Almost all successful marketers on the Internet operate an ‘Affiliate scheme’. The advantage to them is that they get a huge stream of new customers, albeit at a lower initial profit margin, with zero effort or expense on their part.

The advantage to the Affiliates is that they can get an immediate income without having to develop a product, set up a delivery mechanism, or process the payments.

In the long run, you are going to make your real money by having your own products, and your own marketing process, and having your own affiliates bringing you new sales and new customers.

But let’s get back to now… What’s in it for you by being an affiliate of someone else who already has a product, a sales site and a mechanism for taking the customer’s payments and delivering the product to them?

Here’s what’s in it for you:

1. You can earn some money almost immediately - say within the next week or two. I’m not saying it will be a lot, but worth having anyway.
2. You can see that this really does work.
3. You can look at operations that are already working for others - you can begin to see how they position themselves and how they persuade their prospects to become buyers.
4. You can do this ahead of learning the Advanced Skills tht you will need later to do it on your own account.

How do you go about it?

1. You find someone already selling successfully (I’ll explain how to do that in a moment).
2. You register as an Affiliate of theirs.
3. You send interested prospects to their site, tagged with your affiliate code (I’ll suggest some ways of doing that shortly).
4. Some of the prospects you send will buy… for those that do, the trader will pay you a commission.

How does the arithmetic work out?

Let’s take a hypothetical example:

• The trader you sign up with has a product (say an ebook) priced at US $40 (I’ve priced it in dollars bcause most products are on the Internet)
• Of qualified prospects sent to his site, 2% actually buy
• He pays commission of 50% (nb all of these figures are typical in real life, but specific instances may vary)
• Suppose you send him 1000 prospects:
• 20 purchase the ebook (2% of 1000)
• He gets $800 from them (20 x $40)
• He pays you $400 commission (50% x $800)

Isn’t that cool? You didn’t have to write the e-book, or package it, or take the order, or deliver it, or process the credit card payment. All you do is get a commission cheque through the post once or twice a month, or maybe even have it transferred directly into your bank account.

Let’s look at those numbers again:

• for every thousand visitors you send, you might earn $400…

Where are those visitors going to come from?

Here are some possibilities:

• From a website (the obvious one!)
• Through Google Adwords
• Through e-zines or newsletters
• To a list of email contacts (as long as they have given you permission of course)
• In offline media, such as print adverts.

Let’s just take a look at that second option for a moment - Google Adwords. Don’t worry about the details for the moment - I’ll be doing a big explanation of the whole topic in the Key Skills report. All you need to know for now is that when someone searches on Google, the results page contains a set of entries down the right hand side - the so-called ’sponsored links’ - that are paid for.

For example suppose you find a product that appeals to model train enthusiasts. You sign up as an affiliate. You join the Google Adwords scheme, write an ad for the product and bid for it to be displayed for the search term ‘model trains’, arranging that when someone clicks on that link, they are sent directly to the supplier’s sales page, with your affiliate code included in the link (again, I’ll explain exactly how do all that later - just focus on the big picture for now).

Each time someone clicks on the link and is sent to the site, Google charges you the price that you had bid.

I highlighted that last sentence because it exemplifies the key insight to success with any web business, in fact any business at all. Marketing is a mixture of art and science, but it’s about 95% science. The key difference that the Internet has brought is that the data can be gathered faster and cheaper and more accurately than ever before.

So here is the simplest possible business model - you don’t need a product of your own, or a delivery or payment mechanism, or even a website! Some internet business educators even promote it as the fastest and easiest way to build an income. Is that too good to be true? Well, partly. Here’s my take on it:

• Is it possible to earn money without a website, just sending affiliate traffic direct from Google Adwords listings? Yes!
• Is it easy? No!
• Is it an optimal strategy for building a business? No!

Let me expand on those points: It is definitely possible to make money doing this: I have on occasion made over £300 in a single day, but I didn’t manage to do it consistently. It isn’t easy because the gap is too tight between the cost and the return, as you can see from the example above. Recent changes to Google’s policies have made it even harder for beginners to get a look in if there is already an experienced advertiser promoting an affiliate product.

But the main drawback is that you never get to build a list of customers. Your customer list is the most valuable asset you have. By sending them directly to the seller’s site, all you are doing is building their list. Just look at the ways of promoting above: consider the fourth one - promoting to an email list. Suppose you have a list of people you had sold to, or recommended to, in the past (and they were pleased). You could promote a product to that list at zero cost. And the take-up rate would be far higher if they already trust you. Another good reason why it makes sense to always give excellent value in business!

Where to find products with affiliate schemes

The two most popular sites where you can find products to promote are clickbank.com and Commission Junction

ClickBank is a fascinating phenomenon, and worth of a whole report in itself. I’ll be telling you more about it in tomorrow’s report on ebooks. From the point of view of a product developer, it’s a great way to distribute their products. From the affiliate’s point of view, the advantage is that Clickbank manages the whole affiliate scheme.

Commission Junction hold details on suppliers of a much wider range of Products and Services, not just downloadable ones. It also manages the commission scheme and can pay the money directly into your bank account, rather than sending a cheque in US dollars.

How to choose which ones to promote

Both ClickBank and Commission Junction list the currently most successful products. This is a good place to start, as it’s a sure sign that the product is in demand and the sales page is effective. It also makes sense to look at areas in which you have an interest and/or some expertise. If you can write knowledgeably and enthusiastically, you will have more chance of inspiring your prospects to buy.

What to look out for in the affiliate agreement

Apart from the commission rate, of course, you should be aware that commissions are paid for various periods of time, and may or may not apply to subsequent pruchases.

How to add value for your visitors, and increase their purchase rate

Websites, or newsletters, or email pitches, which simply say in effect ‘Go here and buy this product’ are unlikely to motivate many prospect to do that. By giving useful information on the your site, you build trust and gratitude. A good approach is to write an impartial, advisory ‘review’ of the product, which can send them to the site already keen to buy.

How comparison sites can be an each-way winner for you

An extension of the above technique is to review several products, comparing the strengths and weaknesses of each. This positions you as being on the customer’s side, and makes it far more likely that they will buy one or other of them. Of course, if all of they suppliers are ones you are affiliated to, you won’t care which one it is!

How to avoid giving away your most important asset

I’ve already mentioned this above. Your biggest asset is your list - make sure you offer them something of genuine value in return for their details.

Generating leads for specialised service providers

Virtually everything I’ve said about the affiliate model above applies also to this. The difference is that you get paid for sending a prospective client who meets certain criteria, regardless of whether or not they are eventually signed up for the service being offered. The nice thing for you is that you get your fee for everyone who you send. The downside is that these tend to be in very competitive areas, and you may find it difficult to get prospects at affordable cost unless you already have some profile in the area.

You can find suppliers working on this basis at Commissin Junction.

This variation is offered where the product or service is a high value item which requires specialised and personalised discussion to close the deal. Examples are Financial Planning, Mortgages and Insurance.

Recomendation no 1: between now and tomorrow, take a look at clickbank.com and Commission Junction and begin to speculate about what products you might promote as an affiliate, and what products you might want to develop yourself. Make notes in your notebook about the sites that you visit.

Recommendation no 2: picture yourself a year from now. What are you earning from your online businesses? Write that in your notebook too.