4 Steps to Building Models for an Affiliate Media Buying Company (or any company for that matter) - 1 of 3

November 19, 2013
affiliate models

Hmm well maybe not that kind of model.

Maybe this is more appropriate?

building a business

Boring! You wouldn’t have clicked on that one I’m sure.

Anyways lets get down to business.

If you didn’t read my last 3 part series. It was about how to build a system for freeing  up your time to spend it on high value activities.

Well guess what this is your first HIGH VALUE ACTIVITY!

Obviously a lot of the last post was taking things off your plate and putting them on others. But you have to be careful about that. Why? Because, the MOST IMPORTANT thing about hiring people; is that you put them into good systems.

But how do you build and design those systems?

I’m not going to claim to be an expert in this department. I didn’t graduate from college and have learned from the world of hard knox. No fancy MBA’s or prestigious schools here. However over the last 20 years of running small to larger businesses I’ve constantly re-analyze what I’m doing and make it better. So this is all based on many years of building systems and companies.

Hope that’s good enough for you…. if not well you know what’s I’d say if you know me 😀

I hope there’s some PhD’s in business management that can give pointers in the comments on how to do things even better and even more efficient.

Lets get started with the magical process (well not really magical, but it sounded good)….

Step 1 – Go to a quiet place for 1-2 days with no internet and take a step back

I know this sounds lame but it’s extremely important. As online marketers the world we live in floods us with a constant onslaught of valuable and important information. Affiliate managers, merchants with issues, account reps, budgets getting cut, Skype groups, friends on IM, emails, forums to keep up with, etc. You may miss on that mythical unicorn of an opportunity doing this…. but so what? There’s always more.

For this exercise you really need to clear your mind.

The first time I did this I went to Lake Tahoe, with my family, for 5 days. A4D had wrongly got drug into a situation with the FTC that was cheaper to settle out of then the legal bills it would have cost to fight. So we settled with them and needed to entirely change our business model.

I stepped away so I could clear my mind for a while and I suggest you do this too.

Step 2 – Optimize Your Companies Focus Using ABSTRACTION (Least Common Denominator of your Business Successes)

Once you’re away. Take a step back. What that means is stop focusing on the details and start to look at the bigger picture.

If you read my last post this is going to sound similar but rather then extracting out the tasks you yourself are doing and optimizing your time to make sure you’re focused on high value things. We’re going to do the same thing for your business/company. I call this ABSTRACTION, combing extraction and abstract thinking.

What abstraction is, is trying to find the “least common denominator” in something. Most likely if you’re advanced in your affiliate/merchant/network business you’ve had a lot of success and failures. You’ve probably spent a bunch of time working on opportunities that you thought could turn into something and didn’t. Maybe you spent a bunch of time on a small niche and in the end when it scaled it was only $100/day profit or less. Or maybe you listened to friends/forums about how someone was killing it only to find out they were doing something totally illegal and uncompliant, but you invested the time.

In this industry most people (including myself) have the “shiny bobble syndrome” as we call it in the A4D office. There’s so many amazing opportunities constantly being thrown at us, we’re always tempted to chase each one.

Oh I’ll just run a little test….. have you said this before?

How many of those little tests usually work out?

Do they distract you from your core competencies?

Do you have a core competencies? hahah

As you can imagine at A4D Performance we have a massive amount of opportunities that come across our email, IM and phone every single day. Probably 3-5 new merchants, 20-40 new affiliates , 1-2 new ad networks, and the list goes on. How do we make heads or tails of it all? Everything looks like a good to great opportunity.

What we have to decide is whether it fits within our Core Competency; which is what we focus on 100% of the time.

What I do quarterly as the leader of A4D is figure out what our core competency is, gaining more focus every time. I question whether it should be. Question whether we should change it.

Once we have that Core Competency figured out we evaluate all opportunities against it…

Is this opportunity in line with what we want and what we’re good at? If not most likely it’s going to suck up a lot of resources (money & time) and yield a small outcome.

Could it turn into something amazing? Sure, most of the time the chances are very small.

This doesn’t mean we pass on everything all the time. But we make a very conscious decision to invest the time and resources into building out a division to do something. It’s very different then, well lets just test this…

I know that’s a lot of words to say little, so let me give you an example.

When we had to pivot A4D I sat with one of my main guys and we started detailing what made a great offer for us a a company…

  1. High CPA payout $30+ - so it could support expensive traffic and the margin that was made per sale was considerable
  2. Limited to no caps/budgets - Nothing worse then caps when scaling
  3. Direct billing offer (credit card, premium sms, google play, etc) - leads are a HUGE business but just very finicky, hard to get budgets and extremely hard to get quality. Wasn’t our wheel house so we wanted direct billing offers.
  4. Semi-Monthly net 15 or better payment terms - hard to scale a business with net 30-45 at 200-300k/day in revenue which was what we were aiming for.
  5. There’s more but you get the point…. don’t want to give away our whole model :)

What we’re doing here is abstracting out the values that make something “Great” for us.

We built and wrote this list on the board. Then we’d reference it all the time. Every time a new opportunity was pitched we’d look at the list and think “does it fit?”

Lets look at some verticals we ran that didn’t have all the pieces.

Dentist leads – Although a good client of ours and we still work with them to this day. Definitely didn’t meet a couple of the criteria. It was a lead generation offer not a credit card submit. Also fairly low payout. This lead to a TON of work to manage the relationship, quality out of every pub fluctuated day to day on the same traffic, and overall limited budgets. Took 3-4 hours a day for my top guy to manage which distracted him from more fitting opportunities.

Games – Low payouts = low $ margins for the network. Really bad about budgets typically want big spends for 30 days and hope to self grow from there. Payment terms terrible, world golf tour took a year to pay us (at least we got paid). Again doesn’t mean games is a bad business. Just for 10 cent margins it takes a lot more people and budget to produce the same amount of revenue.

There’s a lot more and we learned through the process. In the end we feel something could have 1 thing missing possibly it just depends on what it was. But 2 was going to typically be a waste of time and resources in the end.

You’re probably saying what’s the holy grail of offers you found….you’re going to need to ask your affiliate manager the ones we found that fit the model that works for our publishers.

It’s very hard to leave opportunity on the table but that’s what makes great people and companies great.

Now sit down and do you’re abstraction. We’re going to need it to build a business model in step 2.

Back tomorrow with post 2 of 3. I know, I know there’s a ton of droning on here but what else am I going to do with 8 hours on a plane. Hope it’s helpful. 🙂


Want More? The more people listening the more I’ll write.
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