Affiliate Commissions Are Like Exclamation Points

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Affiliate Commissions Are Like Exclamation Points post image

There’s been a lot of excitement around the interwebs about the latest Only72 sale. There’s also been a lot of groaning. I saw somebody on Facebook say “these types of launches are so two years ago.”

I’ve got nothing but love for the guys behind this product and think the thing is brilliant. Hearing about the sale got me digging through my drafts folder. I’ve written some half-baked thoughts on adding affiliate margin to your information products. I figured now is as good a time as any to share them.

Ever hear the old copywriting tip about exclamation points? It says that exclamation points are often an indication that words preceding the exclamation are not strong enough. For example:

  • This new book is really amazing! vs…
  • This is the best book I’ve read in 2012.

I think you can say something similar about adding a wide margin to your information product for affiliates. Doing so often indicates that your product isn’t strong enough to sell itself. It’s not compelling enough for people to distribute it without payment.

I don’t think enough people question the dogma that you need to have an affiliate program. Many people have told me I’m nuts for not having an affiliate program for the Dynamite Circle.

My response has always been: if I added a margin in for affiliates, first off it would be way more expensive, but perhaps even more importantly, people would just recommend it to anyone. The people being told about it wouldn’t know if they were being told because of the money or because it was actually a good product for them. 

This to me seems as obvious as the internet marketing orthodoxy of “you must have an affiliate program!”

I suppose if I were asked for advice on the matter I’d say: if your information product sales depend on your relationship with your audience, you shouldn’t have affiliates. 

Yes, you’ll make more on launch day, but I believe you are turning off more people than you think.

The reason is twofold: 1) you aren’t giving them a good deal and 2) you are compromising your integrity by mentioning stuff just for the money (and inspiring your colleagues to do the same).

If you double your info product price for affiliates, you are asking your audience to fund your inefficient distribution. That works for you. Not them. We all know you could take a little more time to figure this out for your customers (instead of forwarding the costs on to them) and give them the same great product at a great price.

If you did, maybe you wouldn’t have to launch so much.

*  *  *

I’m not trying to be a business moralist here-– I think it hurts businesses to launch relationship-oriented information products that require affiliate participation in order to be a success. You’ve gotta keep launch launch launching! Meanwhile you are probably burning out your affiliates and readers. Why not just build something that has enough value that people might mention it to each other?

It’s almost a patronizing thing to say, but there are so many internet marketing dogmas that few seem to question. Not have an affiliate program? Offensive! Stupid!

What I find offensive is paying double just for the privilege of having heard about it.

*  *  *

When to use affiliate approaches?  I believe affiliate commissions are a great way to move your product, and part of the reason I’m thinking about this stuff is that we’ve been talking about increasing our use of affiliate links here at the blog.

In the case of Only72, Baker and Karol used their stature in the blogosphere to cut a deal that customers could not have cut for themselves. That’s a great value for people who wanted those products. I’m not 100% clear where I draw the strategic line here: do I feel great about paying a small portion of the ticket price to help fund the distribution for Bluehost or Virtual Staff Finder? Sure.

How about ponying up a couple hundred bucks for the next big mega-launch? Not so much.

What’s the distinction I’m looking for here?

Cheers,

Dan

PS, I’m the mayor of Twitter.

Published on 05.01.12
  • http://twitter.com/JohnMcIntyre_ John McIntyre

    Haha… I’m less than 12 hours from launching my first product on Clickbank… one of the biggest affiliate networks online.

    I see where you’re coming from, but I don’t think that it’s a black or white issue (I think you mentioned this anyway). In my opinion, it’s probably too extreme to have a blanket “ban” on affiliate programs. I think the real problem is if having an affiliate program causes the quality of the product to be lower. It’s the thought pattern of “Well since I can just get affiliates to promote it, it doesn’t need to be that good”.

    But this thought pattern doesn’t invalidate the idea of an affiliate program, only that way of going about it. In a case like that, the affiliate program is a cop out.

    However, suppose you had a really great product. If you’re trying to spread the distribution as far and wide as possible, lacking an affiliate program will limit the growth and distribution of the product. So in that sense, it’s more more reasonable to have an affiliate program.

    Anyway, I think we’re thinking along the same lines. It’s a case of context. 

  • http://www.monthlyincomereport.com/ Adam

    Well said, Dan. Couldn’t agree with you more. 

