Getting to Market
You don’t have to love infomercials to have a love of selling products direct to the consumer. If you work in the performance marketing space long enough, especially at a network or as a publisher, chances are you will fall in love with the idea of coming up with your own product to market. There is something so enticing, so fun, so tempting about having an offer that can be promoted across the networks. In seemingly one fell swoop, you could go from zero to hundreds, thousands, even tens of thousands of dollars in transactions. Have a good offer, and soon, the thought of generating $50k per month will seem inadequate.
If it were easy to come up with an offer, everyone would do it. That said, there are quite a few types of offers that don’t require millions of dollars, or hundreds of thousands of dollars, or even high tens of thousands of dollars to create. If you want to get into the offer business, without building a full-fledged company in the traditional sense, these come to mind.
Reg Paths – The classic reg path offer requires little to no merchandising. The most famous start with “Free” and can involve just about everything. We’ve seen free dvds, free condoms, and a boat load of free apple products. Not all have to involve incentivized marketing, and they don’t have to involve physical goods either. We’ve seen plenty of quiz sites and most recently the fake job sites. Reg path offers are all about harnessing intent and delaying gratification. They either generate intent that wasn’t there – free ipad, quiz sites, or they purport to offer something that matches the intent of the user – job information for example. Companies exist that make the monetization easier. You find a way to grab the attention, to create something of value, and these companies will hand you a turn key reg path. The challenge is the arbitrage. The value per user is often low. It often requires lots of iterations and many variations in order to reach a large enough audience. Or, it requires being very aggressive. In general, these offer the lowest user value.
Digital Products / Infotainment – When one of the most successful affiliates decides to invest a lot of his own money and time away from promoting offers, you know he must believe in what he’s doing. And, when that person decides to create his own product, you know it must have potential. Instead of looking to make a physical product, he decided to create a digital one. Not unlike many of the more popular infomercials in the past, this one focuses on teaching others how to make money. As you visit various sites, you’ll see quite a few information based products running, many in the diet space. They tend to require a greater investment than reg paths, and like crab cakes, can range from just filler to high crab content, i.e., crap to a legitimate product worth the consumer spending money on. Mobile subscription services could also fall under this category. There are some incredibly large companies in the sector, and options exist where someone could create the concept but leverage an existing billing infrastructure. Software downloads also fall into this category, but with those we enter the realm where the average person starts to need specialized talent to execute.
Lead Gen – The aforementioned almost ex-affiliate above also at one point created his own lead gen offer. He went to a local auto dealer and had them agree to pay a certain dollar amount for every inquiry he generated. It was a wonderfully profitable exercise and took place only in his local market. You can scale that to your liking. The key here is not always direct relationships but putting together enough relationships so that you have buyers to sell this data to. Doing it properly with the right quality are subjects that fill an entire conference, which is to say that they aren’t to be taken lightly. But, it doesn’t always take a massive sales team in order to create a lead gen offer that is either a little different than what is running today or completely new. If you are simply going to take an existing offer and put a new brand around it, you’ll struggle more unless you happen to have expertise in traffic generation. There is a lot of room in between a white label and creating a nationwide network of buyers for someone to succeed.
Physical Goods – For some reason, the idea of the physical good is the one I’d want to do, if I could. As one who is non-technical and who has consumed hundreds of hours of infomercials, the thought of creating something similar on the web feels like a childhood dream realized. This one though, is one of the hardest to pull off successfully. It seems as though you should be able to go to china, find a product, bring it back and sell it. Even with companies that will do fulfillment, it just doesn’t happen all that often or all that well. When it does happen, it can explode as we saw with Acai. That was less a case of a new product and more the result of an innovation (if we dare call it that) in marketing. Nutraceuticals existed a long time before Acai took off. The challenge with the physical good approach is the issue of click to sale. People don’t buy unbranded products. People rarely will buy any product they weren’t looking for. Acai worked for several reasons, one of which was a marketing method that helped overcome the click to sale barrier. The second and equally important one was an economic one. The pills cost so little to produce.
Combine a low cost product with a relatively high total billing per customer (thanks to $60 to $80+ charges on a recurring basis) that the advertiser could afford a high bounty per new user. If the pills had cost $20 to make instead of sub $5, it wouldn’t have worked. It also doesn’t work when the advertiser can only pay a small fraction of the sale price. An offer that charges the user $40 but pays the publisher $15 just isn’t attractive. We’re focusing now on run of network offers for a cpa network as opposed to specialty products for specialty traffic, e.g., salt water fish tanks. You can find a good product, but unless you have the time to build an emotional connection, namely through an infomercial, it’s very hard to find the right combination of product and economics to work online. Holiday offers open the market up a little bit as the impulse need to buy can make a product with normally not as enticing economics – the 25 percent of sale – convert well enough to get traction. Normally though, it’s hard to compete in a world where the affiliate can make more than what the user pays. Finally, besides being more complex procedurally, the physical goods model often costs more to launch, especially if your first time, as it means spending money on goods before taking in any cash. If you do actual research and development instead of custom labeling another product, the costs will just continue to climb. Why is this attractive again? Right, just remember Acai. Perhaps, remembering Acai all of a sudden makes it absolutely unattractive.
