Affiliate Marketing 101 – Week 2

If you missed the first week of training I gave Seth, my intern, you can check it out at http://whatdoesjoethink.com/2009/06/affiliate-marketing-week-1/.  During week 1 we went over some of the basics of affiliate marketing.  For week 2 we looked at how to find a niche, how do to some keyword research, and what to look for when starting an affiliate site. Here is what we went over:

How to choose a niche – Choosing the right products or niche in affiliate marketing is a HUGE key to success. There are many, many factors to consider when looking at what type of site to build, what markets to target, which merchants to work with, etc.

 

In many ways it will be a balancing act. Obviously in some markets there can be millions of dollars to be made per month but those markets will be much harder to crack than one that might only bring in a couple hundred a month.  If you want to put forth the time and effort to succeed in those big markets you can see some great rewards but for the most part I would recommend staying away from them and focus your time and effort on some smaller niches.

 

Here are a few of the factors to consider and some tools to help make the job a bit easier:

 

• Research – Research is key. Would you ever start a real business with out doing your due dilligance to see if it is a viable business? The same principal applies to affiliate marketing. If you don’t do your research ahead of time you could spend a bunch of time and money on something that won’t give you enough of a return. Or you could be targeting a niche that just isn’t viable for affiliate marketing.
•  Keywords – When you go to choose a niche your keyword research will be one of your most valuable indicators to see if it is a viable niche. 
  • What keywords are people using to find a product? When you have a niche in mind do a search for the most general keyword you can think of for that niche. Most of the search engines will then put out a list of a few related searches. Make a note of those and search for those and it will bring up more and more ideas.  Most of those suggestions will bring up other suggestions or at least open up some new ideas of what keywords might work for this niche.
  • There are some tools that can make this job easier for you as well where you can enter a keyword and it will spit out a bunch of related terms you can use to build your keyword lists:

 

https://adwords.google.com/select/KeywordToolExternal

http://www.keywordspy.com

http://www.wordtracker.com 

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  • Is your market big enough where there are hundreds of even thousands of keywords you can target? Or is it a smaller niche with only a few dozen keywords that will be good to use?  Both of these methods can work well depending on the market and what type of site you want to build
  • What is the general search volume on the keywords? Google’s Keyword tool along with most other keyword tools gives some estimates of search volume. I would never take these as hard and fast numbers but if you are only seeing small search volumes (less than 1,000 searches per month for example) on most of your keywords there just might not be enough search volume to make decent money.
  • That isn’t to say all your search terms need to be high volume. If you have a list of say 200 words and you have 50 or so with some good search volumes, 50 with middle of the road volumes, and 100 with low volumes that could still be a very good niche.
  • Keep in mind though that those keywords with low search volume will likely have less competition and therefore be easier to get good listings on the search engines and cheaper paid traffic. Also the more specific the keyword is the more likely the customer is to be a buyer as opposed to a shopper. Example:  Take a search for the word “air conditioner”.  Using Google’s keyword tool there were approx. 2.7 million searches in April. I would guess most people searching for that term are in the beginning stages of the buying process and just doing some research.  If you look at “window air conditioner” there are 368,000 searches but that is a customer who is probably more likely to buy.  Take it even further to a search for “whirlpool window air conditioner” and you only have 1900 searches but that will be a much more targeted customer who has probably looked at a few different models or had that brand recommended by a friend or something and will probably be much closer to buying. So you might get a bunch of traffic from a search for “air conditioners” but make fewer sales than from just a few searches for “whirlpool window air conditioner”
  • So you want to build a good sized keyword list with some high volume general keywords but also include as many specific keywords as you can.  For some sites this might be a list of 50 words and for others it can easily be thousands.           

