Module 7 - The Affiliate Chemistry

Module 7 – The Affiliate Chemistry

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Many ordinary people are making an extraordinary income for themselves just working
from home. And what‟s more, many of them are doing it comfortably just selling other
people‟s products! In this crash course, you will learn the core principles and system of
affiliate marketing and what are some of the things to look out for when you are
promoting as an affiliate marketer. You will become skilled at choosing products to
promote and discover some of the strategies that you may use to churn huge profits as
an affiliate marketer. So let‟s begin.

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We‟ll start by introducing the affiliate marketing business model. Essentially, the affiliate
marketing business model is also known as the third-party proprietor.

It is one of the easiest ways and most aspiring way to get started and make money
online. In a nutshell, an affiliate promotes other people‟s products via referral and then
gets paid a commission for their marketing efforts. This means that as an affiliate, there‟s
no hassle of having a product of your own, managing payment processors or even
handling customer service support.

All an affiliate needs to do to make money online is simply refer customers to the
merchant‟s sales offer. Another benefit of affiliate marketing is that you can reap a

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significant share of the profit on each sale, with less than half of the hassle. By a
significant share, it ranges anything between 5% all the way up to 75%!

Affiliate marketing has also been growing in popularity in various industries in the recent
years. The reason for this is because more and more business owners are realizing the
power of affiliate marketing by leveraging on other people‟s marketing skills. On the
affiliate marketing end, it is so easy because affiliates avoid the trouble on product
creation and customer support. Yet as an affiliate, they still get to practice all the
essential marketing skills that will bring successes in any businesses.

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The first to understand about affiliate marketing is that it is a “pay per action” model.
Affiliate marketing works by having an arrangement between the merchant, also known
as the product vendor, and the affiliate marketer. Only when an affiliate successfully
sells a product or generates a lead, which is the action, then the merchant pays the
affiliate a commission.

So in other words, the affiliate gets compensated based on either the visitors they sent
buy something or fill out a form by providing their contact information. The affiliate then
gets rewarded with commission, which can range between 5 – 75% of the product price.

This referral process works by using a unique link that allows tracking for both the
merchant and affiliate. Therefore, when an affiliate is doing their promotion, the sales will
most definitely be accredited to the affiliate. The merchant on the other hand will know
which affiliate is performing well and the merchant can also provide incentives or
resources to help the affiliate marketing process.

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Now let‟s explain the flow process of the affiliate marketing model. We will begin by
having the affiliate. What the affiliate will do is to visit an affiliate network to find a
merchant to promote a product.

Some of the examples of affiliate networks out there are Clickbank, Commission
Junction, Link Share and also PayDotCom.

An affiliate network basically is a market place, which brings affiliates and merchants
together. The affiliate network company also handles all tracking and payment
processes.

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When an affiliate identifies a product that could be profitable to promote from the market
place, what the affiliate will then do is to set up a campaign and send targeted traffic, in
other words, their potential customers, to the merchant‟s sales offer.

Thereafter, when a sale or lead is successfully transacted, the merchant then pays the
affiliate the stated commission.

There are thousands of affiliate marketing programs out there. Before spending any of
your efforts, it is crucial that you sit back and look at some important considerations
before embarking your efforts into any marketing campaigns.

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So the first rule to begin with is to choose your niche first and then gather a list of related
products within the niche that you can promote. The idea behind choosing the right niche
is to find a niche of hungry buyers. That means targeting people who are ready to pull
out their wallets to buy from you. Those that needs to get their problem solved and
demands a solution immediately. Thereafter, you‟d want to promote to this same group
of people over and over again with related products within this niche.

The second rule is to be picky about the product to promote. You‟d want to only market
products that are high in demand, of high quality, fairly priced and have low refund rates.
A good practice here is to go through the merchant‟s sales offer. From there, gauge for
yourself if you were a prospect, whether you‟d want to make a purchase from them or
not.

