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  1. #1
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    I don't understand why I consistantly see merchants paying way more on a PPC engine than they are effectively paying for a highly targeted visitor from my affiliate site.

    It's not unusual for me to see them paying the PPC engine two or three times what they are effectively paying me per visitor, and the visitors I send are already pre-conditioned by my ad copy to buy from the merchant.

    If those merchants would raise my commission a measley 20% I would probably hustle and send them a 100% increase in traffic, and they would be paying far less per sale than the amounts they blindly dump into the PPC engine coffers.

    Can anyone enlighten me on this strange money-wasting behavior of so many affiliate program merchants?

  2. #2
    Resident Genius and Staunch Capitalist Leader's Avatar
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    Except for a few that have hired agencies to do their non-affiliate web promotion (and don't know what's going on because the agency lumped it all into one big bill, and the merchant isn't bright enough to demand a cost breakdown)...

    It's just stupidity, I would guess (in fact, the ones in the first paragraph are just suffering from a different type of stupidity!). They've been brainwashed into wanting that #1 slot so much they just pay without thinking!

    As for that being enlightening, nah, but this tip may help:

    Don't be surprised if those merchants run out of money. I've seen more than one blow it all on the #1-#3 spot...and then go belly up. Scope out replacements. I'm NOT saying to dump the ones you have, just be prepared for the time when OverSure has sucked up all their money! If you know who is out there to replace them, it will save you from the Mad Merchant Hunt when the time comes to paste in the new link code...

    [ 01-13-2002: Message edited by: Leader ]

  3. #3
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    That must be the answer, Leader, they must just have a lump sum for non-affiliate marketing and don't analyze how poor their return is on that coveted #1 spot.

    Thanks for the advice about watching for the #1 guys to go belly-up. I've already seen it happen. As a matter of routine (and cyber-street smarts) I never spend much time building traffic for a merchant unless I have a qualified back-up merchant already waiting in the wind. Been burned too many times to put all my eggs into a single basket.

    I really wish CJ, Linkshare, BeFree, etc., would earn their money by going out and educating the affilate merchants that they ought to take that money they're pouring into the PPC bottomless pit and re-direct it to affilates who guarantee them a return on their investment through pay-for-performance marketing. When I see so many affilate program merchants dumping a wad for high-priced traffic on a PPC engine I have to ask myself if our match-makers are really doing their job.

  4. #4
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    quote:
    As a matter of routine (and cyber-street smarts) I never spend much time building traffic for a merchant unless I have a qualified back-up merchant already waiting ...


    EXCELLENT point! It's one I had to learn the hard way.

  5. #5
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Most the affiliate program managers are just worker bees for their own advertising department wanks. No clue as to what the costs are as they just tap the companies advertising budget or the dumb outside agencies take the easy way out to get the hit meter rolling upwards ..without corresponding sales increases. Advertising does not necessarily equate to sales in their narrow minds.

  6. #6
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    Yeah, WM Mike, I think you've shed some significant light too.

    In the early days of the web, traffic was all that counted, not sales and not ROI. You could snow stupid investors with the traffic count and they would blindly throw millions your way. I thought everyone had learned their lesson about traffic count. That's because I hang out in the performance marketing world. But your message is that there are lots of laggards out there that haven't learned to look at ROI.

    A lot of operators that hang out on this forum are surviving the dot com crash because they learned to look at ROI early on, and they will be well positioned to ride the crest of the wave on the upcoming economic expansion. And all those worker bees with corporate budgets to blow will see their losses on the PPC engines explode in their faces and their boss's faces.

  7. #7
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Affiliate marketing is the only tool available to online e-tailers to focus their traffic effectively every day. When done properly with pre-conditioned traffic directed to converting landing pages merchants can achieve a lot of sales. Mass advertising CPM or even CPC sucks for conversions and only is justified by branding campaigners. Wasting affiliate traffic by DotCom bomb rules dictated by raw numbers assures poor ROI for the companies who still don't get it!!

