Monday, November 13, 2006

Affiliate Marketing + PPC = Huge Profits. Guru's tips.



Long time time ago I've noticed a very interesting thread on the Sitepoint forums. It is a goldmine of experience in PPC/Affiliate programs area and I think it is very actual and inspiring up so far. So I've decided to make a post about starter of this thread and give you some of the best excerpts from his posts.

Ok, let's begin.

Who Kieron Donoghue, owner of UK Offer Media Ltd.
Age 33
Location, marketUnited Kingdom
Primary income sourceAffiliate marketing
Traffic sourcesPPC (pay per click) programs + SEO
Used PPC programsGoogle Adwords, Overture, Yahoo!
Keyword toolsGoogle AdWords and Overture keyword suggestion tools, couple of others 3rd party paid tools
Sites
Site urlGoogle PRAlexa rank
http://www.ukoffer.com4 92,816
http://www.here.org.uk (personal blog)4 65,284
http://www.etoys.co.uk/4 667,337
http://www.poker.org.uk/4 910,661
http://www.creditcard.org.uk/4 1,609,868
http://www.mobiles.org.uk/3 242,113
http://www.bingo.org.uk/3 275,953
http://www.ukloans.net/3 1,591,602
http://www.pokeronline.co.uk/3 4,850,714
http://www.mobileringtone.org.uk/3 0
http://www.thehulk.info/3 0
http://www.northeastcars.info/2 2,864,557
http://www.robosapien2.co.uk/2 0
http://www.freehorsetips.com/2 0
http://www.uk-isp.net/0 5,220,396

What did Kieron Donoghue (sitepoint nickname UKOffer) say in this thread? I've composed the most interesting excerpts from this thread mostly in the form of "question-answer". All the rest you can read in the thread, this blog post intended just to summarize information that I found useful all-in-one. All questions are © Sitepoint forums members, all answers are © Kieron Donoghue (UKOffer).

He about himself and his business

Above is a picture [bank statement picture link] taken of 1 of the 5 pages from my business bank statement that relates to late December 2005, early January 2006. Obviously I've used Photoshop to key out some banking reference codes. I've only posted a picture of 1 page instead of all 5 as I don't want to disclose exactly how much I earn in a month. (BTW the currency of my bank statement is £UK Pounds Sterling). As you can see the rough total on that 1 page alone is roughly £82,000 which works out at approx. $144,000.

The purpose of this post is to hopefully inspire people that they too can earn money online through Affiliate Marketing. I am not bragging but merely illustrating the type of money that can be earned. For example I have 1 particular merchant who regular earns me over £100k per month. But don't get me wrong, my business hasn't been instant. Back in 2001 when I started I almost gave up after about 6 months as I hadn't earned a penny. It's only with lots of hard work and research that you can fully realise the potential that is out there. I do remember though that back when I first started out I used to read posts about affiliates earning big money and that really did motivate me. After all I think everyone longs for financial freedom.

About me: I've been an affiliate since late 2001 and my main site is at www.ukoffer.com. I run maybe another 20 or so sites, some of which are bookmarked in my blog (see signature). As well as that I run many short term ppc campaigns via custom landing pages. These can be live for only a number of weeks then taken down.

My main focus is about 80% PPC and 20% SEO. I'm not very good at SEO but still do alright for some key terms. My Monthly ppc budget is around US $300,000 which equates to roughly UK £170,000. Although when I first started out my budget was approx. $50 a month :-)

  • Q: Do you use a content management system to manage all your sites? If so, which one is it, or did you make one yourself? How do you manage your sites?
  • A: I still update my old sites the old fashioned way I'm afraid! I simply edit the html by hand. Although I am speaking to a design agency about my next project and they have a custom built CMS that I will be using for that.
  • Q: Wow, £100k a month, that is very impressive. Would you call yourself a big spender? What have your most extravagant purchases been?
  • A: Not really, although I did import a Cadillac Escalade from the US which meant that I ended up paying twice the price you guys pay!
    Other than that I have invested in property a bit and have 2 houses in the UK (1 that I rent out) and 1 in Spain also.

