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Obviously affiliates do a lot of search marketing and those that don't, often generate a lot of their traffic from search and aim to dump the consumer off to the end merchant site rather quickly with the hope of generating a sale. So if you are promoting one of the big boys like WalMart, Nordstorm, Target or some niche player with lots of physical locations and they pay 3-10% of online sales with a 1,5,10, or 30-day cookie (if you are really lucky), is the affiliate getting paid anything close to the value of their traffic?
Granted this study focused on consumer electronics and computers (which seem like some of the easiest things to buy online) but it seems like it would be applicable in clothing or other things that may be rather difficult to purchase online.
Do you think affiliate traffic drives high off-line sales as search is reported to?
If so, do you think there is any hope of affiliates getting paid the true value they deliver which according to these numbers would be about 10x the current payouts from most bricks and mortar companies?
What about programs that get repeat purchases?
Do most affiliate programs pay you for residual income?
No. The lifetime value of a customer goes mostly ignored.
And what about those merchants that pay you $6 EPC but happily bid 50 times that amount for clicks on Adwords?
Look at the loan industry. Let's say they pay $50/lead.
You just deleivered to them a customer that will generate hundreds of thousands of dollars in revenue for them.
But what makes this attractive for affiliates is that you can start with just about a zero investment and do it while working in sweat pants.
On the bright side, the skills we learn in the process are priceless!
After a while you will be able to consider dumping affiliate programs in favour of "drop-shipping" and ultimately incorporate and run the entire process yourself, from wholesale warehousing to distribution.
It takes time and money, but we have the advantage! While we are learning the ropes, our money just piles up (unless you spend it all) and when you're ready, all of your website visitors become YOUR customers. :)
(I hope to take the next step towards this goal very soon... it's very exciting :)
On the offline stuff - I only focus on "virtual" things so I have never really thought about it
Aren't there programs that offer online coupons with an affiliate code that can be used in-store?
if not - THERE SHOULD BE
Do you think that is the best route to take, try an affiliate first then start selling it yourself if it works?
It looks like we think along the same lines. :)
I think that it is a very good idea to "test the waters" with an affiliate program and if it proves to be profitable make the move into drop-shipping or distribution.
I have tried this with a few niches but didn't really get the results I was looking for, I am now working on a digital product that I hope will prove to be useful and popular. :)
PS: Another bonus of testing your niche first is that when you take over the sales process, you have an established website with traffic right from day #1.
Thanks for the help!