The third rule is to do the math! Calculate how much is the commission per sale. Do not
get overly excited with the percentage payout. No doubt some merchants offer a high
commission percentage payout of 75%. But ultimately, you‟d want to crunch out the
numbers in dollars and cents. You should also find out or forecast how well the product
converts. This way you can project how much you can spend on advertising or
outsourcing if you choose to and also how many sales you‟d need to make to reach your
profit target.

The last rule is to research on your merchants. You‟d want to get a good overview of the
merchant‟s reputation in the industry. Find out from customers reviews about the product
and customer service. Also look to see what other affiliates are saying about the affiliate
program and merchant. Make sure the merchant has a good standing, pays on time and
provide affiliate tools and resources.

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So where do we find products to promote. One of the ways is to go through affiliate

networks. Affiliate networks are like a market place, which brings affiliates and
merchants together.

Some affiliate networks are Clickbank, Commission Junction, PayDotCom and Link
Share.

Clickbank basically is a marketplace that sells digital information products. This includes
E-books, E-courses and also membership sites.

Commission Junction, PayDotCom and Link Share on the other hand promote both
digital and tangible goods.

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The main benefit of going through affiliate networks is that they handle all the payment
processors for both the merchants and affiliates. This means that they are no worries
that the merchants may incur late payment or not pay you at all. Affiliate networks takes
care of everything from processing customer payments, refunds and also paying the
affiliates and merchants themselves.

The other way of finding products to promote is to go through independent affiliate

programs available online whereby commissions are paid directly by the merchants
themselves rather than the affiliate networks.

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Some merchants prefer to use this method because they would like to manage their own
affiliates in their own ways or possibly because of cost saving options. Because each
time a transaction is made between the merchant and the affiliate through an affiliate
network, the affiliate network would actually earn a commission for handling their
process. So in the long run, independent affiliate programs do have a huge cost savings
for the merchants themselves.

However on the other hand, some affiliates feel more secure going through the affiliate
networks to promote a merchants product just to ensure that the payment process are
guaranteed.

If you wish to find independent affiliate programs to promote, all you need to do is to
simply go to the Google search engine and search for the key phrase of the product
name with the word „affiliate‟ thereafter. So an example search would be “fat loss 4 idiots
affiliate”, where fat loss 4 idiots is the product name. When you hit the search button for
this term, normally what you would see is fat loss 4 idiots affiliate page on the first page
of Google.

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How do we select products to promote?

After your niche research, when you have identified a profitable niche, you need a
product to promote to them. Remember to think in the frame of mind that you are
„referring a solution‟ to your needy audience. So what you‟ll be selecting is a solution for
your customers.

To start, visit one of the affiliate networks and gather a list of related products, which you
can promote, to your niche. Thereafter, visit the merchant‟s sales page and analyze their
sales page and offer. It is important to target only products with high conversions and
low refund rates of below 10%. This would be very crucial to your success because as
an affiliate, there is so much you can do to create traffic throughout your campaign with

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your landing pages however ultimately, the sales need to be converted through the sales
offer of the merchant.

There are 3 main ways to find quality products.

The first way is to buy the product and test it yourself. Analyze it with your own personal
experience. If you were an audience with a specific problem, then does this product
provide a solution to your existing problem?

The second way is to find out from forums to see what people are saying. Look at
customer‟s reviews and what affiliates are saying about the merchant too. Also, identify

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what are some of the questions people are asking as well. With forums, you can gather
great insights, information and reviews of the product that you wish to promote.

Also, you would want to see what other affiliates are doing; how long have they been
promoting the product? If you see a trend of affiliates promoting a product after a period
of time, then this is very likely indicates that they are making money and therefore would
be profitable to promote.

Also, take a look to see if affiliate marketers are spending money to advertise on this
product in places like Google, Yahoo, MSN and even other content websites. If they are,
it also very likely means that they are making money as well.

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When you select products, these are some of the things that you need to check.

You need to make sure that it is a relevant product to the niche that you have identified.
Make sure that this product is a solution that will actually solve their problems.

