Affiliate marketer, you are doomed to lose your pants with ‘Pay Per Click’

Why? I hear you asking, the answer is very simple, it’s all a numbers game. Let us look at a real example and include the numbers to show you exactly what I mean.

I’ve chosen a pretty popular keyword to start with “Make Money Online”, and using Google’s Adwords estimator to have your Ad placed in the top 3 positions of the sponsored links, you’d need to spend a minimum of $2.09 per click, let’s call it $1.5 per click as we’re happy to our Ad in position 4-7. We’ll set our budget at $50 per day during the test period and let’s look at the probable outcome. We run the test for 2 weeks, so our total spend on PPC is $700. The estimated number of clicks per day at $1.5 per click is a maximum of 212, and we’ll use 200 for arguments sake.

This will have generated a maximum of 466 clicks over a period of 2 weeks and cost $700. Now we know that it is conservative to assume that 1% of clicks will convert and become a sale, which means at best we’ve made 5 sales costing us $700. This is something that all the PPC merchants hide from you, but we all know that a large number of people just happy click their way around the internet with no intention of buying. A large number of potential buyers, will see your Ad, note the price and product specifications and then go and compare to other products. Even if they do come back to your product, they may have found it through another affiliates site.

Now, let us assume you’ve picked an excellent product which pays you $50 per sale, you’ve now made $250 and spent $700, a net loss of $450. This is of course if you don’t get refund requests, and let’s face it, many people will try a product, realize it doesn’t work for then and ask for a refund.

Now, you may say I am harsh, so lets look at less popular keyword (the product will also be less popular). I’ve chosen a Clickbank product paying $21 per sale with a gravity above 300. I then analyzed the keywords used by the vendors squeeze page and finally chosen ‘How to get a six pack’. I’ve narrowed my sales down to the US, Canada, Uk and Australia as the keyword may not be used in other countries, or may be mistaken for a six pack of beers. So, the average cost per click is $0.30 and we can anticipate around 20 clicks a day (Google Adword estimator). We go through the same excersize we did before. 2 weeks will then cost us $84 and generate 280 clicks, once again we assume a 1% take on so we’ve made 2.8 sales (Refunds not considered), total gross profit is $58.8, total project is a loss of $25.

Now let us look at the picture from the Vendor’s perspective. Look at case 1, which is an example of a potential big hitter. The Vendor is a well know name and has attracted 1000 affiliates, some of them using PPC and some have a big list, so their campaign is much cheaper than yours. Now you’re thinking, ok, I’ll buy a list, forget it, that is even a better way to waste your money, the veteran affiliates have built their list over months and years and it’s a good list with hungry buyers. But back to the Vendor, you have made 5 sales, you lost $450 and the Vendor made a gross profit of $250. Like you 950 of the affiliates made 5 sales each and like you, quit as they were losing money. The other 50 made cheap sales via their lists and via Free Traffic methods we’ll discuss later. From the 950 losers the vendor made a gross profit of $237,500 and let’s assume the other 50 sold 20 units each, that’s another $50,000, total Vendor gross profit $287,000. And you my friend have just lost $450.

Not convinced, still think you can make money as an affiliate using PPC? Wake up fast, don’t spend your kids college money, you’re better off buying a lottery ticket every week. Why do you think so many big names are selling their ‘How to do PPC’ systems? They are selling them because they no longer work for them, and because they make their money selling tools, not products. (remember that the only people making consistent money during the gold rush were the tools vendors).

So, is it all doom and gloom for affiliate marketers? NO. There are many ways to get free organic traffic to your squeeze page or even directly to your affiliate link (via redirection). Whatever you do, forget about traffic exchanges, they are full of happy clickers who click for credit, so that other happy clickers will visit their sites. They have as much intention of buying from you as you have of buying from them. Forget about buying lists, these people receive dozens of emails a day through some opt in process and are the same ‘happy clicker’ variety, keep your wallet firmly in your pocket.

Ok, so here’s the deal, you can rank high in any of the search engines and you get lots of free traffic, it’s simple to do but requires work and some effort, however, once you start, it starts snowballing and you get a ripple effect (I despise the term Viral – makes me feel like I have a disease). I cannot give this information out for free, as I am sworn to secrecy, just click here

. If you are happy to make an effort and see results, go for it, if you’re hoping your fairy godmother will wave a wand and make you rich don’t bother.

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