 

• Looking at competition – After you have your keyword lists you need to start looking at competition.  How easy will it be to get traffic to the site?  For the most part, the more competition there is the harder it will be to get traffic.  But that could also show that it could be very profitable if you do manage to get that traffic.
  • Lets look at the air conditioner searches in Google:
    • Search for “air conditioners” shows 10.3 million pages.
    • Search for “window air conditioners” shows 8.3 million
    • Search for “whirlpool air conditioners” shows 222,000
  • There will be much more competition for the first couple keywords than the more targeted one. So if you can find keywords with good volume and low competition that will probably be a good niche to look at more.
  • Also check out what the top ranking sites are. Are they big brands? National companies? Sites like Wikipedia or Amazon or Nextag or Epinions? Are they smaller sites? By looking at who you are competing against you can get a good idea if it is a market you can compete in. Seeing those big sites isn’t a deal breaker but generally speaking it is hard to compete with sites like that.

So after you have checked out the search volume and competition you should have a decent idea if this is a market to look into more.

• Payouts – Are the payouts from the merchants high enough to justify my time and effort? Will I put forth a bunch of energy to make a few cents a sale because the payouts are low? Is there a niche where I can get easier traffic and make a few dollars per sale?
  • As a  general rule of thumb the “standard” payout on consumer goods (stuff you can normally buy in a store) is around 10%.  But that can vary widely. Consumer electronics for example have low margins to the payouts are usually less than 5%.  Other products have much higher margins for the merchants so they can pay 20% or more.
  • Would I be better off selling 10 high ticket items with big commissions or 100 cheaper items with a smaller payout per sale? You could sell a $3000 flat screen TV but the payout is only 3% which would be a $90 commission. But you could sell 20 pairs of shoes at $50 a piece for $1000 in total sales but the payout would be 12% so that is $120 in total commissions. Would it be easier to make that 1 TV sale or the 20 shoe sales?
• Is there a demand? – Are people actually buying this product online? You would be surprised at some of the stuff people buy online when you would think there would be no way someone would buy it without seeing it in person and on the flip side there is some stuff that you think would sell well online but it just doesn’t.
• Are there other successful affiliate sites out there? –
  • If you see a lot of different affiliates in your niche that can show you that this is a profitable niche but the competition will be greater.
  • If you see no affiliates in this niche you need to figure out why.  Is it because it isn’t very profitable or is it just because no affiliates have taken the time to make it work.

 

• Does this interest me? – Generally speaking I recommend you start off with something you like and something that interests you. Even if the numbers don’t totally work out it will be much easier for you to build a site if you have a genuine interest in the site you are building. After you get a site or two built and get some experience building the sites, working with affiliate programs, etc. you should then start to look for the real money makers. 
• Potential for growth -Does the niche I am working with have potential for growth?  Is this a market that is declining, growing, or staying steady? Will these products be more popular or less popular in a year?  Is there other niches I can branch off of my main niche? 
• Effort vs Reward – Will the money I make be worth the time, effort, and resources I put into it?  Will this be a project that takes a lot of time but doesn’t have the reward?  Will it be something that might take a day or two to get going and brings in a few hundred a month?  Can I just build the site and let it go or do I need to constantly update?
• Quick hit or long term – Many programs will be quick hitters that might only make money for a season, for a few months, or just last until the media moves on to something else. Quick hitters are fine but I would just consider them “bonus” money. Find a niche that you can make money on for a number of years.

Here is what Seth said he learned this week:

“This week I learned about how to choose what you want to advertise, or as Joe called it, a niche. I am learning how to research niches. You want something that has not very many websites that come up when you search it but also has a decent number of searches and something people are looking for. You also want to look to see if a lot of good affiliate sites come up or not. This could mean that either there is no money to be made in the niche or it hasn’t caught on for a lot of affiliates yet. You also want something that possibly can be split up into multiple sites in the future if you see some success. You also want a niche that has good payout and a lot of good keywords to use.  Some of the main factors to consider when choosing a niche is if the niche is something I would enjoy working with, if it is something that is growing or dying, is there enough reward for the effort, and whether it will be something that is seasonal and/or will only last as a major item for a little while.”

So that is it for week two.  I got some ideas for week 3 for when Seth comes to the office in a couple days.  But what do you think would be a good next step?  You have any questions about affiliate marketing you would like answered?  Leave a comment and let me know.