The second thing is to make sure that the sales letter of the merchant is of top quality.
You need to be able to identify as a prospect yourself that the merchant‟s site feels
trustworthy and the sales copy can actually convert them.

And then, look at the commission payout and make sure that it pays at least $20 per
sale because it is the amount of effort that you are investing in. Why $20? It is because if
you were to use paid traffic methods, you would want to be able to offset your
advertising cost and also make a profit from it.

And lastly, make sure that it has got a low refund rate of below 10%. In the later slides,
you will learn how to calculate the refund rates.

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Now we are going to talk about using Clickbank to choose the product that you will be
promoting. Why Clickbank? It‟s because it is the No.1 largest digital product market
place and they have been around long enough to establish a good standing in the
industry. With that, many merchants and affiliates have already identified Clickbank as a
trustworthy and reliable affiliate network.

On top of all, digital products are instant product delivery. This means that as soon as
customers make a successful payment for their product, all they really need to do is click
on to the download link and their product will be delivered to their desktop instantly.

Promoting Clickbank digital products also does not require inventory cost, the risks are
lower and also this is the place where most new Internet marketers begin anyway.

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Clickbank also provides professional support and handling and all tracking is done for
both the merchant and affiliate. So this ensures that as an affiliate, your commissions will
be accredited and paid out to you. Clickbank also offers extremely high commissions up
to a sale percentage of 75% of the product price and commission payments are sent out
bi-weekly or weekly.

Now let‟s start by signing up to Clickbank. When you visit Clickbank.com, all you need to
do is scroll up and click on the „Sign Up‟ button. Fill up your information and something
you should take note of is to select a nickname for your new account. This nickname is

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unique to you so therefore you should choose it wisely because once you have selected
the nickname, it can never be changed again.

This will be your unique affiliate ID to make your product promotions. Your account
nickname should be anything between 5 – 10 letters and with digits if you wish.

After signing up, the second place where you want to go to is the market place. Simply
scroll up and click on the „Market Place‟ link and you will come to a page like this. Inside
the market place, you can look for a product to promote under categories or keywords.

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By looking through the categories, there is a list of 9 different categories. So if you

happen to have no idea at all about which niche or product you‟d like to promote, you
can start by browsing through the categories and see what might interest you.

The other method is to search using keywords. Say you have already identified a niche
in mind; all you simply need to do is to type in the keyword and do your search. A result
page will then show all the statistics of the product that you can potentially promote.

The main area you need to look out for when you select a product to promote on
Clickbank is the highlighted area over here. As you can see on the first column, the
amount per sale for Panic Away is actually $43.21. This means that when you make a
sale, this is the earn-per-sale amount for the product that you would get.

In the second column, where it shows future dollars, this will show if there are back-end
products that will be promoted upon the front-end purchase. It also indicates the amount
of any rebilling amounts. So in this case for Panic Away, there isn‟t any back-end sale.
The next column is the sale percentage. This is the percentage amount of the product
price that affiliate will earn upon a successful transaction.

The next column where it says „Percentage REFD‟, that stands for Percentage Referred.
A lot of new marketers often think that it is the amount of percentage refund, but it is not
so. Instead, it represents the percentage of „Referred Sales‟. So in this case, it means
that 79% of the sales are actually referred by affiliates and the merchant itself generates
21% of the sales.

Lastly the gravity column, this number represents a unique calculation by Clickbank that
takes into account of how many affiliates has made a sale over the past 8 weeks. Since
more recent transactions are given a higher value, this number can give you an idea of
how „hot‟ the product is at the moment. In this case for Panic Away, at least 204 affiliates
have successfully generated a sale for Panic Away over the past 8 weeks.

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So overall, the gravity simply gives you an indication of how well the product is doing
and an idea of how many affiliates are promoting this product. However high gravity can
also indicate that they are a lot of competition in promoting this product.

Now let‟s calculate the refund rate for Clickbank products.

