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Traditional business models are inherently flawed.
Many businesses have to put in huge sums of money upfront not even knowing how much they will be paid after all the time and effort has been spent. They are completely vulnerable to the very things they cannot control such as weather (farming), the economy and the market. The market dictates its price point. There’s no better example of this than in the farming industry.
The traditional business model is set up to fail from the start when you consider the high overhead and out of pocket capital expenditures paid before a dime is earned. The worst thing you can do as a business is to offer the same exact product or service as many of your competitors.
You see this played out in many different industries such as insurance, real estate, healthcare (medical & dental) and big pharmaceutical companies. Even in our universities’ tuition rates. They all seem to stick together and hold the line on pricing, seemingly unconcerned and unwilling to compete.
Restaurants also seem to follow a similar business model as farming. Big outlay and upfront costs in the thousands well before making a single sale. The next ten years are spent playing catch up (initial expense plus running costs) before you make a single dime in profit.
Is it any wonder that more than 80% of small business go bust within the first three years?
Traditional Business Model vs Affiliate Marketing Model
In today’s online world a huge percentage of products are digital in nature or sold online. How much does it cost to offer an online course, sell an e-book or build websites? Next to nothing when compared to traditional brick and mortar businesses.
Notice that I’m not saying there is absolutely no cost to running an affiliate marketing business. There are some costs (time and money) associated with building up your online presence, ranking in SERPs and online marketing through paid advertising.When compared to the huge outlay of traditional business models, affiliate marketing is hands down ridiculously easy! Click To Tweet
Since 2015, revenue from affiliate marketing programs grows by 10% annually. That revenue comes largely from affiliate links matched only by the selling of one’s own products online.
These products are generally in the form of e-courses, ebooks, memberships, and other digital products. The projections are this impressive trend will continue at least until 2021.
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Not only is Affiliate Marketing growing fast, but it is already a massive global industry. The statistics for 2018 are yet to come out, but in 2017 it was worth over $12 billion, with the US and the EU leading the way. Little surprise there, as these are the markets with the most online trade.
What Is Affiliate Marketing?
An affiliate network is a platform where product manufacturers invite affiliate marketers to promote their products in exchange for a commission. The manufacturers manage payment processing and customer support.
They provide advertising materials that help affiliate marketers promote different products such as links, banner ads, landing pages, and images for social media promotion.
Manufacturers also referred to as “publishers”, prefer affiliate networks because it keeps their own marketing expenses lower and they can manage everything from recruitment to payouts. Affiliate marketers prefer them because of their reliability, brand recognition, range of products and ease of use.
Some are known for the quality of their merchants and higher commissions while others are infamous for spam and poor support. Much like any sales job, you get paid a commission to sell a product, service or membership.
Using Affiliate Marketing As A Merchant
The fastest way for a business to grow is through the use of affiliate marketers who can promote their products and services and reach thousands quickly and easily with low overhead. It’s genius really when you think about it.
Let’s say you have a great idea. You’ve done your research and identified a specific topic wherein there is low competition. So you spend hours, days or weeks creating a great online course on that topic. You’ve got it all ready to go, next dilemma is how to get the word out and generate sales on a limited budget?
You could buy some online ads but that adds up so quickly it will make your head spin. Regardless if you make a single sale or not, you still have to pay the bill. So what’s the best way to reach hundreds or even millions with NO upfront out of pocket expense and low risk? It’s through affiliate marketing.
Affiliate marketing leverages the power of many people to promote your product overnight. How? Professional online marketers already come with big email lists and depending on how much incentive you’re willing to give them (bigger commissions and/or recurring commissions) the more likely it is they will spend their own dime to promote your product.
Your only cost is a percentage of the sale itself which you work into your pricing. Alone, you may reach a thousand, but utilizing affiliate marketers who often have a well established following, you will reach hundreds of thousands or more.
