Category: work

Does affiliate marketing work? Do the math(s)

I’m a sucker for get-rich-quick schemes, especially when they don’t work. Odd that. If you haunt certain communities such as the Warrior Forum, you will be overwhelmed by offers to make you rich within hours/days/months, These generally focus on affiliate marketing, and the model is usually thus:

  • identify some niche keywords, preferably without competition, or at least competition of a low grade; the usual starting point is the Google AdWords Keyword Tool, which gives a rough idea (possibly) of monthly search traffic for your preferred terms
  • set up a WordPress-based blog, and either cram it with themed articles sourced from desperate places such as Fiverr.com, or use auto-blog plugins such as WP Robot; and link these articles to products at Amazon, ClickBank or wherever in the hope of getting a small cut of any purchases there
  • work on the SEO of the site in the hope of reaching a top-10 Google search position.

Now, I’m not doubting for a moment that there are people out there who make thousands of dollars a month doing this. Many of them sell guides on how you can do it yourself by (in theory, at least) explaining what they do.

But.

Let’s do the numbers, which most of the guides I’ve seen (yes, I’ve paid for some of them, because I’m a sucker curious) gloss over. I present here a quick assessment of the factors which you need to multiply together to work out how much money you will make from your affiliate marketing scheme:

Monthly traffic

Different ‘experts’ vary in how many monthly searches they say the Google Keyword Tool should show to make a niche worth the bother, but they generally fall between 1000 and 10000 (and then there’s the issue of ‘exact’ search vs ‘broad’ search, where the latter is much more focused).

Google SERP (search engine ranking position)

Everyone knows you need to be on the first page of Google’s results – only obsessives (like me) go beyond it. The famously leaked AOL search data in 2006 supposedly revealed that 42% of people click on the top result (see here for more on this) but more recent and reliable data suggests the figure may be as low as 18%. All the surveys agree that even the 10th result gets only 2 or 3% of clickthroughs. Anyway, let’s be realistic and say that if you get on the top page of Google, you should get from 2 to 20% = a factor between 0.02 and 0.2.

CTR (clickthrough rate) and conversions

The clickthrough rate is crucial: the number of people who click through (or ‘hop’) from your website, via your affiliate links (cloaked or otherwise – opinions differ on whether you should do that or not). It’s quite likely this will only be around 2%, maybe more, maybe less.

Conversions means the number of people who then, having reached the actual retailer’s site, actually go on to buy something. Let’s say 3% is typical. In both cases better is certainly possible – I’ve come across 30% CTRs, for example – but let’s assume you’re new to all this, and in any case err on the side of cautious. (Of course, different types of product tend to have different conversion rates, and CTRs will depend on how easy to use your site is and how well you funnel people towards the sale.)

Let’s put these numbers together as fractions and say therefore that CTR x clickthrough is probably somewhere between 0.0001 and 0.01.

Referral fee

This is the cut the retailer gives you for bringing them business. There are lots of different models, eg paying for new signups, per product and so on. Let’s assume a pay-per-purchase percentage, and I’ll focus on Amazon here – others pay better, but there are lots of affiliate gurus out there who say you can make a mint with Amazon because they offer so many niche products. Amazon pay from 4% (the starting rate) to 15%, but the latter rate is very restricted; let’s say in general a retailer will pay you from 4 to 12%, ie between 0.04 and 0.12.

Product price

Finally, there’s the price of the product itself – of course, you may link to many different ones, and again the affiliate experts have strong opinions. Obviously it’s tempting to go for high-ticket products such as plasma TVs, tablet computers and so on, but then fewer people are likely to buy them, so less glamorous, but higher-selling items might do better. Anyway, let’s say you’re most likely to find products between $1 and $1000.

Hatmandu’s amazing unbeatable affiliate marketing formula – make $$$s

So let’s put all this together. All of the above variables need to be multiplied together to reveal how much money you could make each month.

Let’s assume you want to make $30 a month from your website – not exactly an over-ambitious amount, surely? $10 of that would cover your domain name and hosting fees, leaving you a tasty $10 to spend on setting up another site in the same way, and $10 to SPEND!