  • http://www.destinydiscoveries.com/ Jcov

    Definitely food for thought. I have just started to consider being an affiliate for some programs but know little about it. I never thought of the flip side of the coin that you presented here. You bring up great valid points. However, I don’t think affiliates are a negative thing. As John mentioned, you are able to spread the word far and wide to those who may not have been reached otherwise. Also, I feel that all the sites that I see who have products that they happen to get a commission on are products that the author stands by. I am interested in getting involved as an affiliate “marketer” (if you will) because I have purchased products online that I LOVE and want to shout from the mountain tops how great the product is. Why not get a commission if I am going to make the mention anyway? Thoughts? 

  • http://FoolishAdventure.com Tim Conley

    Bro, I’ve got to disagree with you here.  I think you’re conflating two separate issues: bad products and reasonable margin with marketing through affiliates.

    The idea of using affiliate marketing for bad products doesn’t hold up for the individual seller because bad products stop selling and the seller develops a reputation as selling bad products and affiliates will stop promoting anything that doesn’t sell for them.

    Also, the idea that one must use affiliate marketing to sell their inferior/mediocre/average product doesn’t hold up since superior products and companies need to use various marketing to sell enough to afford to keep making superior products.

    Now on the idea of reasonable margin.  Is it okay to charge $100 and give $50 to $75 to an affiliate?  What is a reasonable margin?

    Let’s take Apple as an example since they are a loved company and it may keep any reading from jumping to a moral argument immediately.

    Apple spends nearly a billion dollars annually on advertising and marketing not to mention the money spent on things that give them indirect marketing like their stores.  Apple also sells its products at a premium above its competitors.

    Should Apple cut its margin to lower its price by not building into the price the advertising?  

    The real question is whether a product (poor/average/superior) can compete in its market with lower margins.  In a hyper-competitive market, such as electronics, a company must spend a lot on advertising and marketing to get people to perceive their product as superior to their competitors and then to buy the product.

    Affiliates are in a favorable position because they can demand high commissions in many markets because of the level of competition among sellers.  They can get even more from sellers of digital products since the margin can be really high.

    Lastly, if your competitor is using affiliate marketing and paying high commissions, you will have a difficult time selling your product within that market if you don’t follow suit.  

    Margins must be sufficient to compete in your marketplace or you won’t survive even with a superior product.

  • http://phoenixabroad.com Dave Huss

    I bought the Only72 sale last year and never ended up looking at the content beyond a cursory glance.

    A lot of the content was high quality so that wasn’t the reason.

    I think it was more just a case of buying because I had the intention of using it “someday”.

    Turns out I never really needed more information. I just needed to actually do the work.

  • http://www.facebook.com/jamestolf James T Tolf

    A blog is a great marketing tool and a way to grow your brand. So if you are linking with products you and your team use or stand by your audience would have no problem buying through your brand. Brand equity just like real estate equity is best pulled when you can put the profit to good use and it is in a growing market.

  • http://lucidability.com/ Jamie Alexander

    Hey Dan,

    I think this is so true – “I think it hurts businesses to launch relationship-oriented information
    products that require affiliate participation in order to be a success.”

    You hear of people building products only to depend on affiliates to make sales. They can’t find customers so why will they be able to find affiliates.

    I do think the affiliate model has benefits. If you’re driving traffic to your site from a blog, I suppose affiliate could bring you in customers you wouldn’t have reached anyway, plus they make you a bit of bank.

  • John Neil

    Don’t forget- lots of the value in info products is psychological. Committing to ONE approach and actually following through. The money spent keeps you going.

    So discounting it and having a shotgun style mix defeats he purpose.

    It probably moves lots of product though.

  • http://www.tropicalmba.com Dan

    True that. I’m fascinated by how much the experience is part of the value. 

  • http://www.tropicalmba.com Dan

    I’m seeing it hurt upstart internet marketers, in particular. I think this affiliate model worked better a few years ago. Nowadays so many marketers, more transparency, need new tactics! 

  • http://www.tropicalmba.com Dan

    True… I need to get my hosting affiliate links up! :)

  • http://www.tropicalmba.com Dan

    :D – I hear this sort of thing a lot with info-products. Maybe you’ve got too much cash money man???? 

  • http://www.tropicalmba.com Dan

    Cheers Adam. 

  • http://www.tropicalmba.com Dan

    Yeah John that’s actually a really good point. I suppose when you look at small time internet marketing product its tough to separate quality from the effort required to have a successful affiliate program. You gotta wonder– what if all that effort were spent on the product. As a consumer, it’s difficult for me to see because I’m trying to justify why I should pay such high prices for information in the first place, and then on top of it I’m paying the affiliates too!

    Agreed on the context. Best of luck with your product, absolutely worth having an affiliate program for that. 