The main goal of affiliate marketing lies in connecting a company and its products to a customer. That is totally legit. Your biggest challenge, of course, lies in your ability to generate enough interest and traffic that generates sales. This is not MLM. You’re not recruiting others to sell under you. All sales generated through your efforts are independent of anyone else.
How Affiliate Marketers Get Paid
So how does it all work? How do affiliate marketers get paid and how does the product manufacturer keep track of who sells how much and to whom?
That’s where affiliate links come in. You see each affiliate link that’s generated is unique to each affiliate marketer acting as a kind of identifier for the manufacturer. It’s an easy system.
As far as an online income source, affiliate marketing has unlimited income potential. Once it’s set up properly, the income is completely passive in nature.
There are thousands of success stories online that prove this point. In fact, it’s what I use today to supplement my current income. My goal is to build it up to the point when I can comfortably retire and travel.
Affiliate programs can offer commissions as low as 2.5% to as high as 50% with many also offering recurring commissions. Typically, recurring commissions are associated with membership sites.
Every time one of your sales customers renews a membership or upgrades to another product with the same company, you will get another bite at the apple.
How Affiliate Marketers Generate Traffic
Did you know that the biggest portion of online ads is actually placed by affiliate marketers? Even big brick and mortar retailers such as Walmart, HomeDepot, and Target also offer affiliate programs.
Using your affiliate link, you will have to publish content such as product reviews and place online ads using various social media outlets. Paid ads are the fastest way to grow a website but it can add up very quickly. Many small online business owners prefer to generate free traffic.
There are clear and effective ways to build your email list without spending money on ads. It’s slower and what you save on money, you’ll pay for in time.
This has got to be the toughest part of building any kind of small online business…that is, generating traffic! It’s the giant elephant in the room that you have to get passed in order to succeed at anything online. Whether you’re marketing your self, your services, your products, your business, affiliate links, courses, etc. Nothing succeeds without traffic.
It takes dedication and consistent effort but you can do it! Delve deep, learn from the best in the industry. You can’t go wrong with the top leader in online entrepreneurial training mentioned at the end of this blog.
Email list building is an exact science. I’ve written several blogs on the email list building with each one discussing a different strategy.
The Secret To Being A Successful Affiliate Marketer
The secret to effective affiliate marketing is no secret at all. It just takes work… and that’s why those who do it thrive and those who don’t…struggle to rank and have a dim and fruitless online existence.
Don’t just try to get people through your affiliate links and hope that the company does all the hard work. Don’t be merely a middleman who adds no value to the transaction. Instead, go ahead and provide a TON of value.
Here are some potential ways to go about being an affiliate marketer with a real business… and not just a middle man with no value proposition…
- Provide training or how-to demonstrating the affiliate products you recommend.
- Offer bonuses. I once saw a webinar that literally generated millions of dollars and the core offer they made wasn’t even their’s. Yet, he offered 11 bonuses! Needless to say, he generated a TON of money.
- Build actual sales funnels from lead magnet to the offer. The structure can work for affiliate products, too, you know and it’ll build a great list for you.
- When at all possible, find out who bought through your affiliate link. And treat them as YOUR customers, too.
- Be very stingy about what you promote. Don’t promote get rich schemes or other questionable products. A good affiliate marketer is very selective when choosing a merchant and his/her product. Look for products from people or companies with a positive reputation.
- Be careful what your promises. Don’t hype up what you can’t (or the product) doesn’t deliver on.
- When you overdeliver, you build goodwill and inspire trust.
Affiliate marketing is booming. You know why? It can work VERY well. In fact, you could build an entire business were pretty much all your revenue came from affiliate commissions if you wanted to.
Starting Off On The Right Foot
To do it well and effectively, it will take almost the same amount of work, diligence, and care as building any other kind of online business.
The rules are the same:
- Provide great value.
- Inspire trust.
- Create content worth looking at.
- Build your list.
Don’t waste time chasing after online folks guaranteeing quick money and overnight success.
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Your Two Cents
Feel free to leave your “two cents” here. Questions and comments are welcome.