Let’s assume you’re confident your SEO skills will get you to position 5 in Google, which about 4% of people will click. Let’s also assume that CTRs x conversions come to 0.0005 (ie about 2 or 3% for each, multiplied together), and that you get a referral rate of 4% as a new affiliate marketer. Put it together and you get:

MONTHLY SEARCHES x 0.04 x 0.0005 x 0.04 x PRODUCT PRICE = 30 or, simplified:

MONTHLY SEARCHES x 0.0000008 x PRODUCT PRICE

This means that to make $30, MONTHLY SEARCHES x PRODUCT PRICE needs to total 37,500,000.

Woah, that’s 37.5 million! So if you average a product price of $100 for your ‘greenhouse heaters’ or ‘cheap android tablets’ or whatever your lovely targeted niche is, you need to get around 375,000 monthly searches for your key phrase! Hm, that doesn’t sound very easy. Oh, and greenhouseheaters.com and cheapandroidtablets.com have both been taken, by the way – one by an affiliate marketing site and one by domain parkers. You’ll find one or the other is true of most niches you look for.

And there’s the rub: even if you can find a niche that’s free (they do exist, but they take a lot of work to find), the numbers don’t really stack up. Obviously you can improve your margins along each stage of the path:

  • Monthly searches: maybe there’s a niche attracting 100,000 searches a month that no one has spotted. Yeah, good luck with that. So really you’re stuck with the niches, or going for something popular… which is hugely competitive.
  • Google SERP: from 2% up to 20% is a factor of 10 (or 5 from our example) – if your SEO skills are amazing you could hit the sweet spot and get 20% of the keyword traffic.
  • CTRs and conversions: if you’re really focused you could get a percentage-of-a-percentage of around 1%, maybe even more. But it will take a lot of research and testing to find the right products and the right way of selling them.
  • Referral fee: the more you sell, the more this will go up, or you could target better-paying schemes than Amazon’s. But you can only really improve it roughly threefold.
  • Product price. This is the easiest one to change. Hell, yeah, let’s go for the $10,000 diamond-encrusted watch or a T-shirt hand-woven by Britney Bieber. I’m sure thousands of people a month will by one.

In the course of researching this, I tried looking up various .co.uk niche domains and found most were already taken. And take a look at this. These people have 1500 niche domains! Now, let’s say you want to make a comfortable, but not outrageous living of $80,000 a year. Add on top the $5000 you’d need to register, host and maintain 1500 domains, then divide by 1500 and by 12 months. Hey! Each site only needs to make $4.72 a month. You can give up the day job!

In other words, you can make a living doing this, but you’d need to find hundreds of available niches, and work hard to keep them all optimised and attracting focused traffic. Hang on, that sounds like a full-time job.

Posted on by Andrew Chapman 3

A new look at the publisher’s lunch

As usual, everyone’s talking about how publishing can survive, and how to make money on the internet. Paul Graham has written an excellent essay, Post-Medium Publishing, where he observes that it is wrong to think publishers sell ‘content’ – rather, they sell a means of distribution, and prices are dictated by that (ie, historically, the price of paper and printing) – if t’were otherwise, we’d all pay vastly different sums depending on the quality of the content. And we don’t. Bottom line: “Whoever controls the device sets the terms.” Prospect Magazine, commenting on Graham, also reminds us that we’ve seen all this before, back in Shakespeare’s time.

Meanwhile, Steve Outing warns that ‘Your news content is worth zero to digital consumers’, and that money is again in delivery systems such as neato iPhone apps. (He quaintly goes on to suggest micro-rewards – tip jars 2.0, I guess.) Jeff Reifman has weighed in against Outing saying ‘Micropayments could save journalism’. It’s hard to see how: if the headline writers are any good, the headline is where the news is – the rest is elaboration. I get my news from a few simple sources, all of them essentially ‘headlines’:

  • A few snatched moment’s of Radio 4’s Today programme between bouts of baby care – I really just get the 7am headlines
  • RSS feeds from the BBC and the Guardian on my iGoogle page – I’ll occasionally click through if I want the detail or I’m piqued by something
  • Twitter feeds

I buy one newspaper a week: the Saturday Guardian. I do read the news in it – but almost invariably I’ve seen it the day before on the web. I like it for the columnists, the features, the magazine, basically as a ritual entertainment to accompany a cup of tea. My wife just does the crossword. The physical newspaper, in other words, has become an entertainment channel rather than a news one.

