When most of you set up your affiliate campaigns, the goal is to profit and put money in your pocket. Maybe some of you aim to lose some money in the beginning with high bids and looking for the converting keywords, and then cut the bad keywords and just keep the profitable ones. Both are good strategies with the goal of profiting. The strategy I’m about to describe is one I’m using right now for a niche, and involves breaking even (or commonly losing money) for up to a month or more. Now who would want to do that? If you have enough balls to expect to lose a couple k, the rewards can be worth it.
As read from the guide, if you’re trying to go big in a niche, the eventual goal is to go direct and typically white label the offer. You’ll benefit from much higher payouts and conversion rates. So the goal with this strategy is to bid high (for the premium spots) and get tons of volume, and then with enough sustainable volume go direct. Don’t bid $5.00 to the point where you’re losing 1k/day, bid around where you’re breaking even. For the niche I’m running now, I’m able to bid for the top spots and break even or lose about $100/day. I’ve been working on the niche for about a week and I’m doing about 3-4k/day with it, breaking even. For the next month or so I’ll be working on ramping up the volume even more to 6, 7, or 8k/day still breaking even or losing $500/day instead of $100. But by that point in time, I’ll be doing a ton of leads consistently, and the merchant would be retarded to not want to do direct business with me.
Now it’s time to crunch some numbers. These numbers are just examples and don’t pertain exactly to what I’m running now (although the percentages are very similar).
Right now I’m running offer X through affiliate network Y. I’m doing $5,000/day off of a product that I’m getting $5/lead for. So I’m doing 1,000 leads/day for this product. My conversion rate is great right now, it’s about 20% (my real conversion rate is actually higher), so that’s going well. I’m bidding and losing about $300/day because my bid prices are high. I’m at -$300 profit/day right now.
Now I go direct with the merchant. I start off with an immediate $2.00 payout increase and I’m getting $7.00/lead. I’m able to white label the offer, and that jumps conversions up to 30% instead of 20%. Also because of the white label, it’s time to drop bids down in PPC. So instead of spending $5k/day, I’m able to spend $3.5k/day and keep the same ad position. It’s now super number crunching time. Taking in our new conversion rate, I’m doing 1,500 leads per day at a payout of $7.00 per lead, spending $3,500. That brings my daily profit to $7,000.
As you can see, it’s definitely a strategy to think about. If you have the guts to lose $300/day for a month, you can be rewarded with huge profits. Note that these numbers may be a little exaggerated, but it does give you an idea of how far white labeling and volume can take you.