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Affiliate vs. Contextual - Part 1
Drastic

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4879 posted 6:54 pm on Jul 16, 2005 (gmt 0)

In the beginning, there was banner advertising.
You could earn $20 cpm just for slapping up ad code. Publishers were happy, VC funds were flowing, and advertisers were getting their traffic. And it was good.

Then as the VCs shared in the fruit of knowledge of truth and reality, the bubble burst, and publishers witnessed the fall of the banner ad, into sub-dollar CPMs. It hit across the board.

Behold, there was light!
Affiliate marketing then began its jump into the glory of the online marketers' attention.

During this time, you could slap a few affiliate banners up, call it a day, and watch rev bounce around where the straight cpm banner figures were. Six one way, half a dozen the other.

But some smart guys worked, and learned how to really promote affiliate programs. They figured out how to presell, entice visitors to click and buy, and even build sites around affiliate programs. This is where the money was. Done right, it would kill the early glory days of $20 cpm banners, by a multiple.

Affiliate marketing became all the rage of the day, and you could hear the cries of new marketers on forums everywhwere, whining about not being able to make money. "Everybody else is getting rich! Where's mine?"

Well, they slapped up some banners and called it a day. That method sucked then, and still does today.

The next BIG Thing
Enter the current wave of AdSense and contextual advertising. Back to the days of slapping up some code and earning double digit cpm, no problem. And many people are happy.

Meanwhile, the real affiliate marketers are still methodically and quietly cranking out new sites and promotions daily. If you listen, you can even hear their keystrokes late into the night.

So today, to take the easy road and slap up some code, call it a day, and watch the stats - AdSense is probably your best bet. If you're ready to make more, and don't mind spending the time to do it (yes it may require w*rk), affiliate programs can produce much more, in many cases.

Consider some of those AdSense ads running on your site, the ones that go to affiliate promotions. Think about it, your visitor is going through that link at $x.xx. You get your cut, AdSense gets theirs. The affiliate paying that is still making enough margin to pay for the click and clear revenue. How much more could you make, if you sent that traffic straight to affiliate programs yourself? You would make your EPC, Google's cut, plus the add'l margin that AdWords affiliate is working with.

For example, say you have a good site about finance. It gets decent traffic, has content about loans, stocks, debt, whatever. You plug in adsense and go on to the next project. Sure, it will make good money, and if cranking a site out, forgeting about it (advertising-wise) and then moving on is your thing, contextual is for you.
However, a smart affiliate will promote loan merchants, brokerage accounts, consolidation companies and whatever else fits the site. He'll seamlessly weave the promotions of these companies into his site. He'll get merchants that let him host his own forms, and take leads so the visitor never leaves his site. He'll negotiate even higher commissions.

He will own that visit and cash in more revenue, a LOT more than AdSense clicks. It might take some time, trying different merchants, different site copy, ad placement, different promotions, tweaking this and that, etc. etc. He will work for his add'l revenue, and it will pay off.
THEN he'll leave it on autopilot and monitor stats, just like those addicted to CrackSense.

There are still some sites and topics that will do better with contextual ads. Say your kid likes tinkertoys or erector sets and you build a site together. It turns out you did well with it, and it get links and ranks well. There might not be a lot of good affiliate deals out there, but you can bet there will be some adwords on it.
Maybe you already make money some other way, sell a product or whatever, and are just looking for some supplemental revenue. Contextual will probably be the way to go.

There are no hard and fast rules in this business. Affiliate vs. Contextual is no exception.

 

CannonFodder

5+ Year Member



 
Msg#: 4879 posted 8:08 pm on Jul 16, 2005 (gmt 0)

Drastic,

Nice summary. It's posts like this that I continue to read and use to drive some momentum when I need it.

Thanks!

Dan

Zygoot

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4879 posted 8:29 pm on Jul 16, 2005 (gmt 0)

Affiliate programs do have a disadvantage. Most programs are bound to a specific region or country. Someone who lives in Europe and clicks on an affiliate link to an American store isn't likely to buy anything.

AdSense on the other hand works internationally.

Eltiti

10+ Year Member



 
Msg#: 4879 posted 9:19 pm on Jul 16, 2005 (gmt 0)

AdSense lowers your "transactions costs". You don't have to go out and seek the best-performing advertisers for each page --and each market!

Of course, you pay the good people at Google for that; and in the long run, you *may* be better off setting up different (e.g., affiliate) arrangements for certain pages.

dmorison

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4879 posted 9:43 pm on Jul 16, 2005 (gmt 0)

The affiliate paying that is still making enough margin to pay for the click and clear revenue.

Not necessarily - they could be in the "testing" phase, only to discover that there is no ROI on that particular campaign. I get the impression that, for the high ticket keywords, for every one advertiser leaving because of no ROI there is another joining to find out the same thing.

Procyon



 
Msg#: 4879 posted 11:08 am on Jul 17, 2005 (gmt 0)

Excellent post Drastic!

Catalyst

10+ Year Member



 
Msg#: 4879 posted 4:33 pm on Jul 17, 2005 (gmt 0)

Very good post Drastic! I may blog about it next week.

Like Drastic said when weighing the question of Affiliate Vs Adsense - Adsense can be the safest, easiest way to go, but if you want to make more money, smart affiliate marketing can pay much better. Take into consideration average order size and conversion rates with affiliate programs. Sometimes you need to do some spit tests. But with some affiliate programs that have good conversion rates, you can make a ton more than you could make on Adsense.

Can't wait to see part 2!

Linda

Catalyst

10+ Year Member



 
Msg#: 4879 posted 6:07 pm on Jul 17, 2005 (gmt 0)

"Sometimes you need to do some spit tests."

Sorry, please do not do any "spit" testing - your keyboard won't like it. Split testing is good tho! ;-)

suzyvirtual

10+ Year Member



 
Msg#: 4879 posted 10:54 pm on Jul 17, 2005 (gmt 0)

Adsense can often be the only entry into mom and pop industries where there really are no affiliate programs yet too.

jcoronella

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 4879 posted 2:58 am on Jul 18, 2005 (gmt 0)

All of this assumes, of course, that the keywords you are after are in an area that has a good affiliate program available. There are some high value areas that are not yet tapped.

Like dmorison adds, there are some areas that are prone to ego bidding and repeated expirementation. I'm not sure this is the norm, however.

I do more aff than adsense, but I hear there some nifty ways to manipulate adsense to get high value clicks out of low value traffic. Affiliate markeiting tends to yield high value for high value traffic, but like Drastic says, there are no hard and fast rules.

europeforvisitors



 
Msg#: 4879 posted 5:17 pm on Jul 18, 2005 (gmt 0)

Why affiliate vs. contextual? Why not both?

On my editorial site, affiliate links do very well (in fact, I earn more from them than I do from AdSense), but I have many subtopics that don't tie in with affiliate programs. AdSense "fills in the gaps" by generating revenue from those subtopics--and with the new AdSense site-targeted CPM ads, even subtopics that don't generate significant clickthroughs can earn money.

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