Diorex's - The Affiliate Playbook

December 17, 2007

I don’t want credit for this it was written by a very smart fellow named Diorex who’s blog isn’t any longer online. So I thought I’d repost it as a lot of my readers have asked for it. Not sure what happened to his blog but here’s the Affiliate Playbook post from it.

The Affiliate Playbook

I have been asked how to scale probably 100 times since I started blogging. It has been a long time since I have tried to scale that I might not be the right person to ask, but I have done it 3 different times in 3 different ways for paid search campaigns over the last 5+ years. So forgive me if this game plan is hopelessly outdated or too brutally honest.

Our goal – starting with a single niche and the standard affiliate payout transform into a super-affiliate making 6+ figures a month.

Some caveats:

·  This assumes that you are not in a terribly crowded field, so mortgages, payday loans, satellite, ringtones and a few other ‘flavor of the month’ affiliate campaigns probably won’t work on this plan.

·  This is not going to work on a $2.00 zip submit payout, so please don’t ask. If you dont have a starting payout north of $10 it is probably best to pick a different product.

·  The goal is sufficient (7+ figures per year) that I am not even going to try and pretend to do this with $2,000. I had lots of money in the bank each time I started over and invested significant sums to get scale with each.

·  I am not going to live in my mothers basement and hope that the affiliate manager at my merchant notices me and rewards me with a higher payout, I am going to meet the senior guys at the network, then the affiliate manager at the merchant and then the affiliate managers director or VP and impress them that I can help them achieve and exceed aggressive goals. In short I am in a real business that happens to be online, but I am not a hermit crab.

Here is what needs to be in place to start:

·  We have located a product with a decent payout, that is not already stuffed with affiliates, offered by at least 2-3 respectable networks.

·  We have designed or paid an expert to design a great landing page with good usability and website surrounding it with good content and at least 8-10 pages deep of keyword rich content that is unique to my site that will pass all sniffs of the quality score test because it is quality and relevant.

·  We have some good tracking in place so that I can determine ROI by keyword.

·  We actually took the time to create well thought out ad copy unique to my high value keywords.

·  We did not jam tens of thousands of keywords into one adgroup or campaign and then wait to see which ones work.

·  We approached this with pride of ownership, something where quality of work shines through, nobody is going to call this crap.

·  We came to the party with 3-6 hours every day to tweak and monitor this campaign, and not just for the first week but for the next 12-18 months. 7 days a week, holidays, weekends, when I am out of town, when I feel like shit and when my buddies are out doing something a lot more fun.

·  We have a solid credit line dedicated just to this, and I dont mean buying 30″ dual monitors and Herman Miller chairs before I ever make a penny all those awesome systems you see online were bought after the fact not before.

If you cant, wont or dont know how to do any of the above, Stop reading. The rest won’t help you one bit.

So we now have a single affiliate offer at standard commission with well thought out ad copy, landing pages and some money ready to turn on our adwords campaign.

·  My first goal is to just get on the networks radar, let them know who I am, do enough volume that my account manager does not have to figure out who I am, get me on his radar. To do this I need to drive consistent steady volume. Anyone can be a flash in the pan and bid to first place and lose a ton of money and then fade away. They see it all the time, and are not going to be impressed. Instead show them consistent steady volume, maybe do this with just a few high converting keywords, or lots of cheaper long tail ones, maybe just bid to 9-10th place on the short tail stuff. Our goal is to lose as little as possible while still being consistent.

·  At this stage, no way am I going to get anything like a white label or even an invite to dinner when my affiliate manager is in town. I have a few limited options to test. The first thing is the display URL. I want something that describes the product generically (dont infringe on copyrights) in a short of way as possible using high volume keywords. Widgets.com is probably not going to be available to you. Try WidgetsDeluxe, WidgetsFast, WidgetsEtc. Take your primary keyword and get 5-7 short and sweet URL’s and test them in rotation using Google ad copy testing tool. 1 or 2 of these is going to perform better than the rest. This will take you from slight loser to slight winner. Increase bids accordingly until you are back to slight loser

·  So with a little bit of traffic we probably just increased volume by 20% or more just by fiddling with the display URL and then bumping bids. With that small bump in volume over the levels your network was used to seeing, approach them about a better payout. You will probably get it since you have established consistent volume and are not just a flash in the pan, dont ask for a bump before you prove anything.

·  With the 10% or so boost in payout, dump those revenues back into your bids. You are probably now 4-6 weeks in and are down a couple of grand and you are probably now in the bottom of the middle of the results. Now is the time to add in Yahoo and MSN. MSN will convert well but provide low volume, Yahoo will convert worse in most cases and be 1/4 to 1/3 of the volume of Google. Go back to your network again and get another small bump. You might need to play 1 network vs. another. Dont be untruthful about what a payout is being offerred, it is a small community and you dont want to burn bridges or be seen as a liar. Get that 2nd bump and now you are 20% or so higher than you were before.