  • http://www.tropicalmba.com Dan

    Yes I absolutely agree here, in particular when it comes to hosting etc. The case I’m trying to point out is online marketing membership sites or Frank Kern-esque training products that might sell for $500 bucks but you are paying the affiliates another $500. 

  • http://www.tropicalmba.com Dan

    Tim, you might have nailed the distinction I was seeking. Perhaps my whole idea is that you shouldn’t have your customers invest in your product development via your affiliates… so yes, why don’t I mind paying small distribution cost for VSF? Because its’ a bomb product. Same with Bluehost / apple etc. 

    Right it sucks to pay such HUGE premium for brand new, untested, immature products. So if these marketers are charing for experience as another commenter mentioned, then my experience of paying for 2nd rate blog posts from other marketers in order to distribute the thing, my experience sucks out of the gate :) 

    Yeah, I think your comment is better than my blog post. I’m clearer on it not. You’ve given a little clarity to my guess that IM products using these types of tactics out of the gate are more likely to fail than ones that focus first on quality then build in marketing budget once refined.

  • http://lucidability.com/ Jamie Alexander

     Absolutely. There’s a lot of things I can see wrong with it now.

    The more people come out with IM blogs and people get used to seeing affiliate products everywhere, the quicker they will realize they can just jump on clickbank and use their own affiliate products.

    People also depend on affiliates and never learn the proper marketing skills.

    You could probably sit down and pick out lots of things wrong with it.

  • http://twitter.com/JohnMcIntyre_ John McIntyre

    Affiliates are essentially an online salesforce paid on a commission-only basis. However, they differ from their offline counterparts only in that sometimes they don’t mention that they’re trying to sell you on something, rather than just mentioning something cool.

    As for the price, isn’t it arbitrary? Isn’t pricing more about psychology and perceived value rather than the supposed “objective” worth? If someone releases a simple product that saves a person 10 hours of time by organising some hard-to-find information, doesn’t that mean that if it was priced at 9 hours worth, that it’s a positive return on the part of the consumer? So if the product is for busy professionals that earn $50/hour, the product is feasibly worth $450/hour? If it’s a competitive market, then perhaps the price is lower.

    Also, if there was no affiliate network promoting a product, despite how awesome it might be, the consumer in question might never have heard about it and thus never benefited it.

    So what the consumer gets is an increased likelihood of being exposed to the product, as well as increased time, on top of whatever value the product delivers ($$$, health, relationships, etc). Pretty sweet deal, right?

    So the real problem, which I think you nailed, is that making a crap product in the belief that a high volume of affiliate traffic will offset it, is a dumb strategy. It’s like spamming 30,000,000 email addresses, making 2000 sales, and calling that marketing. If someone has to send 30 million emails to get 2000 sales, that is not marketing :)

  • http://liferapture.com Benjamin Spall

    Totally agree. I’d never thought over your point surrounding giving a time limit on the deal meaning the deal can’t stand up so well by itself (without the limit) but that’s so damn true.

    With regard to the DC, I damn well love how big the barrier to entry is. No affiliate program plus the three-month up front payment keeps the place clean. I don’t know how many of the 200+ plus members come back on a consistent basis, but I find myself on there four, five times a day.

    Derek Sivers wrote in his book [horribly paraphrased] “Ignore the 99%, focus on your 1%, thrill them, and you’ll never have to do any marketing again”. Which is the way I feel about the DC. I told a friend of mine to sign up because I wanted him in there and I knew it’s right up his street, and the fact that I didn’t receive anything in return for the recommendation, means he knew I meant it.

  • http://www.tropicalmba.com Dan

    Great advice from Sivers there. Cheers appreciate your support on the DC man! That’s really nice to hear. 

  • http://liferapture.com Benjamin Spall

    Welcome man. I’m sure you’ve taken a dive through it before, but Derek’s blog is a treasure trove of simple, actionable, unpretentious advice.

  • http://twitter.com/BenjaminoChile Benjamino

    Where are the links in the post if we want to get hosting through Bluehost or buy a book off of AMAZON?

    I think you could list some at the end of this post. It came up at #1 on google when i searched “Tropical MBA affiliate links” yet there are no actual affiliate links to give YOU GUYS money.

  • http://www.tropicalmba.com Dan

    Cheers man I really appreciate that impulse! It has been on the list of things to do, but just haven’t found the time to pull it together.

  • http://twitter.com/Yakezie Yakezie

    Speaking of which, it’s been a while since the last one. They crush it everytime!

  • http://www.tropicalmba.com Dan

    True!

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