The Master Class returns in the New Year to assist with two of the most common dilemmas of affiliates: (a) which sector to enter and (b) which traffic and revenue generation models to focus on. Today we’ll address the first question and next week the second.

Most affiliates create a website on a particular subject on a whim, without giving it much thought. However, you should choose with care because it can and will make the difference between the success or failure of your affiliate marketing business.

What Are You Passionate About?

If you intend to create a major website or blog that will be around for years to come, you must consider a subject you are enthusiastic about. Don’t focus exclusively on the bling, or else your foray into the world of affiliate marketing may turn out to be just a fling.

Running a successful small business requires an exceptional amount of hard work, far more than most people anticipate. You may find yourself burning the midnight oil to keep your pet project going and are less likely to stick to it during the tough times if the subject matter does not float your boat. You are far more likely to go the extra mile and make a success of your venture if what you do is enjoyable.

Rather than having a general site that covers a large field you should try to find a niche. It is better to have a site about a particular computer game than computer games in general, as there will be less competition. However, obviously the niche shouldn’t be so small that too few people are interested in it for you to generate a reasonable income. You need to get an idea of the search traffic. A fabulous tool you can use for this is SEO Book’s Keyword Suggestion Tool. This tool compiles search data from the big three engines (Google, Yahoo and Windows Live) into one easy location.

If your aim is to set up mini-sites or go into Pay Per Click arbitrage, you don’t necessarily need to be fanatical about the topic. It is possible to create a mini-site on a subject that does not necessarily give you a buzz. The commitment is less. And, in these scenarios, it may be worth you focusing on, say, promoting a web host which rewards you with $120 a sale than a music store which gives you a mere 5% commission per CD.

The Craze of the Moment: Blogging With over 100 million blogs worldwide and the blogosphere doubling every 200 days, the blog is undoubted the preferred way of developing on online presence at the moment. The reason for the meteoric rise in blogging has been the ease with which one can be set up and the preference that people are demonstrating to hear an individual’s voice rather than the often bland output of organizations. You could set up a blog on any of the verticals mentioned below - and countless others – but you must be aware that over-commercializing blogs discourages people from linking to them. Also blogs need to be regularly updated if they are to attract a loyal readership, something that the majority of people fail to do in the medium to long term when the novelty has worn off. Bloggers tend to surround their content with contextual advertising from providers like Google Adsense and Yahoo Publisher Network to earn revenue. Unless you can pull a significant amount of traffic, the income is likely to be minimal.

 

The Most Popular Verticals

Travel

The advantage with travel is that the median basket size is usually high. The disadvantage is commission rates tend to be low.

Mosaic Holidays, who will be launching soon on PrimeQ’s affiliate network, has an average purchase price of $2,250. While they have been persuaded to offer an incredibly generous 5% commission, more typical in the industry is 2%. 2% of $2,250 comes to a mere $45.

The sector becomes even less tempting when one considers the astronomical cost of acquiring traffic. It can easily cost 50 cents to acquire a single visitor via Google Adwords or Yahoo Search Marketing and so you have to watch your metrics like a hawk.

Some of the most successful sites in this sector are review portals which can attract traffic from organic search engine listings and therefore not have to cover high PPC costs. Popular review sites include TripAdvisor and Holiday Watchdog.

Entertainment

Bonkers about Britney or crazy about Kylie? You may have thought about setting up a fan site and making money by selling related DVDs, CDs, books and posters.

It may be more enjoyable to create a page with Daniel Craig pictures than compare the interest rates of loan providers, but the down side is that there is less commission in entertainment. If you sell a DVD or a book you are unlikely to make much money. 5% is typical in these sectors, which means you will make a mere 50 cents or so per product.

Also conversion rates tend to be low. There is a high probably that somebody visiting a cellphone site is likely to be interested in buying a phone, whereas somebody visiting a Paris Hilton site is probably more interested in seeing scantily-clad pictures of the socialite than buying that book you are trying to sell about her.

Telecommunications and Internet

Many affiliates tend to be geeky males and are attracted to this sector where they can indulge in their passion for the latest Nokias and Samsungs. The CPA amounts can be high too, with $60 per contract phone not unusual.

While the cellphone and broadband sectors are buoyant, paying decent commissions and having huge potential for growth, the landline telecom market seems to have a less rosy future. The plummeting cost of calls means that margins have been shaved for telecom providers and this means there is less commission to pass onto affiliates. Whereas it may have cost $3.00 a minute to call Pakistan from the United States a few years ago, the same call can be made for 5 cents a minute now.

On the other hand, people are making more and longer international calls and, with a well-through out strategy, it could be possible to make money. This is one of the few sectors in affiliate marketing where residual income commissions are common and you should look out for these schemes rather than those that pay a one-off CPA amount. Cognigen, for instance, pay agents between 6% and 17% of a customers’ call charges for life.

Finance

Banking and finance is one of the most lucrative sectors around and CPA amounts can be high. Feel Good Loans, for example, who are launching soon on PrimeQ, pay up to $100 per bona fide loan or mortgage application from a UK resident.

However, the competition is fierce and you really need to know your stuff to survive in this field.

If you can provide a steady stream of genuine leads for banks and loan companies, then you could become very wealthy indeed, but don’t forget that first word of this sentence!

Gambling

This is another field where some affiliates are making massive profits. As this CBS video demonstrates, the clampdown on gambling in the USA has not dented the lucre in the industry.