Micropayments? I can’t see myself paying for news stories. Features… maybe, if they’re really going to interest me. Academic papers: possibly, if I’m researching something. That said, I did make one micropayment this week: we were planning to buy a new car seat for the baby, and only one place, Which, has a decent, up-to-date review of best buys, focusing on safety (ie there’s an emotive imperative here – and the possibility of saving money, I guess). They charge £1 for a trial subscription – but then sting you with monthly payments several times that. You can cancel any time, so I will cancel straight away. It’s very annoying: I just want one article, which I probably would have paid £5 for, simply because it’s not possible to get this quality information elsewhere. I subscribed because I’m bloody minded enough to remember to unsubscribe – though of course their business model partly relies on people forgetting, or being sufficiently charmed by the dull magazine you get in the mail.

Paul Graham says that the only kind of information people will pay for is that “they think they can make money from” – I’d add that saving money (assuming more is saved than the information costs!) might be a motive, and niche issues such as the baby safety report I mentioned.

Graham reminds us, as people like Chris Anderson have done before, that something else people will pay for is live entertainment. I wonder if this connects to another constraint upon pricing for publishing models: it’s noticeable that novels, DVD rentals, cinema visits, CD albums, all generally fall within the £5 to £15 range: people will only pay so much for entertainment that they know can be reproduced. Live entertainment, such as a theatre show, opera, music gigs and a decent meal at a good restaurant, is more of a one-off experience, and commands more value. In his excellent book 59 Seconds, Richard Wiseman points to research showing that people’s happiness is improved significantly more by experiences than by products. There’s no such thing as retail therapy.

Again and again I come back, too, to the feeling that modern content producers – writers in particular – have unrealistic expectations of fame and fortune. Most people don’t want their content, and won’t pay much for it even if they do. As Prospect says, we’ve gone back to a pre-Romantic time (I’m thinking of poets and gentleman publishers such as John Murray here, which is where the modern author-publisher dream of the last 200 years began) where writers have to work hard, diversify, hawk their products themselves, and not just sit back and expect a publisher (whose grip of the medium is now somewhat buttery) to make them millions. The Dan Browns and J K Rowlings are the lucky exceptions.

I’m a writer myself, so it’s not like I don’t have an interest in these issues – but I just write to commission, content I know someone seems to want, rather than trying to sell my own ideas, as the latter is so much hard work (obviously I thank my stars for those commissions – and make most of my money by doing design work anyway – ie making vessels for others’ content). Whatever ideas I have (mostly daft, I admit) I give away for free, often at this website.

Perhaps the answer lies in Kevin Kelly’s 1000 True Fans argument: build a core, devoted audience – if your stuff is good enough (and has a bit of luck and a fair wind), there will be some people at least who will go to your every gig, buy every T-shirt, read every book. If you can’t find 1000 true fans… maybe it’s time to be honest and admit the world isn’t knocking at your door. Do something for free. See what happens. Oh, and go out for a nice meal: it will make you happy.

Edit: After a challenge on Twitter to crowdsource payment for an article, you can now pay micropayments to get me to write an article on ‘The Modern Ninja’! I can’t lose: if not enough money is raised, it proves content isn’t worth much to people (well, er, my content…); if it is, I get a paid commission! (Oh, and if less than $300 is raised, I’ll refund your money folks!)

Posted on by Andrew Chapman

Tea for two

Gosh. Years ago I did some subbing on The Lawyer. They ran an interview with Jack Straw, where da man was very grumpy: when he ordered a lackey to bring tea, he only ordered one cup. My headline was ‘One tea, no sugar’. (I think the pic of him might even have shown the tea – I have a copy somewhere.) Cos he was ‘no sugar’, right? I had to argue for ages to get them to keep it, ‘cos they didn’t get it. Eventually it stayed.

OK, so nothing very amazing, but I was Satisfied at the time. Today, I’ve just heard from a dear friend with an absurdly good memory that he met Straw today and they were discussing headlines. He told him mine – and Straw loved it, and then told it to the editor of The Guardian.

This is probably as famous as I’ll ever be.