About affiliate marketing

  • Q: Do you have special direct relationships with certain merchants that pay you greater commission levels than publicly advertised?
    If so, what proportion of the programs you promote have put you on a "hidden tier" of commission? In the majority of cases, do you think you would still be able to successfully promote these programs via PPC if it were not for the higher commissions, or are they simply like a performance bonus to you?
  • A: Being honest, in the sectors which I am most active in I am on hidden tiers and performance bonuses for every merchant I promote. And yes some of these are direct relationships and some are through affiliate networks, about a 50/50 split.
    Of course the higher commission rates do help me to be more aggressive with ppc ads. However, when a new merchant comes into play I have to promote them on the same CPA rate as everyone else. Only after I get a few sales under my belt does the negotiating begin and the possibility of increased commissions for increased CPA levels come into play.
  • Q: Do you have any tips as to how you should go about negotiating with merchants to get to these hidden tiers? Is it basically a case of saying something along the lines of, "If I had 10% more commission, I could make 20% more sales for you" ... for example?
  • A: Well as I mentioned earlier I always push programs on the same rate as other affiliates at first. This proves to the merchant that you are serious and can generate sales. I then send them an email or call them and say that their program is working well but it could work better. I have a couple of ideas that can generate some more sales for you, in return for a higher CPA.
    What's better is when you own a site that really dominates a particular niche. That's when you get merchants approaching you asking how much they need to pay to be given greater exposure.
  • Q: I will take an example of one of the merchants you are promoting if I may. If I do a search on Google for chocolates, one of the merchants that comes up under the PPC listings is HotelChocolat. So how could you put out a Google PPC ad for the same merchant and actually make money doing it? From what you are saying, under Google rules you can't link directly to the merchant's page. But, if you bring them to your site and then send to the merchant, how much money can you really make? I don't know, maybe I am missing something...
  • A: OK using your example I could do this 2 ways.
    The first way is that I put up a PPC ad for the term "chocolate" and I sent users direct to the HotelChocolat website, so the display URL would be www.hotelchocolat.co.uk and my (hidden) tracking URL would be my affiliate link to the Hotel Chocolat website. However, Google now only allow one display URL per search term. So if Hotel Chocolat were doing some ppc themselves I wouldn't be able to link to them via the method above.
    The second way is via a landing page. So again I put up a ppc ad for the term "chocolate" and instead of sending visitors direct to the Hotel Chocolat website I send them to a specifically designed landing page on my site. I.e. something like www.ukoffer.com/hotelchocolat. The landing page will have some information on the products and offers that Hotel Chocolat have on at the moment and would then encourage users to click away straight to the actual Hotel Chocolat website via my affiliate links. Depending on how good your pre-selling techniques are and your landing page will increase your chances of a clickthrough to the merchant.
  • Q: Now, this is where I am getting confused. In such a situation, why would you even bother promoting this merchant? Whatever you do, your CTR is going to be less than that of the merchant's from the same Google search because the customer can directly click on HotelChocolat's ad to go to their page. You are going to lose a large percentage of customers by sending them to your landing page and then to your merchant's site. I would think that your google expense to send that customer over to the merchant's site will not be too far off what the merchant spent.
    Also, let us say you get an average of 10% for each sale, which is what many merchants pay at least starting out. But, the merchant has maybe a 40% markup on the item. So, you make much less by spending the same amount of money then you would if you were the merchant yourself.
    Two things:
    1. Can you still make money doing it this way?
    2. Why would you not become a drop ship merchant and sell the product yourself?
  • A: OK yes you are right, my ctr won't be as good as the merchants and yes I will lose a percentage of visitors who don't bother clicking through from my landing page to the merchant.
    In answer to your other questions, yes you can still make money from sending visitors to landing pages. However to do this you need to concentrate on the right merchants and the right products. So in this example I probably wouldn't do it with a company that sells chocolates and has a small basket size. 10% of say an average $30 order isn't worth promoting via PPC in my opinion.
    But if you instead concentrate of merchants selling products/services with much higher commission levels then it can work very well.
    For example one major UK high street retailer isn't even running a ppc campaign at the moment, and hasn't done for a while. There are no other affiliates bidding on their terms so I am generating thousands of clicks per day (and very healthy commissions) at the lowest price possible. Oh, and they sell very high ticket items.
    Granted the above scenario is out of the ordinary but if you look hard enough and do lots of research there are lots and lots of opportunities to promote merchants via landing pages.
  • Q: Kieron, I noticed that you said that if possible, you link directly to the merchant. So what do you think about "pre-selling"? Do you ever decide to pre-sell even if you could link directly to the merchant, or is that just too much trouble when a direct link is possible? (link it, send 'em, and move on) ... I assume you must do a lot of landing pages/pre-selling because of the way google is set up now. Do you have any recommendations for copywriting and preselling? I'm assuming you must be pretty good at it, and I'm assume you must have learned a lot through experience, but I'm also assuming it can't all be natural talent and experience (maybe I'm wrong ). Any pointers or links for people looking to improve in this area?
  • A: If a direct link is possible then I always take that route. However if not then yes a landing page is needed. I have found that what works best is to find some sort of unique slant on the merchants product/service. For instance one particular merchant that I am promoting has a 20% offer for new customers. Now, unbelievably they don't mention that at all in their Google PPC ads, so naturally I do :-) I also ensure the content on my landing page (certainly the headline) clearly states what the consumer offer is in terms that the user will understand. Also, clear calls to action such as "click here for this offer", "click here to save 20%" and so on work very well.
  • Q: When it becomes interesting for you to set up a Google Adwords campaign, with other words above which amount CPA? (for example: Smileys download pays CPA $1.60, free ringtones pays CPA $11 & Mortgage pays can pay CPA $30 per lead). Probably, also how higher the payout CPA, how more difficult to get leads. What is your tactic here in order still to profit after deducting cost for clicks (ppc)?
  • A: To be honest it's not always a high CPA that attracts me to a particular campaign, it's how crowded the market is. For instance I have loan merchants contacting me all the time saying they will pay be hundreds of pounds per lead and so on. But because the market is so saturated and ppc costs are so high I don't even bother trying. But then again if a new merchant comes on board with a reasonably low CPA, say £2 or so and there is no competition then I will give it a go. I did very well out of the Crazy Frog ringtone a while ago, that only paid £3 CPA or similar. So I'm guess what I'm saying is be on the lookout for new programs/merchants and new niches.
  • Q: Is it network specific or merchant specific whether or not you can use direct links?
  • A: Its merchant specific. If they already have some ppc campaigns running then the merchant won't allow you to use direct links.
  • Q: How do you know which merchants will allow direct ppc links?
  • A: Well if you are using a merchant on an affiliate network they will ususally tell you the ppc guidelines in their terms of service that you need to accept.
  • Q: Is it lucrative to promote books or music at amazon since you only start with 5 % commissions?
  • A: Not using ppc. But if you have a high traffic site that gets hundreds of thousands of visitors then I guess you could. Although I would always much prefer to see out higher paying programs.

