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Thursday, December 14, 2017
Article written by Carole Nickerson

Affiliate Programs - Crunching The Numbers & Conversion Myths

All too often, many affiliate marketers discover that an affiliate program's promises of high converting sales simply never materializes. They followed all the instructions, used all the affiliate marketing tools & tips offered by the program, and learned everything they could about profiting with affiliate programs but still ended up losing - both money put into advertising and faith in the concept of making money online. So what went wrong?

Let's say you sign up for an eBook affiliate program where you can earn $20 per sale. If the average conversion is claimed to be 1 out of 35 visitors to the site, then you know you'll have to refer at least that many people to make a single sale. This might be ok if you are simply putting a banner on your site or writing an article which doesn't cost anything, but if you use PPC engines to drive traffic, you might find that it's just not worth it.

So off you go to Adwords, find a few keywords to bid on and see that you have to spend $0.25 per click in promoting that eBook affiliate program just to average 15 clicks per day. That right there is $3.75 per day you'll be spending. But wait, that was only 15 visitors. Because the average conversion is 1 out of 35 visitors, you're likely going to have to spend $8.75 more to meet that number. Add it all up and you've spent $12.50 to send those 35 visitors. Your actual profit is knocked down to $7.50 per sale at this point. But that is only if you get that steady 1 out 35 people converting into buyers. Not as exciting as it first sounded right?

But that's not all. What do you do when you realize that it actually takes 45, 50, or even 100 visitors just to make that one sale? You'll end up losing more money than what you'd ever make in commissions. This doesn't even include the amout of time you've invested just in tweaking your ad copy for the campaign, testing different keywords, etc. Now I know there are some nuts who will dump $1000 into a campaign just to make $1200, earning them a profit of $200, but for most people (especially those starting out) it's just not realistic or financially feasible. It's a huge gamble. What a lot of people don't realize is that when an affiliate program is claiming very high conversions, they aren't basing it solely on affiliate conversions (that is if they are being honest and basing it on anything at all). These "conversion" figures are often used to manipulate new affiliates into signing up.

Another form of manipulation is the claim of top affiliates who earned $10,000-$30,000 or more in a single month. Sounds good, but what they aren't telling you is that only a very small fraction of affiliates ever make that much, and of those that did either had websites directing 1000's of visitors every day, or they spent $1000's in advertising. The affiliate program owner isn't going to say "The affiliates who earned $30,000 last month had to invest $25,000 to make that much, equating to an actual profit of just $5,000". Are there really people who invest that much money? I'm afraid so. I personal am not that brave nor rich. I would rather take that money and put it into developing my own products, which is far more rewarding and has more profit potential any day of the week.

Hype is hype - and it sells well. That's business, nothing personal. Whether it's hype about the product itself, or hype to recruit affiliates - it's all part of the game. Of course, nobody really wants to talk about this because it sheds a negative light on these affiliate programs and discourages sign-ups, but for those who already have trouble making ends meet and hoping to find riches online, these are things they need to consider before jumping into the affiliate marketing game.

In conclusion, these low-ticket items really need some evaluation and the conversion claims need to be taken with a grain of salt. It is wise to test affiliate programs first using free methods of promotion like writing articles or putting a button on your site. Get those first 35-40 targeted visitors rolling in and see what happens. If the sales do start to accumulate, then you know it might be something worth investing in. If you want to try out PPC advertising options, set a budget and stick to it. Crunch the numbers yourself and figure out what a reasonable investment would be. This little bit of time quality spent with a calculator can go a long way in not only helping you work smarter, but helping you realize your goals more quickly as you can dump the poor performing programs and focus on more profitable ones.
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