Incorrect, if you produce a shitload of revenue for a company, you are not "replaceable", simply because affiliates that can push big revenue numbers are not a dime a dozen.
You're generating 250k USD a month in affiliate payments, what do you think will happen if I use my competitive intelligence tools and reverse engineer your campaign? Do you have direct deals with traffic sources? Cool, I can pay more than you. I see which ads you're running, I'll just copy them and your whole flow. How do you want to prevent that? You can not. I can copy you, other affs can copy you. My CLV is 5x higher than your payout. Go figure. It costs me 4.5k USD to hire a media buyer who can handle a dozen internal campaigns (plus adspend ofc). By doing this I can improve my profit by 100k a month. Even if I were not greedy I would still try to move more and more traffic to the internal dep as affiliates usually get paid net 7, but the payment processors pay out net30 to net45 (not taking into account all the 180 day rolling reserves you have to deal with).
On the other hand, many products and offers out there are immediately replaceable. You have no control if your #1 distributor decides he doesn't like your margin, or you don't convert as well as you used to. He says buh bye, and your revenue numbers drop 60% overnight.
Sure, but that's the reason why every offer owner runs internal traffic as well, which a) is stable and b) is usually way more profitable than affiliate traffic. If an affiliate decides to drop out I'll just get one of the media buyers to copy and paste his campaign. Worked in the past, will work in the future. In times of WRW, Socialadspy, similarweb.com and so on it is very easy to replace you and your campaigns.
Overhead in our case is very limited as almost everything is automated, so I couldn't care less about missing out on 10k revenue a day. People usually overestimate the overhead costs as they don't understand how crucial it is to optimize the whole backend once you scale.
Go ahead and build your own business first, work on your MVP, and try to sell it directly if you can. If you really think that involves less risk than selling products in that space first and gathering data BEFORE you develop your own product, than you really don't know what you're talking about. Oh wait, you do because you did affiliate marketing first and THEN developed your own product, so you did exactly what I always recommend
I have the feeling that you have no idea what an MVP really is (hint: it's used to keep your costs down to a minimum while allowing you to gather data and recoup part of your investment). We came up with a completely new product and had zero competition when we launched. We did some marketing research with surveys in the beginning, then banged out a small quantity of products and launched with a super minimal backend. There were no working campaigns prior the launch and we did not optimize traffic sources, banners or landing pages in the first two months as we were busy scaling and building a proper backend, all while being very, very profitable.
but now that you have your own product you want to act like affiliate marketing is your red-headed stepchild when you probably owe 95% of your success to it. Give me a break.
I'll give you your break the minute you start reading my F*cking posts. Do I really have to repeat myself a third time? I'm glad that I got into affiliate marketing as it made me tons of money, but I know hundreds of affiliates personally that started with a few thousand bucks in their pocket and left with zero, or even worse, with debt on their credit cards because
affiliate marketing is hard and
it is not for everybody. What does affiliate marketing look like for most people who are new to the industry? Bling bling, guru, yadda yadda, 50k a day, get comissionz and fat checks. All you have to do is set up a nice site and buy some traffic. You know what I'm talking about.
We both know that affiliate marketing is hard and challenging, but most people who decide to jump into it simply don't.
I think that a bit of background information like the one I gave in my opener will help beginners approach affiliate marketing the right way. I've seen too many people lose a lot of money because they had a wrong idea what affiliate marketing really is as everybody is only talking about how much money they made in a day, but nobody talks about all the dark nights spent hustling 15 hours in front of the computer not knowing if your campaign you're working on will pay for the adspend or not.
I don't even understand your point. Competition doesn't magically go away when you build your own service, but your overhead certainly goes up.
Of course not. The profit margins of your own offer / service will most certainly outweigh your CPA you receive as an affiliate. What does that mean? More money in the bank, easier to build a successful campaign as your max CPA is higher.
Same thing, building your own offers doesn't mean competition goes away.
See above.
Incorrect, my main offer pays 50% front-end, 25% backend, lifetime. There are plenty of offers out there like that one.
Hah, I had to laugh when I read that line.
And you think that your advertiser will track everything properly? This little line shows us two things: a) you have no idea how a large part of the industry works (on an advertiser level) and b) you are very naive. You give up control and let other people decide your outcome.
You are making more dough now because you did affiliate marketing and learned what you learned. "Build your own business and learn the marketing by selling your own stuff" sounds nice and powerful, but 95% fail that way, because they spend all their energy creating a product and then don't know what to do once they have it.
Please remind yourself that I was speaking about launching with a MVP. Let me quote the definition for you:
- Be able to test a product hypothesis with minimal resources
- Accelerate learning
- Reduce wasted engineering hours
- Get the product to early customers as soon as possible
I agree, if you spend 5k USD and 90% on your business the probability of your business failing will increase, but that was not what I was talking about.
If you flip it around and learn to market proven products first, all it takes after that is developing a product and inserting it into your proven funnel.
Are we talking about building a business that
innovates or
imitates? Sure, if you want to build a business just to compete with the guy you just generated sales for, go ahead do it and see what happens. Prepare for fighting an uphill battle.
You have two choices.
1) You become an affiliate and promote what everybody promotes. You're like a door-to-door salesman that is competing with 5 other guys working the same street as you. Prepare to lose your money if your campaigns do not work. You will end up with nothing as you have not built any assets. You don't learn much as you still don't know how to sell or how to interpret the markets needs correctly.
2) You work on your own business, put a MVP on the market and promote it directly. If your campaign fails you will lose money, that's no surprise, but the chances of your campaign succeeding are higher as the optimization is easier. More revenue / profit means increased max CPA = easier to optimize. It is a huge difference to optimize for $20 CPA or for $30. If it does not work out as planned you always have the option of selling your asset (product, brand, blueprint) to someone in the same industry.
There's no debating this, but we can go back and forth as long as you'd like.
You hopefully see that your approach is somewhat flawed. If not, that's fine.
You are actually proof of exactly what I have been saying all along, learn the ropes by marketing as an affiliate first, then use that knowledge to grow your own product/service.
Just because a few guys win the lottery every year doesn't mean that it's the best way to make a lot of money. Your logic is flawed.
Coalission, let me quote you:
"A lot of people, including MJ himself, has a negative view on affiliate marketing, something I do and am very proud of."
And that is the problem here. You are arguing with me because you feel offended by my experience. Affiliate marketing works for you, that's great and you should enjoy it (and scale it), but you should also step back for a minute and see the bigger picture of what we are doing. Most affiliates fail miserably because they enter the industry under false pretenses. They think it's easy money and a quick way to riches. Both of us know that that's not the whole story and I think I gave a good opinion on the state of the industry you won't read that often in forums.
If you think I'm full of shit and it's the other way round, I can live with that, but please don't expect me putting in more time in participating in a virtual pissing match that this thread became after page one. Sorry to disappoint you, MJ, hope you already finished your popcorn!
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