  8. #8
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    At the risk of helping those jerks, I have to say that I advertise my affiliate program on BendOverture, and I track all my hits, sales, ROI, etc. Even when they went to the five cent min. bid, I kept my listings on there because they were making more than that.

    The reason why I don't pay my affiliates as much as I pay Overture is simple - they don't bring me as much return! If they did, or more accurately, for the ones that do - I do pay them as much if not more in some cases.

    For me, it's all about ROI. If I can't get a 3-4 ROI, I'm not interested.

    The stupid people are the ones who are paying CPMs for banner ad impressions. All the trials I've done on those indicate that they work just a little better than sitting on my a$$ doing nothing.

    Hope that helps a little.
    [img]/infopop/emoticons/icon_wink.gif[/img]

  9. #9
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    I'll tell you whats stupid ...

    Time and time again ... I'll see someone with a bid of $1.21 for the number one spot and the number two spot sits at $.53 for months :rolleyes:

    Do these people like to throw their money away? Don't they monitor their bids?(aparently not)

    It makes you wonder what kind of monkeys run their marketing efforts [img]/infopop/emoticons/icon_biggrin.gif[/img]


    Dave

  10. #10
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    That is stupid. It's easy to monitor a few key bids, or to use a great program like Bidright that will monitor them for you and alert you when there's money to be saved or a 1st place available for the taking.

    Trinity

  11. #11
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    The most successful programs online are the ones that have the most affiliates that get a check.

    There is NO WAY you can make a profit if you are a real brick and mortar company from listings on a pay per click search engine.

    There is NOT enough traffic generated from PPC. Even if its 1,000 hits a day isn't going to cut it.

    And the problem with merchants is they DO NOT have a clue about how to use affiliates to make money whether they bring in sales or not.

    It's all about making 1 cent more per visitor than you are paying out. In other words PROFIT.

    If you pay 5 cents per click to BendOver and get 100 visitors it cost you $5. However, even if you lose money on BendOver it may be worth having a listing.

    Because if you get 100 visitors per day from FREE search engines and 100 from BendOver you got 200 for $5. Cost per visitor 2.5 cents or $2.5.

    If your affiliates send you 300 visitors and you get NO sales it still costs you $5 and now you are down to 1 cent per visitor.

    Now based on ALL your traffic you only have to make $5.01 to make a profit for the day.

    The MORE traffic you have the MORE chances you have to snag a sale. But the one thing you can never know is where the buyer is going to come from. Since BendOver is targeted more than others then it's likely they will come from there but not necessarily so.

    The problem with most merchants is they DON'T KNOW HOW TO SELL ONLINE.

    The problem with most affiliates is they
    DON'T KNOW HOW TO SELL ONLINE.

    Amazon has 550,000 affiliates - it they get just 1 visitor per day from each affiliate they get 550,000 chances to sell something.

    And guess what it's almost FREE traffic. 5% is nothing to pay affiliates. If they divided their affiliate payments by their total traffic they would be paying an astronomicaly low price per visitor.

    It's not how much you pay your affiliates that counts - the more the better. It's how much traffic they send you that counts.

    Paying $250 per month to CJ is chump change if you do it right - if affiliates send you
    25,000 visitors you are only paying 1 cent per visitor from this one source.

    If you can close just one sale in 500 that's
    50 sales at say $20 or $1000. If you pay 10%,
    You pay your affiliates $100 plus an extra $30 to CJ. Total revenue $1,000 minus $380 =
    $620 gross profit. Now from your $620 you have to subtract your overhead and cost of product. If it's less than $620 you make a profit. If NOT, you need to lower overhead and raise affiliate commissions levels so you get more traffic so you can make more sales and tweak your salespages to improve them.

    In this example you only had to pay 1.52 cents per visitor.

    It's totally stupid for merchants NOT to pay affiliates at least 1 cent per click thru.

