The Problem with Revenue Per Sale (RPS) Affiliate Advertising

Let me start by explaining how affiliate advertising works.

The company, lets say it is Cute Fuzzy Widget Inc., sells a variety of cute fuzzy widgets - and they are having difficulties advertising and selling their product because nobody knows what a widget is, nobody cares and the product doesn't really sell itself.

So they start an affiliate program and let gullible people advertise their widgets for them, essentially for free.

The people who do the advertising are paid a commission for each widget sale they make.

Supposedly.

Maybe.

Rarely.

Often never.

The reason why is because affiliate programs which use a Revenue Per Sale (RPS) model often don't pay out. They get the free advertising, but often gyp the people doing the advertising / never actually pay out.

Basically, for the person doing all the work, affiliate programs are a complete waste of time. Especially for products that are difficult to sell.

It would be another matter if the product was actually something that was easy to sell - but this is not the case with the companies that use affiliate programs. The products, frankly, are horrible and often have really bad product reviews.

Finding a company with good product reviews that dabbles in affiliate programs is extremely rare. Why? Because their products sell themselves, sometimes via word-of-mouth. They don't even need to advertise. They keep making sales with barely trying.

Here are four commonly used advertising techniques used by affiliate programs.

#1. Spam. How annoying is that?

#2. Commission ONLY / Revenue Per Sale (RPS). Meaning you don't get paid unless they actually sell something.

#3. Faulty recording of sales. Even if you did sell their product, they might not tell you about it.

#4. Trashy products that are difficult to sell.

#5. Scams - meaning they are trying to trick people into buying something that they will never receive, or possibly even pretending to be a company they are not so they can trick people into giving their bank or credit card information.

#6. Unethical Advertising - Not just spam, but also fake landing pages, fake blogs, fake celebrity endorsements, etc.

#7. Pyramid Scheme Affiliates - Basically the idea wherein you recruit 3 people, they recruit 3 people, etc and for every person under you then you make more money. It just costs $699 to sign up...


The end result is that Revenue Per Sale (RPS) Affiliate Advertising is a COMPLETE WASTE OF TIME.

So just don't bother.

Stick to cash in advance for every advertisement you do, Pay Per Click (PPC) and advertising that is guaranteed to pay out.

Social Media Experts = Funny

I must admit that "Social Media Experts" (people who deal primarily in Facebook, Twitter, etc) give online marketing a bad rep.

And what good is web traffic if it doesn't also increase sales?

Hiring a SMO (Social Media Optimizer) should have some kind of long term ROI (Return On Investment) goal.

Note - Less than 8% of people in North America use Twitter. And less than 1% of people actually READ Twitter. Most of them are just posting nonsense and hoping other people are reading.

And Facebook? Facebook is so full of spam that people are turning it off as much as they can, upping their privacy, reducing notifications, etc that trying to advertise a company on Facebook is also largely a waste of time and purely the result of a company bent on egotism instead of profits.

If you are egotist, then go ahead and hire someone to do SMO to promote you and your business for the sake of ego.

If you want to get traffic that will result in sales, hire a SEO expert instead.

Amusing SEM Images

Since my brain is on the topic of Search Engine Marketing (SEM) and Pay Per Click advertising today I thought I would post these amusing SEM images.

PPC Competitors, Costs and Conversion Tracking

An Essay on the Topic of Pay Per Click Costs and Conversions

By Charles Moffat - SEO/SEM Expert at designSEO.ca

Let us say for a moment that you are running a business, like say an essay writing / resume writing business geared towards university students, and you were thinking about advertising using Pay Per Click (PPC). But you don't want to jump into the business of PPC without knowing what your competitors are spending.

Well I am afraid we would never be able to get exact numbers - the results of other people's PPC campaigns are confidential, you would need to hack into their account and look at what they are spending per click.

But I can give you an educated guess based on past experience.

Competitors and Costs

When I Googled essay writing, three sites came up in the top advertising box. Based on my experience I would say they are probably paying between 40 cents and $1 (USD) to come up in that top box, with the biggest bidder being the one at the top.

If I wanted a more specific number I would need to make an Adwords campaign, see what Google's bid estimate is (which is always inaccurate) and then actually bid on the keywords in question - essay writing, essay help, resume writing, resume help, etc. Wait a few days and I would get a clearer picture of how much the competitors are bidding. Then I would alter my bids to determine exactly how much the competitors are bidding for the top spot, alter bids for specific keywords, experiment with different keyword combinations, etc.

Basically it is a lot of hours sitting at the computer on a regular basis viewing the results and experimenting to determine how to get the best results.

If you wanted to hire designSEO.ca to run a PPC campaign for you then you could create an Adwords account, add a small sum of cash to the account balance, send designSEO.ca the login/password and we could run an experiment for you to see roughly how high you need to bid to come up in the top box in 1st, 2nd or 3rd place. Our monthly fee for running such an experiment is $120 CDN (4 hours worth of work).

However I don't recommend going the PPC route just yet. If you are running a business it would be better to find out:

#1. How many visitors your website has on a monthly basis;
#2. How many new customers you gain monthly;
#3. What percentage of visitors become customers;
#4. How much gross profit you make off each customer, on average, over the course of a year.

The trick however is that not all visitors are looking to buy. People who click on ads are more likely to make a purchase. What the higher rate of purchase is is unknown, but we can safely assume it is a higher rate. I will come back to this later.

Once you know those 4 things then it would be a matter of creating a PPC campaign, experimenting to see which keywords work best, making a PPC landing page with a contact form (to maximize how many people sign up), and add Adwords Conversion Tracking to the contact form.

Conversion Tracking is a great tool. Basically you track which people click ads and actually fill out / complete the contact/purchase form - then you learn which keywords people click on and are more likely to convert them into paying customers. Over time you then determine which ads make the most conversions and thus are worth bidding more on.

Using Conversion Tracking you can then determine what the higher rate of purchase is for people clicking on your ads as opposed to people just browsing.

But for now I recommend finding out those 4 things I mentioned above before committing to any PPC campaign.

Once you do determine those 4 things contact designSEO.ca and we can help get your PPC campaign on the road towards advertising success and maximizing the return on your advertising dollars!

Essay Fini!