About PPC programs

  • Q: i'm very interested in promoting affiliate programs by using PPC. but i've read in other forums that it got too competitive (clickprices very high) nowadays and it's really hard to earn a profit with it. so would you mind telling which sectors work for you and how you find profitable niches?
  • A: I'm afraid I don't want to divulge what sectors work for me best, for obvious reasons. And as for finding profitable niches I find that "first mover advantage" plays a big part in my experience. In other words when a new merchant launches an affiliate program I quickly research the sector, see of there is a revenue opportunity and if there is I get a landing page up ASAP and get some Google ads live. By doing this I often find I can get high conversion rates for my ads (as less competition) which helps me when all the other affiliates pile on board. By having a good conversion rate then my ads keep at the top of Google and are profitable.
  • Q: In Adwords, do you stick with Google search /Search Network, or also run your campaigns on the content network? Which converts better?
  • A: Hi, I always stick with the Google Search / Search Network option and never use their content network. I find conversions almost non-existant on the content network, in my experience.
  • Q: While doing PPC marketing, do you strive to be in a particular position with your keywords? like 3rd place or better, or only 1st or second place? etc. Also could you give us a little idea of how you worked your way up from $50 to today? Did one of your campaigns just hit the jackpot and you just kept raising the PPC budget?
  • A: Yes I always aim to be in position 1, 2 or 3, the higher the better.
    The rise from $50 a day to $10,000 a day was a very slow one. If memory serves it took almost 2 years. The biggest problem was cashflow, I'd spend $50 a day and make maybe $50 in profit. However I didn't see that profit until 3 months later due to the usual delay using an affiliate network. So by the time you receive your profit you find yourself re-investing it all by increasing your ppc spend in order to grow further.
    Luckily along the way I found a few niches that were like striking gold and some very high profits were able to be realised.
  • Q: The problem I was always wondering about is whether or not to try and get 10,000 different keywords for one product and try and find all those keywords for less than 5 cents or to go after the main keywords most people type and pay more than 50 cents or a dollar? DO you mainly try and get the cheaper keywords that other marketers have forgotten about or the main keywords? both? Which are more important... your bread and butter?
  • A: I have to say it's the old 80/20 rule here. In my experience 80% of sales come from the top 20% of keywords. So if you are looking for big wins and big volumes go for the obvious.
    But there are sometimes some hidden gems to be found when researching keywords and keyphrases. And sometimes I have come across terms that I thought would never ever get typed in that do and earn good money. Finding them however, is not that easy!
    So whenever possible I try to have a go at the obvious keywords. But I also run campaigns for less popular words/phrases just to keep things balanced. What I would say though is to delete your non-performing keywords etc regularly as they can drag down your ctr.
  • Q: Speaking of getting to the top without paying so much - got any tips? Do you initially pay higher when you start a campaign to get it started with a higher CTR and then lower the bid price gradually as the good CTR takes up the slack in terms of holding the ads position?
  • A: Indeed that is exactly how I do it. Start high and gradually lower your bid. However a key factor is the actual text in your ad. If you know what words "sell" then use them to increase CTR.
  • Q: Though I fully agree, still it's a big question here if you are still able to get sufficient traffic in order to make leads through Adwords by using keywords less popular?
  • A: Believe it or not there are words/phrases out there that are *very* popular, i.e. gets lots of searches-but are not being targetted by affiliates.
  • Q: So, the very popular words/phrases which gets lots of searches & not being targetted by affiliates as you spoke about not long ago are "broad match"? And that's the reason why they are not targetted much by advertisers, but on the other hand still receiving lots of traffic? Or I understood you wrongly?
  • A: OK will try to make it crystal clear.
    There are a number of search words/search phrases available if you are prepared to think oustide the box. Don't go for the obvious.
    These search words/phrases have *some* ppc ads showing but these ads are showing almost by accident. I.e. the advertiser has lots of broad match terms in their Google account, hence their ads are showing. Think of all the eBay ads you see for every term on the planet.
    Now because these ads are showing almost by accident they aren't really relevant to the users that are searching on Google. I.e. they don't have very targetted ad copy because the advertiser isn't actually aware they are being displayed - or for what terms they are being displayed for.
    So the opportunity exists to target these search terms and write very targetted ads that get clicked on and convert better than the broad match ones showing by "accident".
  • Q: When you find a keyword to use for ppc and the merchant is not bidding (thus permitting the direct link) does the link listed in the ppc ad reflect your site or the merchants? (i.e. (as an example): credit cards.....UKOffer.com). Or does it the ppc ad read: credit cards......americanexpress.com?
  • A: The display URL for the link will be americanexpress.com (to use your example). However the actual URL (which is hidden) will be your affiliate link to amercianexpress.com.
  • Q: With Google making all of it's supposedly good-intentioned changes, are you noticing an increase or decrease in business (or no change), specifically through Adwords?
  • A: To be honest Google's changes (I take it you mean algorithm) don't effect me at all as I'm pretty much all ppc. However what has made it harder is the fact that blue chip companies are pouring more of their advertising budget into online. Also, there is more competition now as the web continues to expand.

