Selling products for other people online !
Discussion
Went to a dinner/cocktail party last night and i got talking to a guy who was there, due to him having a stunning black Aston Martin DBS parked outside.
He told me, he works from home, about 3-4 hours a day sat behind a computer and basically advertises and sells other peoples products online and gets paid a commission on every sale or every person that clicks through to someones website. He started divulging figures and told me he makes between £300k - £400k a year profit from this. Last year he brought in just over a million in revenue but spent around £700k on advertising.
The interesting part was that he told me he doesn't know much about computers, their are programmes set up which do a lot of the work for you and all you have to decide is what products to sell and where to advertise, 99% of his ad money goes on Google.
Now i know nothing about computers or how this works, but he was a smart guy, had a lovely car outside and was told he has a very nice apartment in Putney, so no reason not to believe he's making these returns and good luck to him.
But is it really that easy to make that kind of money doing that kind of work?
There has to be some sort of catch otherwise everyone would be at it. Can someone a lot more knowledgable than me on this subject offer any thoughts !!!
He told me, he works from home, about 3-4 hours a day sat behind a computer and basically advertises and sells other peoples products online and gets paid a commission on every sale or every person that clicks through to someones website. He started divulging figures and told me he makes between £300k - £400k a year profit from this. Last year he brought in just over a million in revenue but spent around £700k on advertising.
The interesting part was that he told me he doesn't know much about computers, their are programmes set up which do a lot of the work for you and all you have to decide is what products to sell and where to advertise, 99% of his ad money goes on Google.
Now i know nothing about computers or how this works, but he was a smart guy, had a lovely car outside and was told he has a very nice apartment in Putney, so no reason not to believe he's making these returns and good luck to him.
But is it really that easy to make that kind of money doing that kind of work?
There has to be some sort of catch otherwise everyone would be at it. Can someone a lot more knowledgable than me on this subject offer any thoughts !!!
Ok, interesting one Stimmers.
From what you have said he is doing online affiliate marketing: http://www.clickbank.com/promote_products.html
Your (his) numbers suggest he is achieving a margin of 30%. This figure is bizzarely highly IMO. Affliate marketing has zero barriers to entry and 15 year old could do it (and many probably do), margins nearer to 1-5% I can believe... and unless you are very clever and pick your products very well you will just lose money (but the product owner still wins BTW - they still got exposure). If there is money to be made on a product, more affiliates will move in therefore driving the keyword/phrase bid higher thus reducing your arbitrage.
Effectively as the affiliate marketer you are taking all of the risk, the product owner takes zero risk for a fixed commission upon a sale. You spend all of your cash on advertising and HOPE and PRAY that somebody buys the product after clicking through (or within cookie lifetime).
I suspect this chap is either pulling your leg, or he is involved in something more complex... or slightly more dodgy. Plenty of people heavily bending the rules in this industry as you can just hide behind your computer.
Trouble with doing anything like this is you are at the mercy of google (or similar) making small modifications to their systems (keyword bidding etc) which effect the way your arbitrage works. A small change can throw everything out and you have to start again, so the 'business model' is not sustainable and highly vunerable.
The situation is completely different if this chaps owns/runs a decent content site with high levels of natural traffic and simply affiliate markets relevant products from there. In this case affiliate marketing does work, but unless he runs the bbc website or has a hundred PR5+ sites I cant see him generating the revenue you mention.
Ill gladly be proven wrong !! ;-) Id love to make some easy cash !!
From what you have said he is doing online affiliate marketing: http://www.clickbank.com/promote_products.html
Your (his) numbers suggest he is achieving a margin of 30%. This figure is bizzarely highly IMO. Affliate marketing has zero barriers to entry and 15 year old could do it (and many probably do), margins nearer to 1-5% I can believe... and unless you are very clever and pick your products very well you will just lose money (but the product owner still wins BTW - they still got exposure). If there is money to be made on a product, more affiliates will move in therefore driving the keyword/phrase bid higher thus reducing your arbitrage.
Effectively as the affiliate marketer you are taking all of the risk, the product owner takes zero risk for a fixed commission upon a sale. You spend all of your cash on advertising and HOPE and PRAY that somebody buys the product after clicking through (or within cookie lifetime).
I suspect this chap is either pulling your leg, or he is involved in something more complex... or slightly more dodgy. Plenty of people heavily bending the rules in this industry as you can just hide behind your computer.
Trouble with doing anything like this is you are at the mercy of google (or similar) making small modifications to their systems (keyword bidding etc) which effect the way your arbitrage works. A small change can throw everything out and you have to start again, so the 'business model' is not sustainable and highly vunerable.
The situation is completely different if this chaps owns/runs a decent content site with high levels of natural traffic and simply affiliate markets relevant products from there. In this case affiliate marketing does work, but unless he runs the bbc website or has a hundred PR5+ sites I cant see him generating the revenue you mention.
Ill gladly be proven wrong !! ;-) Id love to make some easy cash !!