Posted on by Andrew Chapman 1

One small step for mankind, one big leap for Hat

Today is an important occasion for me: it’s 10 years since I went self-employed. I’m dead chuffed that somehow I’ve blundered through all these years, slightly anxious about the year ahead (two clients falling off, one affecting some readers of this as they’ll know, the other alas my most lucrative in terms of pay-per-work; though in happier news at least two new clients secured and a possible Big New Project which would make everything much securer), and determined to carry on for as long as I possibly can, ie until I die. I’ve seen numerous people come and go in the self-employed arena, and very few seem to have the luck/disposition to stay a long-term course. I hope I do, but obviously we’ll see.
I think the two things that have made all this work for me are:
1. Diversifying. My disposition is to be an incurable generalist, and I’ve gradually persuaded people to let me do a variety of different stuff – I started as a writer, became an editor, then a designer, and now even occasionally a coder, and bluff my way through all four, thanks to some lucky opportunities, reliable contacts and I suppose some sort of facility for picking things up.
2. Loyalty. Although inevitably clients come and go, there are three or four people/organisations I’ve worked with from only about six months after I went freelance, and these people have been good to me – and hopefully I’ve been good to them too, sometimes putting business their way too, and trying to be dependable. This pays the bills, and allows time for doing other stuff as it comes up, and all the other daft stuff I get up to. I’m hugely grateful to these people, and the occasional boredom is a very fair price for years of work. Boredom, I think, is a factor in any job, and finding the right kind of tolerable boredom (at least if you have an attention span as piscine as mine) is a crucial strategy.

This year, as I say, I’m slightly anxious, but recently I’ve started looking around for extra work in a way I’ve not really done since I started – so it’s an exciting time for reboot, and a challenge to work out how to find new work (I have one particular new angle to help with that – more another time maybe). Luckily it’s driven by foresight rather than sheer necessity – so far.

Sometimes I think being a specialist is better than a generalist. So many people (writers, I’m mainly thinking of) identify an area of interest and nurture an expertise for which people then come knocking. Somehow that just isn’t me, so I’ll have to keep up this fly-by-night approach somehow instead. Wish me luck!

Posted on by Andrew Chapman 9

Three steps to heaven

Somewhere on the web today a young graphic designer ranted about how they hate their clients and the work they have to do for them, and wanted to know how to earn money by doing things they love and respect (they had a startlingly high opinion of their own skills). Someone responded with Hugh McLeod’s wise Sex and Cash theory. Today I give you a restatement of this in the form of…

Hat’s Three-Step Plan for Fulfilment
1. Do things you don’t like for money.
2. Do things you like for free.
3. On the occasions when you get money for doing something you like, count yourself lucky.

Anyway, I’m off to the pub for lunch now.

Posted on by Andrew Chapman 4

Methodism in the madness

A few weeks ago someone suggested to me what’s needed to make people really wake up to climate change and the root-and-branch alterations to daily life it will inevitably demand is a new religion. I think, in a sense, we already have it.

Last night we went to Tom Dyson‘s excellent talk on climate change, which neatly summarised the main issues, tackled some of the criticisms, and advocated personal carbon rationing. Sitting there in Ramsden Memorial Hall, a beautiful converted barn with ancient beams gnarling across the ceiling, not to mention aided by the local brewery’s imaginative stimulant, I half found myself back in the 1740s. The occasion reminded me (I say ‘reminded’ – I mean, I’m getting on, but I’m not 300 years old) of the early days of Methodism, where small village groups would assemble to hear the new message.

The meeting had a mixture of locals of all ages, plus a bunch of us loyally going to swell Tom’s crowd, where most were already receptive or indeed converted to the message. In the Q&A afterwards, a few theological niceties, as it were, were discussed; and there were only one or two voices of dissent, notably one from a chap who thought the whole thing was highly suspicious, but nevertheless led perhaps one of the least carbon-consumptive lives of us all. I bet John Wesley met people like him too – people already living ‘the Way’ but deeply sceptical of imported justifications for it. One or two in the audience were perhaps even leaning towards the temperance movement in spirit.

Ever since the age of 12 when I harangued our school chaplain with unanswerable questions, I’ve been on the side of unbelief. But now, suddenly, that seems to have changed. All round the country, likeable lay preachers such as Tom are spreading the word; further afield, there are charismatic prophets such as George Monbiot (let’s leave aside Al Gore’s messianic tone for now). The difference, of course, is that the ‘revealed truth’ underpinning this belief system is a set of 928 scientific papers, and not a book written by a motley collection of marketeers a couple of millennia ago.