Nigel Payne, who runs Sportingbet, one of the world’s biggest online gambling companies, says "There'll be more online poker games per day at the end of this year than all of the casinos in the entire world put together. It's a huge business.”

The growth shows no sign of abating. Various trends are benefiting the online gaming industry. According to an article in Marketing magazine last week, for example, a smoking ban in Scoland since March 28, 2006 has seen the turnover for Scottish bingo operators drop by between 14% and 27% and seven venues have already closed down. A similar ban in England on July 1 will lead to hundreds of thousands of bingo players switch from bingo halls to the internet.

With gambling becoming more socially acceptable, the number of affiliate programs and the rewards they offer will continue to rise. Many companies operate a number of brands and affiliate programs, with different commission structures. A network-based affiliate program often pays a lead fee, while an independent one pays a proportion of the net loss of each user you refer.

Although there are undoubted rewards, this sector is dominated by super affiliates and it can be hard to get a foothold. Also some people have moral qualms about profiting from other people’s losses.

Shopping

Why not a straightforward shopping portal, we hear you say. The aim of a shopping portal is to become a port of call for people to easily find online stores.

The advantage of having a shopping site is conversion rates are high. People don’t generally visit such a website unless they are in a buying mode.

There are literally tens of thousands of shopping portals out there created by affiliates and, unless you can do something exceptional, it could be a tough to stand out with a run-of-the-mill site.

To attract visitors, some affiliates attempt to introduce a cashback incentive where they share a portion of their referral commissions with shoppers, or provide a comparison shopping feature where surfers can find the lowest prices for products.

With affiliate programs starting and closing down regularly, you’ll need to have a sound Content Management System to keep the process of updating your portal as hassle-free as possible.

Next week we’ll look into the various strategies affiliates can employ to generate traffic and sales, from running a website to PPC to viral marketing. Merchants/advertisers will find this useful too.

 

Nadeem Azam, PrimeQ
Public Relations Manager
nazam@primeq.co.uk

 

Court OKs Narrow Use of Competitor Trademarks in Search Ads & Meta Tags

An American District Court has ruled that the use of keyword-triggered ads and keyword meta-tags using trademarked terms cannot confuse consumers if the resulting ads or search results don't display a competitor's trademarks.

This is a narrow ruling and doesn't give search marketers carte-blanche to use trademarked terms. Rather, it means it's permissible to bid on a trademarked search term that triggers an ad that does not contain the trademark. Similarly, it's OK to use trademarks in meta tags, as long as the trademarks don't show up on search result pages.

The verdict is not conclusive as Santa Clara University Law Professor Eric Goldman explains at his Technology and Marketing Law blog. Several aspects of the case make it impossible to interpret it as a broad endorsement of bidding on competitors' trademarked keywords, he says, but it might be seen as a minor victory for marketers wishing to bid on trademarked terms.

Yahoo Introduces Mobile Service Software

After falling behind Google in Internet search and advertising, Yahoo is trying to remain number one in the battle to deliver information and online services to mobile phones.

Yahoo’s latest weapon is software that will let users find information like weather, news, stock quotes and sports scores more quickly on their cellphones. The software, called Go for Mobile 2.0, was unveiled last Monday at the Consumer Electronics Show in Las Vegas, just as Google announced a partnership to put its own mobile software on Samsung cellphones.

Internet services on mobile phones remain a small market today. But industry analysts and Internet companies believe they will eventually outgrow the market for computer-based internet services as the capabilities of cellphones and the bandwidth of wireless networks improve rapidly.

“We view the mobile Internet today as entering an era where the PC-based Internet was in ’96 or ’97,” said Steve Boom, Yahoo’s Senior Vice President for Broadband and Mobile. “It is just on the cusp of taking off.”

For Yahoo, securing a leading position in that market is especially important. The company has struggled over the last year, as Google solidified its lead in search and leaped ahead in online video by acquiring YouTube. Yahoo has also been criticized as lacking initiative and being slow to capitalize on Internet trends like social networking, now dominated by MySpace and Facebook.

Yahoo’s introduction of mobile software was reported Monday in The Wall Street Journal. The software, a revamped version of technology that the company introduced last year, makes it easy to move among various online services providing news, sports scores, maps, weather, movies, photos and e-mail. The free ad-supported services will be tailored to match a user’s settings, like ZIP code and stock preferences, on Yahoo’s existing online services.

The software will also be equipped with a search service, oneSearch, that will interpret a user’s intent and deliver results accordingly. For instance, when a user searches for a sports team, the service will make a bet that the user is interested in the latest scores, a team profile and news related to the team, and return those first. More general web links, like those returned in typical Internet searches, will be de-emphasized.

“It’s the kind of thing that Yahoo very much needs to extend further onto the mobile platform,” said Gary Arlen, president of Arlen Communications, a research firm based in Bethesda, Md.

The service is already available on about 70 handset models and is expected to be on some 400 devices by the end of the year, Mr. Boom said. Yahoo has signed agreements with handset makers to preload or distribute the software. Yahoo is also encouraging users to download the software directly onto their devices.

Yahoo’s mobile services were used by 6.8 percent of cellphone users in the United States in October, according to Telephia, a research firm. That made Yahoo, whose most popular wireless service is e-mail, the No. 1 mobile Internet company. But in mobile search, Google already tops Yahoo, according to Telephia.

Google said its cellphone search, e-mail and map products would be preloaded on Samsung phones. Deep Nishar, Google’s director of wireless products and strategy, said the company’s mobile search service already emphasized results that users typically want, like sports scores and movie times and locations.

Courtesy New York Times.

 

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