The formula is simply like this; let go through this step-by-step:

There are four steps to calculating the refund rate for Clickbank products. We begin with
calculating the Net Commission where the formula is (Product Price – 7.5%) - $1.

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The percentage of 7.5% and $1 are actually Clickbank‟s commission charges as an

affiliate network to handle all the processing and administration. So by subtracting
Clickbank‟s commission off the product price, this equals to your „Net Commission‟.

Step two is where you multiply your Net Commission with the Payout Percentage, it then
equates to your Affiliate Commission.

Step three, to obtain the Refund Difference, you simply minus your Affiliate Commission
over the Earned/Sale.

Finally step four, the Refund Difference divided by the Affiliate Commission, multiply by
100 then equates to your Refund Percentage.

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Now let‟s demonstrate it more clearly with an example.

So as you can see, using back the Panic Away example, the product price is actually
$67.95. How you gather this product pricing is simply by clicking on the „View Pitch
Page‟ that will direct you to the sales page offer and all you need to do is to scroll down
to the end of the sales page offer to see the what the product‟s price is.

The Earned Per Sale amount is obtained at first column of the Clickbank‟s marketplace
search results. For Panic Away the Earned Per Sale amount is $43.21. For this product,
the payout percentage is 70%. These are all the 3 variables that you need to find out to
calculate your refund rate.

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So now let‟s work on the calculation. As we‟ve learnt earlier, you need to start by taking
the Product Price, minus off 7.5% of Clickbank‟s commission, minus a dollar and that
equates to your Net Commission.

Then using your Net Commission, multiply it by 70% of the Payout which equates to
your Affiliate Commission; in this case, $43.30.

Then minus off the Affiliate Commission with the Earned/Sale and you‟ll get a Refund
Difference of only $0.09 in this example.

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The Refund Percentage is then calculated by $0.09 divided over the Affiliate
Commission and multiplying it by 100. This equates to an extremely low refund
percentage of 0.20% only.

This goes to show that this product is rather successful because only 0.20% of their
customers have requested for a refund.

There are many products out there with a much higher refund percentage. Refunds are
normal in sales and marketing. Normally the kind of product you‟d want to look out for in
refund rate is anything between 0 – 10%. Of course, the lower the refund rate, the better.

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Next, let‟s move on to creating your unique affiliate ID URL. In Clickbank, it is known as
the Clickbank HopLink. This affiliate ID is only unique to you. This means that when you
promote any products using your affiliate ID, the sale will be tracked and definitely
accredited to you.

So once you have identified a product to promote in Clickbank, create your unique
affiliate ID simply by clicking on the „create HopLink‟ button. After that, all you need to do
is to fill up your Clickbank nickname together with a tracking ID if you wish.

A tracking ID is simply used for your own campaign‟s tracking purposes. This will allow
you to see exactly where your sales are coming from. For example, you may want to
track to see whether it‟s coming from a particular article, a particular Adwords campaign,
or even a video marketing campaign.

So as soon as you‟ve keyed in your Clickbank nickname and tracking ID, a unique
HopLink HTML code will be provided to you. You can then use this unique HopLink
HTML code in your campaigns to promote your chosen product to your niche.

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Now let‟s move forward to talk about how the affiliate campaign model works. You start
by having a traffic source. Your traffic source can be generated from any traffic methods
such as articles, videos, blogs and so on. These traffic sources are then sent to a
landing page. From your landing page, you only then direct them to the merchant‟s sales
offer.

A lot of new affiliate marketers very often send their traffic source directly to their sales
offer. However, it has been tested and proven that if you were to have a landing page,
your sales conversion would definitely increase much higher. Because you have to
understand that people do not like to buy. If throw them to a sales offer right away, it is
less likely that they will buy, because they are not ready to. As an affiliate, it is important

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for you to drive traffic but it is more important for you to create a relationship with the
prospects.

Comparatively, if you send them to your landing page instead, you can use this platform
to build a relationship with them. Your relationship building can be in the form of adding
value, providing tips, giving an unbiased review or even sharing your experiences.
Subsequently, when they have acquired enough trust and liking for you, they would then
be more open to your recommendation.

