus increasing your position, your test bandwidth and frequently your conversion rate in a beautiful cycle.

When you are starting out it is not ridiculous to think you might get 20% or more lifts from some tests, and trust me when I say that front loading the conversion increases significantly improves the end results.

All of the above being said, I am not trying to say that any campaign can be a winner. Nor am I saying that you should stick with a loser. I am merely saying that most people fail because they do not test their way into being a winner ad discard lots of things that would have worked with a proper test plan.

Not to get too nerdy, but when I used to play Dungeons & Dragons type games on the computer, I was always asked to determine my characters alignment, which indicated how I would generally react to a situation.

Paladins always had to be the good guys. Assassins were typically evil. You could also be a troublemaker and be chaotic or totally neutral etc. Essentially you could be good or evil and lawful or chaotic with neutral combinations of each. I usually chose Chaotic Good because even then I was an outside the box non-conformist who was basically good.

Anyway, as I am getting more into the affiliate management space, I am starting to realize that the same holds true for affiliates.

• There are the affiliates who only care about themselves, often using fraudulent or misleading methods to drive traffic, confuse consumers or outright scam advertisers - these would be the chaotic evil alignments - out for only themselves and noone else.
• There are the people who are pushing the limits (think Google takeover Scams, or someone using Splogs to game the SERPS) - I would categorize these guys as Chaotic Neutral. They are gaming Google, but in general are not misleading consumers nor advertisers.
• There are the guys who go out of there way to provide quality leads and make sure that the leads are quality for both the consumer and the advertiser. Often this is the way in which they protect themselves. This is the model Lawful Good paladin.
• There are of course combinations of all of the above. They guy who bids on trademarked terms in violation of an affiliate agreement who do not scam consumers but are intentionally breaking the advertisers rules. The company who has a valid unsubscribe in their Can-Spam compliant emails, but then just mails that consumer from a different domain or for a different product.

As an affiliate, I subscribed to the theory that the fastest way to higher payouts, stronger relationships and overall more predictable earnings was the Lawful Good affiliate character. I was always cognizant of the fact that if I provided bad leads or otherwise unprofitable business to my partners, then my long term viability could be compromised. It was certainly not the only way to achieve my goals, just the way I chose.

Now that I am running a large affiliate team, I am dealing with characters from all walks.  Some are focused on the highest possible payout - to heck with my profitability. Others are slimeballs who consistently mislead consumers and draw unwanted regulatory attention. Still others are very focused on long term relationships and although want a high payout, they also want to make sure their traffic quality is good and that my profits are stable - these are also often the guys who understand that payout is merely one side of the equation - and that conversion rate can be far more important.

I am not trying to condemn any of the affiliate types (well maybe the Chaotic Evil ones who intentionally screw us and our customers), but rather bringing to light that there are many shades of affiliate marketing other than the color of your hat.

Having been on both sides, I do not have a preference for one type over another - I just know that some types of alignments tend to wear a different color hat with higher frequency - Green, for the money they make and the envy they attract from others.

So what is your affiliate alignment? Is that part of the reason for your success? or is that what might be getting in your way from building a sustainable business? Have you ever stopped to think about the ultimate value of your traffic? or are you focused on how much money you can make? have you ever worked with a partner with a lower payout because they pay more reliably or convert better?

Assuming that you have a somewhat mature PPC lead based (not products) campaign within a vertical that has all appropriate keywords with properly set bids etc. I can think of three simple ways to earn more profit from that campaign.

1. Pay less for each visitor - most people attempt this by lowering bids dramatically - this seems to be the most common and least profitable, since you typically also sacrifice volume. You can also improve your quality score (think SEO on landing pages) hoping to get a reduction, but this is sometimes problematic and certainly not a slam dunk process. Another idea is to find areas where your max bid is significantly higher than your actual CPC. Say you are bidding $3.00 and the CPC is $1.75 - try lowering the bid to $2.50. 9 times out of 10 your CPC will go down without a change in position.

2. Convert more of the existing visitors you have - Optimize your landing page to convert at a higher pace. Change things subtly (button text to “order now”, or “Continue” or “next”) or dramatically (New hero shots, totally different layouts etc) and take the same pool of visitors you have now and convert more of them into sales. If you control the form, be sure to optimize that as well. Since you have already paid for the visitors each additional sale is 100% pure profit. Small tweaks can result in huge gains.

3. Get paid more for each sale - Go directly to the vendor and ask for higher payouts. Cut out affiliate network middlemen. Do not allow others to profit off of your work. If they will pay $25 a lead, they will probably pay $30, especially if you turn the faucet off for a day or two.

Simple Numbers to illustrate this point (totally made up…)
Assume 1000 visitors a day at a $1.00 CPC with $2.00 max bids.
5% of those visitors convert = 50 sales.
Payout per sale/lead = $35

So you are making $750 per day from this campaign (($35*50)-($1*1000))

Now assume you:
+decrease CPC by $.10 a click without losing position by reducing bids to $1.50 for a CPC of $.90
+Increase Conversion rate to 6% = 60 sales
+Increase Payout to $40

You are now earning $1500 a day (($40*60)-($.9*1000))

3 relatively small improvements doubled your daily profit.

Once you get something that is modestly successful, really small tweaks have dramatic consequences.

****There is a 4th lever which many fail to consider which is that you can increase your bids, move up in position, get more clicks and earn less per click, but probably improve conversion rate as well, for more total profit. This is risky and not for the feint of heart.****