Affmy
Power Member
- Feb 1, 2017
- 512
- 67
The smaller payout offers
When it comes to affiliate marketing, a lot of people are just obsessed with the offer’s payout size.
Actually, any size of offer’s payout does not guarantee its profit at all.
You should understand that large payouts require large budget.
Let’s imagine for a moment, that you found this cool new offer with 50$ payout. After setting up your fresh ads and landing pages and running a couple of split-tests, you realize that your return on investment (ROI) is about -50%, which is average.
This means a single conversion costs you about 100$ during testing period. For 2 offers and 2 landing pages you will need about 16 conversions to approach to statistical significance, which is solid 1600$.
Banners require 2x payout spending, about 100$ for a single one.
Keep in mind that you may be using 20-30 banners at the same time.
After running some split-tests and cutting down bad campaigns and keeping the good ones, you will find your spending multiplied by 2 or 2.5 (that is average).
So, in order to test a 50$ offer, 4000$ are required. Even with a maximum payback at 70%, you will need 1200$ for a single campaign to run. Which is a lot for a beginner with small budget.
Now let’s see what you would get when working with a simple 1$ offer.
Just like in first case above, we are looking through the networks, setting our ads and landing pages. Still keeping our ROI at -50% rate again, which means it will cost 32$ for 16 conversations (we are heading for the same statistically significance) plus 30$ for running 30 banners. The overall amount of spending after a split-test will be around 75$, which is little more than 35$ for a campaign at 50% payback.
In short, you will end up testing 40 times more angles by picking 1$ offer rather than 50$ one.
Does it mean that you get less money by running 1$ offers? Of course not! Remember, it’s all about ROI. If you manage to keep it positive, payout rates don’t matter at all. With a positive 50% ROI you can make 500$ a day by just spending 1000$, whether your payout is 10$ or 1$.
When starting in affiliate marketing with low budget, the low-payout offers are your top choice. Dealing with high-payout offers is troublesome enough for a beginner, so most of your campaigns will result in losing all of your money.
I do not mean that high-payout offers are impossible to optimize. In fact, many of them have nice conversion and wider demographics. Also, they provide you with experience in order to find new verticals that you could not even access before.
