Conversation with 2 CJ Top Performers, Part I
September 30th, 2007 by 
Amit
In the past week I had the unique opportunity to speak with 2 CJ Top Performers: Felix Leshno, on a mastermind call, and Jeremy Palmer, for an interview I did for PPC Classroom.
Both of these guys are seasoned veterans, super stars really, in this industry, they’ve both been full time super affiliates since before I even knew what affiliate marketing even was! So I appreciate every opportunity I get to speak with them.
I had a chance to talk with both Felix and Jeremy about what the future of ppc affiliate marketing holds, and here’s what we concluded:
Conversation with Felix:
I asked Felix how you deal with the following scenario:
You promote a new affiliate offer, get it profitable and strong. It’s making a killing, you optimize & expand it as much as you can, and then let it run on autopilot.
Everything is going fine the first couple of months, then you start to see a slight decline in sale and profits.
Okay, no big deal, probably just a slow month, right?
Then after 6 months of your campaign running on autopilot you realized that your profits have drop by 25%, 40%, or more. Sound familiar?
Felix said that you will see this steady decline in profit overtime in virtually every market you’re in! The fact is that there’s more competition entering in every niche, bid prices are going up. Also, ppc affiliates, and other advertisers are getting savvier and savvier.
Overtime this game will get more challenging NOT less.
So what’s the solution?
With his years of experience and expertise in affiliate marketing, here’s what Felix had to say: You need to accept the fact that profit margins will become thinner and thinner, and overcome this by launching affiliate offers at a faster rate.
Today you may be able to make a fortune with 4-5 solid & build up affiliate offers, 3 years from now you’re probably going to need 10-12 strong offers going to make the same net profit.
The bottom line is if you don’t launch affiliate offers FASTER than your existing affiliate offers are losing profitability, you’re in trouble.
Before you panic, here’s steps you can take to assure long term profitability of your business:
- For most of you out there you’ve BARELY touched the surface of the niches you’re currently in. If this is the case, you need to get busy optimizing and expanding your current campaigns. Split test your landing pages, do keyword research, test new adcopy, etc, etc. The more optimized and build up your campaigns are, the more long term & stable your profits will be.
- If you’re already having great success with affiliate marketing you need to start thinking about how you’re going to build a team and turn your one man show into a real company. With a team you’ll be able to launch, optimize, and build up more affiliate offers, at a faster rate. This way your companies bottom line continues to grow, even as your profit margins continue to shrink and more competition enters your markets.
Remember the average business in America has a profit margin of about 10%, expect that to be the case with affiliate marketing 5 years down the road from today.
Are you prepared for the future of affiliate marketing?
Stay Tune for Part II where I talk about My Conversation with Jeremy Palmer!
Posted in Google™ AdWords, PPC Marketing, Super Affiliate Mindset | 
Great post, although I 100% disagree that all we have to look forward to are 10% margins in the future. There is just so much a savvy affiliate can do … more/better testing and tweaking, more creativity, etc. I would bet any amount of money that savvy affiliates will still be able to generate 20-40% returns on a large scale, even 5 years from now. You really disagree?
Hi Patrick,
I hope you’re right
I imagine the business model will evolve over the next five years. 10% margins is only a guess.
Really savvy and smart affiliate will always be able to achieve higher margins.
The competition will increase, but so will the NET AMOUNT of internet sales.
The rules will change, but the game wont.
Competition is a tenet of the marketplace…Get used to it.
A plasma TV that cost $10,000 just a few years ago, costs $1,000 now. It’s the same case with laptops, game consoles, any product which can be commoditized.
During the infancy of adsense publishing and affiliate marketing, bidding on broad terms, putting junk on a page would still get you conversions, something at the super affiliate level, even if you put junk/spam on a page.
As consumers/leads/customers get educated and smarter this tactic doesn’t work obviously.
So ’stupid tactics’ won’t work.
On the other hand, smart, educated customers are willing to pay a premium for quality stuff, look at the limited edition iPods or iPhones which costs twice as much as similar cell phones.
If you look at affiliate offers, payouts have gone from $0.50, $1, $2, or maybe $5 a lead to $100 or $200 for some offers.
It’s a sign of a growing market, and if you’re not continuing to upgrade yourself, whether it’s through products like PPC Classroom, or spending time on improving your mind to up your game, you could very well go the way of the dinosaurs.
I was relying on one of my first and my main ppc offer for the past two months. Unfortunately this offer keeps being pulled for tracking issues. I’m told its fixed and should be fine now, but my revenue numbers were much lower than they could have been.
My target for october is to launch at least 5 new ppc campaigns per week. Weed out what works and what not, then pour in money to bring in some nice numbers. Repeat the process and cash in.
Hey Amit,
Where would you say AM is these days? At what profit margin?
Wee,stop promoting PPC Classroom in your posts. Getting tiresome now-some points in your comment make sense.
After a while of heavy marketing, I agree to let it sit on autopilot after showing it’s potential. I also would update it about4-5 times a month with more marketing to ensure it’s success.
Hi Chris,
I would say the average affiliate has an ROI of about 50% these days (base on talking to many affiliates). My ROI is between 90-100%.
I find a lot of affiliates don’t properly optimize their campaigns, as a results they get a much lower ROI.
Interesting post, but a rather shallow analysis of how to succeed in such a climate. There are a lot more possibilities than just settling for razor-thin margins and becoming PPC day-traders:
. In super-competitive markets like mortgages some affs are advertising in newspapers, which gets better ROI than paying Google;
. Some affs may settle to break even or lose on the initial offer in favor of building a list and making it back on the back end;
. I’ve seen some make the jump from PPC to SEO’d sites, though that will also get more competitive over time;
. The content network is an underutilized resource, for those that understand how to get results from it;
. There’s Authority sites and how to leverage Web 2.0 to get traffic without going near search engines or PPC.
Hi Walter,
Great points! I’m already using (or plan to use) several of the strategies that you mention.
But my point is that no matter what strategy you’re using (unless it’s super innovative) is going to face more and more competition.
For example, some affiliates are making a killing making viral facebook apps embedded with affiliate offers. However, a year from how it’s going to be much harder to succeed with that model as more and more competitors flood facebook with aps.
You are quite right. But if you think this is tough, you ought to try commodities trading! The prospect of easy money attracts players, which dilutes the opportunity. You won’t have to be super innovative, just more innovative than average. It reminds me of a joke.
Two hikers are headed into grizzly bear country, when one of them pauses to exchange his boots for running shoes. The other hiker says, “What are you doing that for, you can’t run faster than a grizzly.”
The first one says, “I don’t have to run faster than a grizzly, I just have to run faster than you!”
Take care,
AM is no different than the other direct response marketing mediums. Look at mail order DRTV (infomercials, etc) all of them have become more competitive. Thats OK. I think one of the best things to do as you grow in your expertise, especially along a niche, is to think beyond the traditional AM model. Could you:
1) take the offer to tv, radio, or mail?
2) create or license your own product that you could use as an upsell?
3) capture the email before a customer goes onto the offer with a free give away, and get into the list building business?
4) look to new venues - what are you doing with mobile ads in our business?
At the end of the day, AM is still marketing - getting people to buy through a combination of media. Stay open to the possibilities!
Amit,
I plan on writing some software in the future for the api that google supports, but right now I’m trying to figure out what works then I’ll automate the process something like that :).