So very quickly one more time, how the affiliate campaign model works. You start by
using traffic sources to send prospects to your own landing page and from your landing
page; you send them to the merchant‟s sales offer.

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There are numerous ways to generate traffic online out there. These are some of the
main types of traffic sources that we will discuss very quickly.

You have article marketing where you create written content and submit them to article
directories. When a user reads your article and clicks through from your article resource
box, you direct them to your landing page.

Then you have Social Bookmarks. Social Bookmarks are platforms like Digg, Technorati
and StumbleUpon. These are social networking sites where people network and share
content.

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And also, you have Squidoo Lenses, which is an extremely user-friendly content creation
site whereby you can not only create written content but also insert images, videos and
also add colors to your lenses.

Video marketing has been growing in popularity in the recent years. How video
marketing works is to simply to create a short video of about 30 seconds – 3 minutes of
topic that you‟d like to discuss about. And thereafter, submitting it to several video
directory sites.

Podcasting is simply recording audio and also submitting them to several Podcasting
sites to share your content. A major benefit of Podcasting is that your users can
download it to their media playing device and listen to your content anywhere and
anytime.

Then we have blogging where you can new content in the form of articles, audio or video
and post up onto your own blogging platform. You can also generate traffic from this
method by making comments on other people‟s blogs and linking them back to your own
blog or website.

And finally the last traffic source that we will share in here is Pay-Per-Click. Pay-Per-
Click is a form of paid advertising. This means that you will be spending money for your
ads. However you only pay for each time a user clicks onto your ad.

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There are three main types of landing pages:

 The Pre Sell Page

 Opt-In Page
 Review Page

A presell page is simply a page where you pre sell the user into wanting to buy the
product. The strategy here is to use or create a social proof. So this will come from a
first-party point of view. The author or character that you‟ll be using already had a
personal experience on a product and is sharing his/her experience with the audience
about the problems they have encountered and how the product has improved their
quality of life.

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So this presell page makes it very personalized and creates a trust and relationship with
the reader because they are sharing a similar experience. Once this kind of social proof
relationship is built, any product recommendation would ease into the reader easier and
better.

The second type of landing page is an opt-in page. The purpose of an opt-in page is for
lead generation and list building. How to convert sales through an opt-in landing page is
to use an automated follow-up e-mail system to build relationships and make
recommendations. The beauty of list building is that you will be able to capture
information of your prospects to constantly be in contact with them. It‟s like having your
personal broadcasting channel or station and you can deliver content to them in the form
of written content, audio or even videos. Furthermore, this gives you full accessibility to
them at all times.

Once you‟ve built a sustainable relationship where you‟ve built a reputation for your
prospects to like, trust and admire you, these prospects of yours will then be open to
products or solutions you refer them to.

Finally, a review page is actually a product comparison page. So how this works is
simply by giving a product review and also comparing it with several similar products.

A review page will normally have a comparison between two to five products. A quality
rating is given to each product being compared and a short summary of what the product
can do and it‟s offers. The idea of having a review page is to give shoppers a non-biased
product comparison overview to help them make a better purchasing decision.

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Finally coming to the end of this Affiliate Marketing course, affiliate marketing once again
is simply to promote other people‟s product and this means that you do not need your
own product, your inventory or customer service support. The focus of an affiliate is to
send web traffic and improve web conversions with their landing pages.

Affiliate marketing can be applied to various industries. After your niche research, follow
a checklist to find a quality product to promote. The affiliate marketing campaign model
starts with different traffic sources that will be directed to your landing page and from
your landing page to the sales offer.

Be careful of who you market for. Successful affiliate marketing goes to mainly to those
who put the most effort in their research and marketing campaigns. The longer you are

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involved with affiliate marketing, the more confidence and skills you will gain to know
what will work and what won‟t. Ultimately your efforts will reap greater profits in shorter
periods of time.

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