    Because if affiliates make money they will send you more traffic. And it's all about TRAFFIC AND SALES.

    If Amazon didn't have 550,000 potential customers visit them everyday they wouldn't sell zip.

    But you know something, if they paid affiliates 1 cent per click thru tracked as a lead and the 5%, their traffic would probably double. So if they are taking in 10 cents per visitor and paying out less than 1 cent, on 500,000 visitors per day, then raising the affiliates rate would mean they would be taking in $10 per visitor on 1 million per day and still paying out 1.5 cent per day.

    You should always figure out your revenue per visitor (A) and your cost per visitor. Then simple set up your business so is (A) greater than (B). Who cares where it comes from or how muchyou pay affiliates.

    The more you pay affiliates the more traffic you will get, the more chances YOU have to make sales. I't not the affiliates fault you don't make sales.

    100,000 visitors per month coats $1,000 no matter how you slice it. You cannot get that much traffic for much less. A 1/500 closing ratio should be profitable for any merchant.

    If you can't set it up to do that, you got the wrong products, the wrong setup and you can't sell. Get a day job.

  12. #12
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    CPM advertising is the most profitable of all for merchants who use it right.

    You just can't pop a banner up on 1,000 sites and have it spun. You have to target the traffic by category and you can get huge traffic form chump change.

    For example: If you pay $1 CPM and can get 5% CTR your cost per visitor is 2 cents.
    plus you get the branding.

    If you pay $10 CPM and get 5% your cost per visitor is $.20 plus you get the branding.

    Now the difference is WHERE DO YOU place the CPM. If it's on a some what targeted page, the $1 CPM would probably pay.

    If it's on a totally targeted page the $10 CPM would pay, since it would cost less than
    a listing for a similar high traffic page on bendOver.

    But anyway you slice it CPM must be highly managed to be successful.

  13. #13
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    Thanks for all the insight on ROI and banner ads, Professor.

    Where might one start to buy targeted banner ads at $10 CPM?

  14. #14
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    I'm sure Prof. Fred has a particular site in mind. One that only has 10 banners on a page, with targeted traffic driven at it! Better hurry--as I recall, once the ten slots in your category are filled, it's tough...

    (It's not like I've read that ad before or anything [img]/infopop/emoticons/icon_wink.gif[/img] )

  15. #15
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    No particular site in mind...you can use any site that's fully targeted, or semi targeted.

    Maryilyn, you just keep doing it your way and I will do it my way - and we'll see who makes the most money.

    As for where to buy $10 CPM fully targeted with mega traffic - coming soon to a theater near you. Actually it will probably be less than $10 CPM.

    And yes, you heard it before. And yes, I have been testing the concept, using semi-targeting to see if it would work. If it is a win-win-win deal with semi-targeting, it will be killer on full targeting. And it does work. We make money, the affiliates make money and the merchants get a ton of branding and very high CTR for their money with minimal competition.

    And none of the stuff is incentivized.

    Only thing it doesn't do is make the sales for the merchants.

    The numbers work and how much we make is a function of how much traffic we get.

    We'll be launching the full program hopefully
    by Feb 1st.

    And considering last night, I signed a deal that's going to get me access to 160,000 affiliates who are going to be paid 7 cents per click thru and 1 cent for per click per referred affiliate.

    We will start off with more traffic per day than goClick.

  16. #16
    Resident Genius and Staunch Capitalist Leader's Avatar
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    "Maryilyn, you just keep doing it your way and I will do it my way - and we'll see who makes the most money."

    I'll remember that line as I whiz by you in my Lamborghini...

    "No particular site in mind...you can use any site that's fully targeted,"

    To put a CPA deal on and RAKE it in! But go ahead, run CPM. With CPM it doesn't matter if the item sells or not. Product selling like gangbusters? Make the same money as if it wasn't! Sounds like how a J*B works.

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