(I’m going to stop now as I’ve just been invited to expand on this theme in a paid article!)

Posted on by Andrew Chapman 16

Solvitur ambulando

Further to the essay thoughts, this all ties in with a whole style of book I really want to produce, and brings together several of my book ideas from the last few ideas, namely combining walking with writing. Hardly unusual, but I may have a new take on this genre to some extent (more on this another time, perhaps). Again, though, I’d rather have a commission first. I love being self-employed, but it has rather taught me to focus on what I *know* will bring in money rather than what *might*, which isn’t always very good for proper creative expression.

(Incidentally, the motto ‘solvitur ambulando’, which I first picked up a few years ago from reading Chatwin’s Songlines, is attributed to St Augustine.)

Posted on by Andrew Chapman

Wessex essays

All this talk of ancient trackways and so on has led me to wonder about writing a series of ‘Wessex essays’. One would be about the Harroway, another about Roman roads in this area, I think. And the one that started this idea is ‘In search of Egbert’s stone’ (see May 18th entry). I read an online draft of a book someone has written about the whole subject of Alfred and the war with the Danes, which includes a lengthy exposition on the location of Egbert’s stone, including a couple more possible locations. There are some notable inaccuracies – describing the Harroway as a Roman road, for example (though they may have adopted it) – and it would need some editing, but I wonder if it might be worth contacting the author (my age, it turns out) to discuss the idea of trying to publish it. It occurs to me I should try and write something on these themes for one of the history magazines.

The problem with writing for me these days is that I seem only to make the effort if I have a commission first – I don’t like knocking something out and then trying to flog it. But I could make some enquiries, I guess.

Posted on by Andrew Chapman

Dodgy types

OK, here’s something for *you*, typography and copyright fans (though obviously it applies analogously to things like music downloads)…

I bought a font today for $40 which I needed for work – in this instance I can invoice my client for it, but in other instances in the past I have just coughed up myself. Not often at this price, but occasionally. And perhaps only when, let’s say ‘other channels’, have failed to provide the font I need.

Now, technically the law of course protects the copyright of fonts and, unless you are licensed for more than one computer, you’re not supposed to share them across an office network even, let alone send them to pre-press bureau, clients, printers or whoever. But, of course, every damn advertising, design or publishing firm in the country sends them glibly around anyway: expediency demands it. (Though PDFs have rather reduced the need for this, it’s true.)

In all honesty I resent the charge of $40 just for one individual weight of a typeface (to have the whole family in this case was nearly $500, supposedly a generous discount from $720…). I’m not a big firm with big budgets. I’m just a Me.

The font foundries no doubt justify this – as software firms do (we’re thinking Quark here as the ultimate corporate bastard) – by saying that so many people nick their products that they *have* to charge this much. (There’s also the entirely valid point that the actual designers of these typefaces, like us designers pissing around with them to produce other things, deserve to be paid for their work.)

I admit that if people can get away with copying fonts or software or music, however cheap they are, they probably always will. But.

Surely if the foundries charged a subscription of, let’s stab at $100-$200 a year or something, for which one could have access for that year (and maybe the technology could permit the files to expire after that?) to *any* of their fonts, wouldn’t this be small enough a cost for most firms or freelancers to bear without much of a wince to the wallet, given the advantages it would offer?

And surely 100000 people paying $100 is as good as 10000 paying $1000 – not just in terms of revenue, but also because of the *good will* it would generate.

When I was younger, poorer and less mature, I gladly downloaded shareware all over the place and never even considered registering it. But now I find there are numerous really useful apps out there, often costing only about twenty quid, and I think it’s worth registering them – they’re helpful, and have shown ‘good will’ in producing something I want cheaply, so I’m willing to do the same by paying for them if I genuinely use them regularly.

I think I read recently that the type foundries have been getting together to consider what to do about all this, and in the meantime are cracking down more on the ‘thieves’ – but I earnestly hope they might have the vision to look at the situation from a different perspective.

What would your payment or subscription thresholds for things like fonts, software and music be? (Please don’t say ‘nothing’, because it really doesn’t address the economics of the issue…)

Posted on by Andrew Chapman 7