Affiliate Marketing: Profit’s Not Everything: The Hidden Power of Driving More Revenue
I was watching The Profit the other night and was reminded of a simple business lesson.
An ice cream maker wanted to increase their profit margins, and one of the keys to doing it was to get better pricing from their suppliers. (The less they have to pay for the ice cream ingredients, then the more profit they make)
They negotiated with their suppliers, and the suppliers were willing to give them better pricing if they could send enough volume. If they could fulfill a certain number of orders per year, then they’ll get a massive discount.
It makes sense right? For the supplier to give a discount, there has to be something in it for them. More volume could mean they reach economies of scale, or they’re in a better position to negotiate with their own vendors.
Let’s tie this back to affiliate marketing and how this can benefit you.
I think that most affiliate marketers are way too “return on investment” focused. They’ll brag about having a 150% ROI campaign, but the actual numbers show only a $400 a day profit. Not horrible, but it could be much better.
They wanna scale their campaigns, but get scared when they see their profit margins shrink.
Here’s what they don’t realize: being able to generate more volume gives you hidden leverages towards becoming more profitable.
I’m going to show you some benefits of generating higher revenue you may not realize, and give you some simple strategies to utilize it.
The Leverage of More Volume
Sending more volume gives you leverage to win more in the long run. Don’t just think about today. Read this section from a long-term mindset.
More volume means you’ll get higher payouts.
An easy way to increase your profits is to get paid higher for each lead. But if affiliate networks had it their way, they’d love to give you the lowest payout possible.
It’s simple math. They’ll get less of a cut, but they’ll make more money because you send more volume.
This is an example of when being loyal to an affiliate network can pay big dividends.
More volume means it’s easier to go direct with advertisers.
Example: They only want to work with affiliates that are generating $5,000 a day or more.
If you can get past the threshold the advertiser sets, you’ll be in a position to go direct if you wish.
Going direct means higher offer payouts, less competition from other affiliates, and access to further “insiders” offers the advertiser might have.
More volume means you get juicy insider information.
Knowledge is currency in this industry, and secrets are valuable. Let’s just say affiliate managers and traffic source managers can’t give the best secrets away to everyone.
If they did, then no one really has an edge.
So they have to play favorites. And who do they play favorites with? The ones who can generate cash. I often talk about developing relationships with your AMs, but the biggest factor is the amount of revenue you can send them.
More volume means you’ll get cap space on the best offers.
Some of the best offers are private, and they may have cap space. Cap means that an advertiser will only pay for so many leads per day, and after that number has been reached, they “cap” the offer. Maybe the advertiser has a limited budget and can only take on a few select affiliates to run.
And which affiliates do you think get picked? It’s going to be the guys with a proven track record who can increase revenues.
If the affiliate manager allocates you cap space and you can’t fulfill it, then they lost money. Another person could’ve filled it up. So they have to be careful who they give access to.
More volume means more credit card points.
I travel a lot. And when I’m flying from Miami to Asia multiple times a year, I don’t wanna be cramped in the back in economy class.
The more I spend on my credit cards, the more miles I get. So even if I’m “breaking even” on a campaign, I’m racking up first class flights.
Also, you can get a lot of other rewards with credit cards, I just choose flights because they offer good upgrades.
How Do You Actually Get More Volume?
Here are a few of my best tips to get more volume if you already have a winning campaign.
Focus On Optimization Instead of Cutting
The first one is to not be so adamant on cutting placements / site ID’s. If you’re focusing too much on cutting, then you’ll never hit the big volumes. Focus more on the increasing your conversion rates, landing pages conversions and ads.
The higher your conversion rates, the more you can afford to bid.
Run Campaigns even if they Break even.
Do you have a campaign that’s breaking even? If it’s not too much maintenance and doesn’t affect your business cash flow, then consider letting it run. The street cred that you get by running traffic to your affiliate network can be worth it to run campaigns, even if you are just breaking even.
This is especially true if you’re new to the industry and trying to make a name for yourself. Most new affiliates send drips of traffic to a selection of scattered offers. If you show your affiliate network you can send a good number of quality leads on a regular basis, they’ll pay more attention to you.
Get Aggressive With Bidding
I know a lot of you guys wanna grab those .01 cent clicks. It can be a good feeling to scoop up cheap clicks, but that’s the lowest quality traffic. I like to bid so that I’m in one of the top positions on a traffic source.
This boosts your traffic and gives you more volume, but means you don’t waste money getting into a bidding war for the #1 spot.
More into GEO’s with bigger Volume
One strategy I recommend for newbies is to focus on less competitive GEO’s. The bid prices are cheaper, and there’s less competition.
But don’t get stuck at that level. There’s only so much volume a small GEO like Malaysia can do. Use that GEO to optimize your ads, angle, and landing pages. Once you figure out the formula, it’s time to graduate to a bigger country.
The margins may not be as high, but you’ll be able to drive more revenue.
More Volume is More Power
When you’re the guy running big volume to your affiliate network, you’ll notice a change in how they treat you.
They’ll give you their phone number, respond back to you faster, and start hooking you up with insider knowledge.
Because they’re making money off you.
The more conversions you send them, the more they need you.
Of course, they will never tell you this, but affiliate networks will bend over backward to keep affiliates who can send big volume.
Think about it – they spend huge sums to buy booths at all of the conferences, and they advertise and compete ruthlessly with each other.
If all it takes to stop you from going to another network is a small pay bump, they’ll do it if you are sending high volumes.
Got any other secrets on how to increase your revenue?
Share in the comments!