About landing pages

  • Q: While constructing landing pages, how much information do you try and put onto them to increase the CTR rate? Just a small bit? Or do you send them to the company's landing page immediately upon clicking the google ad, so you don't need to have a page at all? What method works best for you, and why?
  • A: Without a shadow of a doubt sending users straight from Google to the merchants site is always best. That way you are ensured of a 100% click through rate. Whereby if you send them via a landing page you may only receive say a 75% ctr.
    However with Google enforcing the 1 display URL rule it is becoming harder to do this all the time so landing pages have to be built when needed.
    With regard to landing pages, in an ideal world I would like to have a few bullet points, a graphic and a strong call to action. In other words give the user a reason to click out of my site to the merchants site ASAP. But....Google are enforcing strict "Affiliate Bridge Page" rules, i.e. "Bridge Pages: Ads for webpages that act as an intermediary, whose sole purpose is to link or redirect traffic to the parent company." This means that Bridge pages need to give a lot more detail about the product/service/market/economy etc etc etc! All good fun and keeps you on your toes!
  • Q: Would you mind offering a link to one of your landing pages (for ppc campaigns) so that we can get an idea of what you are talking about?
  • A: Here you go http://www.robosapien2.co.uk. Slightly out of date but you get the idea.
  • Q: When you see an opportunity and you want to get a landing page/site up fast, do you buy a new domain or just use your existing one (use a subdomain perhaps?).
  • A: Mostly sub domains or dedicated landing pages within UKOffer.com. For projects with a longer shelf live I will buy a new domain.

Good advice? ;) Good luck with your affiliate programs!




3 comments:

GoogleAdsense is a rip off said...

WOW he spends 300,000 a month? That is crazy...But inspiring since he started with 50 bucks. I have a few pages one is www.superrichguy.com but its just text link ads, I dont have an affiliate there...
Thanks for the great write up I just bookmarked it for later.
Jason

Abid's Adsense Treasure Website Package said...
This comment has been removed by a blog administrator.
Eyad said...

WOW he spends 300,000 a month? That is crazy...But inspiring since he started with 50 bucks. I have a few pages one is www.superrichguy.com but its just text link ads, I dont have an affiliate there...
Thanks for the great write up I just bookmarked it for later.
Jason


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