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Thursday, September 24, 2009

Part 1 of 3: Affiliate marketing - What type of internet marketer are you? (or how to choose your online business model)

A friend of mine recently asked, “Chris, what’s the best type of internet marketer for me to be?” I answered, “That depends on whether you prefer creating your own products, marketing other people’s products or marketing content. What are you best suited to? How important is keeping all the money to you? Do you consider being a merchant is a hassle? And these aren’t the only questions.”

He replied, “Look, I hadn’t thought about all that. Why can’t I just start selling something?” The truth is, at his stage, you can't just jump in without a bit of thought.

Thinking about this prompted me to ask a question of many people who are new to internet marketing but haven’t yet made the important decision: what type of internet marketer are you?
If you haven’t made this decision then you haven’t chosen a business model yet, which, as you will see, is fundamental to success because you need a plan. So before you start creating web sites, designing landing (or squeeze) pages, writing a blog, shooting a video or setting up your autoresponder to build email lists…

Stop!

But only for a moment.

And answer this question; are you an affiliate marketer, a content marketer or a product marketer (merchant)? What are the pros and cons of each? Are you particularly suited to any of these business models?

Use my three part guide to find out.


Part 1 of 3: Affiliate marketing

The best part

The best part about affiliate marketing is the minimal risk to your pocket and immediate start-up time. As you are promoting someone else’s product you don’t have to invest much to get started.

You don’t need to purchase, store, pack, ship, handle billing or maintain inventory for the product(s) you promote. These costs are all paid by the merchant so you simply have to concentrate on promoting the product. Your job is to ‘represent’ the merchant by driving traffic to a product web site or promoting the product to your email list for which you receive a commission. This is usually 30% to 50%, and can even be as much as 75%.

Sometimes, you can get started for nothing. Many merchants who produce their own products provide web sites, landing (squeeze) pages, banners and videos completely free. After all, when an affiliate makes money so does the merchant. You’ll place ads on a variety of web sites, post in forums, buy traffic (PPC or ‘Pay-per-click’), make videos, market to your list and use other methods to get the message out to the world. The amount of your involvement and level of sophistication you employ is up to you. Needless to say, the better a promotion system you create, the larger the list you build, the greater financial reward you’ll receive.

So your investment is time.

You can earn more money working with a merchant who offers a 2-tier commission plan. Many merchants now will pay commissions on your product sales plus another commission on the sales of anyone you recruit (who signs-up under you). So even if you don’t make huge, or any, sales commissions one month, you can still earn from your recruits.


The downside

On the downside, though, can you guarantee you’ll receive payment from the merchant(s) you represent? Are the products or programs they want you to market strictly legal – i.e. not scams? Can you sit back and continue to rake in the money from work done once? These are real questions you must ask if you are to be a successful affiliate. You should protect your affiliate business by asking these questions because it’s no different than any other type of business.

Luckily, sites like ClickBank, probably the largest affiliate-merchant network on the planet, allow you to join free and represent as many merchants as you like. ClickBank performs the very important functions of a) collecting money owed to you by merchants and, b) presenting you with a huge number of merchant opportunities all in one place. Working with ClickBank (or similar program) provides a very high level of protection for you, the affiliate. You get paid. You get a choice of merchants. You can do it all immediately. And it’s free.


Affiliate marketing pros and cons

Pros
  • Your own ‘work from home’ business
  • Little to no start-up investment
  • Don’t even need your own web site
  • No product ownership risk
  • Ongoing marketing costs, excluding your time, can be as low as zero
  • Represent more than one merchant program
  • Some merchants will also pay you on sales of other affiliates you recruit
  • If the product doesn’t sell well your only expense is promotion costs
  • Great foundation for becoming a merchant yourself

Cons
  • Requires a lot of effort and time (constant activity but no more than your 9-5 job)
  • Requires good marketing skills to set-up a successful campaign (but learn this as you go)
  • You don’t keep all the money (you’re paid 30% to 50% on average)
  • You don’t own the rights to the product (so you can’t make changes)
  • You can’t build a brand (although you can build loyalty from your list)

In conclusion, as you’ll probably agree, the pros far out-weigh the cons. Affiliate marketing can be very lucrative if you put in the time and effort but it won’t always give you a residual income. Look for opportunities that offer a residual income and you may have found the perfect career! And even better, this is all proof that knowing how to market someone else’s product gives you the experience to launch your own.

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