·  It is now time to test ad copy. Always start with things on Google since your test volume is Clicks/impressions rather than Conversions/clicks. Until you have good volume it is important to test what you can get answers on and not eat up tons of test bandwidth. Although CTR is important, be sure to drill down to conversion rate per test since that is ultimately what matters.

·  You have now gotten 2 bumps from networks and are probably not going to get a ton more since they only have so much to give. You should be 3+ months in, plenty of time to have hit a pubcon or ad:tech or SES or just arranged an onsite meeting with the affiliate marketing manager for the product you are working on. Start by email, then work your way up to an occasional IM and eventually phone and in person meetings. Your goal is get your foot in the door and remove the affiliate network from the picture and get them to agree to a white label situation. This may take months, so get cracking early on this. Your white label will get you 10% increase in conversion overnight.

·  Either right before or right after you get the white label (at the very least be in talks with them) start aggressively testing landing pages. Start with 2 or more radically different designs and then pick a design winner and then test other elements like hero shots, call to actions, button language, placement of items on the page. Before starting this, you should have invested in SSL certificates and be landing in a secure environment and displaying the security seals prominently to let visitors know you are serious. If you cannot get a 30-50% increase in conversion with your landing page, you are not trying hard enough.

·  Between the 10% security seal boost, the 10% white label boost, the 30% boost to conversion from testing the page, you should now be pulling yourself back to even and even turning a small profit, dont spend it just yet though. Just like with the affiliate network, you need to establish a baseline of consistent results where the merchant starts to assume your volume is always going to be there.

·  You have worked with the merchant for 2-3 months and they are treating your volume like their volume (trust me this will happen). You have flown to corporate HQ and met the director or VP who the affiliate manager reports to, you are now negotiating with him rather than through the affiliate manager who has no real power in most cases. You need to let it be known that you could drive a lot more volume with a decent sized payout increase. They will salivate at the idea of volume, but will also be hesitant to give you a big boost. At the same time you are seducing the VP, you are making inquiries to one of your largest competitors about moving your volume over, you want to get a white label from them from the start (they are poaching an affiliate which is different than working with a small guy). Before you move your volume over, you call the VP at your original merchant and “give him a heads up” that you are going to test XYZ (tell them the name) for a few days, but you dont want him to worry too much, you will turn the volume back on in a few days, worst case a few weeks. You have now caused him to sweat and think that he might lose you. He has already budgeted in your volume and those resulting profits to his boss, he has probably mentioned to his boss that their could be more volume if they were willing to pay up. Now the choice almost becomes nothing from you or pay you more.

·  In almost all circumstances, you will probably want to work long term with the same company and not jump around to the highest pay out all of the time. That does not mean you don’t flirt with the others and even have a few “test runs” for a few weeks every so often. Don’t seem fickle or emotional, just act like you are a businessman (which you are) and you are looking out for your own interests as good business (which it is) and you will soon be viewed as a strategic partner rather than an affiliate.

·  At some point it will probably make sense to go to some sort of tiered pricing structure. Make sure you can hit these targets. Do not get paid $x for first 10,000 units and $y for units 10,001 – 15,000 and $z for 15,001+. Instead you want to hit a tier and get paid retroactive to the first unit. They will resist, but this is imperative for you. It means that sometimes you can take a loss per unit the last few days of the month and drive a ton of volume in order to hit your tier so you make a greater overall profit. The reason this is important is that the merchant sees these volume surges and starts thinking how they can get them every day instead of just the last 3-4 days of the month, then you are on for another round of negotiations. Always have a tier you have not yet met. When you start hitting the last tier, time to start negotiating for a new tier.

·  In time, the merchant will get addicted to your business, they will spread their overhead across all of their traffic (much of which is really your traffic) and start seeing economies of scale. This is when you really have leverage. Dont be a bad business partner, just dont be a meek one either.

·  The last 4-5 bullets I have not mentioned continual testing of things like the form, possible cross-sells, gathering an email list, retargeting, and a whole host of other stuff. Our philosophy is that we have to increase conversion by 20% each year to just stand still, once you start standing still, others start to pass you and you start to lose your leverage. Once you lose leverage, it is almost impossible to get it back. Never stop testing.

OK I want to thank both of the people who made it to the bottom of this post. It is obviously not exhaustive, but it is a reasonable series of steps for how to start as a dinky small fry affiliate today and 18-24 months from now be writing your own blog and posting a big check. Of course you will be doing so well you might also think, being rich and unknown with no competition may just be better than rich and famous with 100 new people entering your space hellbent on killing your margins…


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