The Short End of the Long Tail of Affiliate Marketing.
Last night, while sitting in the bar at the W in New Orleans waiting for my wife to get dressed for a night out. I got to thinking about something I read on the plane ride here and realized how it applies to affiliate marketing. Pardon me if it does not come out crystal clear, it was much more lucid last night.
I dont agree with everything Seth Godin writes, but in his new book The Dip, I think there is some great hidden wisdom. For $10 or so, I have gotten my money’s worth.
I keep reading it, and taking away things from it that are very subtle. The underlying theme of the book is that if you cannot be the best at something in your world, then you either need to work harder or you need to quit and focus your energies on something where you have the ability to achieve greatness.
This applies to affiliate marketing. Too many of the people who I talk to are scattershot affiliate marketers. They do 4-5 different verticals, but they all seem to have hit a wall. They cannot seem to figure out how to get past there current level of income. (Many of these guys are earning well over $25k a month, but just cannot seem to scale..)
All of these guys tend to play in the tail of keywords. When I share my average CPC they gulp, and wonder how the heck I can make that work.
In my mind, the short (and thick) head is where the money is at. Sure you can get $.10 clicks and lots of them in the tail, and we pursue those too, but volume is a fraction of what you can get from the more expensive head terms. SEO_mike wrote about this a few days back in many of you guys favorite vertical.
Best advice I can give any budding affiliate marketer - dont be a sheep and follow the crowd. If you are running ringtones or blockbuster or whatever the flavor of the month is, you are not going to be that successful.
Pick a competitive but unknown industry. Go gangbusters on the top 5 keywords. Drive a lot of volume. Test the heck out of your landing pages and ad copy. Then cut out the networks that earn more than most of you realize and go direct to the merchant. Show them your volume, your desire to work directly with them, and dangle the prospect of even more volume if the payout is good enough. There is some relationship building involved, but the affiliate networks are getting rich because affiliate marketers are too lazy too negotiate directly with the ultimate buyer of the lead/sale.
Lots of people focus on ROI. Focus on total profit. Would you rather make $5.00 100 times a day and invest $500 a day to do that or make $1.50 1000 times a day, but invest $5000 a day. Overall return is lower, but the IRS and your banker will like you more with the lower ROI. (Chicks think total profit is sexier than ROI too…)
Hedge Fund managers would kill for 1% daily returns and affiliate marketers are turning their backs on 50% ROI’s, if you have the program but need cash to scale it, let me know I can solve that problem. The head is where the low margin low ROI profits are.
Direct relationships with the buyer of your traffic combined with the volume you get from head terms is where the obscene profits are.
Back to drinking…sorry if this was a jumbled mess….
June 2nd, 2007 at 11:37 am
Thank god you started posting again!
June 2nd, 2007 at 12:16 pm
Awesome post. I’m so glad you’re posting again.
When you say, “pick a competitive but unknown industry”, isn’t this kind of an oxymoron? Seems like any industry that will be competitive will for sure be known. That’s the reason it’s competitive! Can you give an example of this type of industry? Don’t worry, you don’t have to give a moneymaking industry.
June 3rd, 2007 at 12:23 pm
paycoguy: probably an industry that’s big but is also not in the spotlight of the internet marketing community all the time (like ringtones, movie rentals, etc)
Diorex: i love your blog. even if you can’t post frequently, please don’t kill it
June 3rd, 2007 at 10:36 pm
honestly welcome back man.
June 6th, 2007 at 8:31 am
enjoy your posts over on WF - hope you keep this up whenever you have time.
June 6th, 2007 at 8:35 am
Forgot my question - we just started shifting some resources over to affiliate marketing from client work on the b2b side, and wondered what you recommend to monitor testing (split or multivariate) of ads, landing pages, and copy when we have to use subids? Do you send the traffic to different landing pages entirely and track conversions that way? If I could get the analytics on the thank you page, I’d be set, but…
June 6th, 2007 at 4:57 pm
@ paycoguy as timeloop suggested just look for fields that are not already crowded with dozens or hundreds of other affiliates who may be irrationally affecting the landscape. I like competing with Fortune 500 companies - they get one slot can beat me on brand name and CPC, but I can still be right below em.
@ Matt - we host all the forms ourselves - check out http://diorex.wordpress.com/2007/01/30/why-white-label/
We also are mostly A/B split testing. the problem with MV is that you can miss significance and it takes longer to get any answer and increases the chance we get the wrong answer. We have a custom traffic management system that can truly split test for us across lots of keywords or other variables if we so desire.
June 15th, 2007 at 1:46 pm
Diorex,
This is my first visit to your blog and I’ve already picked up some serious insights.
You mentioned that some of the marketers above are earning 25k per month. I’m just starting out. I plan to seriously utilize strategies I’ve gleaned from you, John Reese, Jeremy@Shoemoney, Rosalind Gardner, etc. Is it unrealistic to shoot for a 25k/month within a six month window? Your comment on directly approaching the buyer is an echo of an audio interview I heard recently between John Reese and Jeremy Schoemaker. I want to bust my ass to make my business work. From what I’m learning, there’s plenty of loot for the taking if one is willing to work hard and smart. Thank you.
September 11th, 2007 at 12:43 am
Another great post Diorex. As you mentioned in this article I really see focus as a key ingredient to all this. If you really want to spend time getting to know a niche you’re going to do so much better then just trying to work a lot of different ones at the same time. If you become strong in a niche you’ll develop relationships with everyone in that niche. Then you can trade email lists, get special deals, higher payouts, etc. Focus on something and learn it inside and out. I slightly disagree that the hard niches are dead as I think with some slow testing and low bids to start things out you can get into almost any niche. Just keep your bids low and do your research. And for gods sake pickup the phone and talk to people in your industry.
September 11th, 2007 at 12:47 am
Anthony,
Don’t believe in false gods. Some peoples mouths are much bigger then their wallets. See through the hype and sales/pr pitches or you’re going to be disappointed again and again.
October 1st, 2007 at 3:25 pm
[...] The Shord End of the Long Tail [...]
October 8th, 2007 at 6:23 am
wow! you guys make $25k a month? lol i can’t even do $25 a day. lol i think I stepped into some different territory here. lol pardon me, i’ll see my way out.