Ade355 said:
I suspect this chap is either pulling your leg, or he is involved in something more complex... or slightly more dodgy. Plenty of people heavily bending the rules in this industry as you can just hide behind your computer.
Oh he isn't pulling your leg, far from it. Affiliates are not the most lucrative model by a long stretch though, if he was a little more imaginative he could be pulling £300-400k/month with 50% margins. However, as nice as that sounds, due to changes Google have brought about (with yet another update just last week to their QS system), the lifespan of such a model is limited to a couple of years at best, with many major players who've made many millions over the past four to five years already moving into other businesses. 
Not definite that its affiliate marketing. We do a similair thing with art whereby we have a full ecommerce website and place artists work on the site and charge a 25% commission. The artist sends the artwork to the purchaser (ie we hold no stock) and we pay the artists the net sale figure. This could be applied to any product, just look at any classified advertising site ie autotrader, its basically the same thing.
Yes we have advertising costs but the profit margin is attractive.
Yes we have advertising costs but the profit margin is attractive.
sa_20v said:
Ade355 said:
I suspect this chap is either pulling your leg, or he is involved in something more complex... or slightly more dodgy. Plenty of people heavily bending the rules in this industry as you can just hide behind your computer.
Oh he isn't pulling your leg, far from it. Affiliates are not the most lucrative model by a long stretch though, if he was a little more imaginative he could be pulling £300-400k/month with 50% margins. However, as nice as that sounds, due to changes Google have brought about (with yet another update just last week to their QS system), the lifespan of such a model is limited to a couple of years at best, with many major players who've made many millions over the past four to five years already moving into other businesses. jamesuk28 said:
Not definite that its affiliate marketing. We do a similair thing with art whereby we have a full ecommerce website and place artists work on the site and charge a 25% commission. The artist sends the artwork to the purchaser (ie we hold no stock) and we pay the artists the net sale figure. This could be applied to any product, just look at any classified advertising site ie autotrader, its basically the same thing.
Yes we have advertising costs but the profit margin is attractive.
Why dont they just sign up to clickbank (or similar) and get a selection of relevant promoters/affiliates rather than just exclusively you? Also presumably you need to spend some time getting the artists on board as well so what is the advantage for you "going direct" as it were rather than using a product-providing intermidate?Yes we have advertising costs but the profit margin is attractive.
Ade355 said:
sa_20v said:
Ade355 said:
I suspect this chap is either pulling your leg, or he is involved in something more complex... or slightly more dodgy. Plenty of people heavily bending the rules in this industry as you can just hide behind your computer.
Oh he isn't pulling your leg, far from it. Affiliates are not the most lucrative model by a long stretch though, if he was a little more imaginative he could be pulling £300-400k/month with 50% margins. However, as nice as that sounds, due to changes Google have brought about (with yet another update just last week to their QS system), the lifespan of such a model is limited to a couple of years at best, with many major players who've made many millions over the past four to five years already moving into other businesses. 
Ade355 said:
Ok, interesting one Stimmers.
From what you have said he is doing online affiliate marketing: http://www.clickbank.com/promote_products.html
Your (his) numbers suggest he is achieving a margin of 30%. This figure is bizzarely highly IMO. Affliate marketing has zero barriers to entry and 15 year old could do it (and many probably do), margins nearer to 1-5% I can believe...
Maybe he's a brand bidder From what you have said he is doing online affiliate marketing: http://www.clickbank.com/promote_products.html
Your (his) numbers suggest he is achieving a margin of 30%. This figure is bizzarely highly IMO. Affliate marketing has zero barriers to entry and 15 year old could do it (and many probably do), margins nearer to 1-5% I can believe...
I'd say the top PPC affiliates are making around 9% margin, but they could be losing up to 50% of that on staff and other overheads.
I wouldn't say affiliate marketing has zero barriers to entry. At a certain level yes, but not at the level the OP is talking about. You need deep pockets to compete in certain markets, finance PPC for example. The big companies are paying Google around a million pounds per month for their traffic and then they have to wait 2 months or more to get paid themselves.
A new comer would have to be prepared to make a BIG loss before their finance campaign moved into profit.
Edited by Webber3 on Monday 14th July 22:53
Ade355 said:
jamesuk28 said:
Not definite that its affiliate marketing. We do a similair thing with art whereby we have a full ecommerce website and place artists work on the site and charge a 25% commission. The artist sends the artwork to the purchaser (ie we hold no stock) and we pay the artists the net sale figure. This could be applied to any product, just look at any classified advertising site ie autotrader, its basically the same thing.
Yes we have advertising costs but the profit margin is attractive.
Why dont they just sign up to clickbank (or similar) and get a selection of relevant promoters/affiliates rather than just exclusively you? Also presumably you need to spend some time getting the artists on board as well so what is the advantage for you "going direct" as it were rather than using a product-providing intermidate?Yes we have advertising costs but the profit margin is attractive.
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