Affiliate marketing is basically selling other peoples stuff and receiving a commission. If I sell your TV for you, you will give me part of the profit as commission for doing that for you.
Affiliate arbitrage is when I advertise to sell your TV for you. So I outlay some cash for ads, find someone to buy your TV, then get the commission minus what I spent on the ads to sell it.
The above example is what is referred to as cost per sale (CPS). I sell something for you, you give me a cut. If I get you a customer lead rather than an actual sale, that is called a cost per lead (CPL), or more so, a cost per action (CPA), as you only needed someone to take an action, such as giving up an email address.
Both have their pros and cons. CPS is more legitimate. You are selling an actual good. Also, more traffic sources allow for this type of selling, so it is easier to run ads for items. The problem with CPS, is usually that the commissions are lower. I believe Amazon’s is 5%, which means if you sell a $100 item on there, you will only get $5. That’s fine if it cost you nothing to make that sale, but if you paid for the sale, you most likely made nothing. There are also things like returns to deal with, which will hurt your overall bottom line. There are items that do pay larger commissions obviously, but competition is usually greater in these areas, so you end up needing to either pay more for your traffic, or have a much more established site in your niche to garner the traffic that would make it profitable enough the continue with.
CPA is often toted as being easier. The target has to do much less in order to get the commission, which can be much lower than CPS. But let’s face it – it’s much easier to get an email address than an actual sale. The issue here, is that there are less traffic sources that will allow these sorts of offers to run. Offers like diet pills, dating, etc. – most of it is junk. So, you have to ask yourself whether or not you are comfortable selling these sorts of offers to people.
For me, I think affiliate marketing on the whole is fine, but I’m not a huge fan of selling crap to people, and it’s just so short term to sell that way. However, I didn’t always feel this way. I was seduced along with many other people to believe that there was easy money to be made in this space. And to be fair, there most likely was. But as competition got harder as more ‘marketers’ entered the space, it became less lucrative. Traffic sources starting to ban this sort of activity everywhere. So now, you had to build a legit site, or keep building ‘slapped together’ thin pages, and run them elsewhere. I expect any super affiliate making a killing doing arbitrage is running their ads in some sort of niche way – whether it is running them in foreign countries, leveraging lesser known traffic sources, or running at very thin margins that most novice marketers wouldn’t be able to sustain (like spending $8,000 to make $10,000 – 20% gain, but do you have a spare $8,000?).
Ads are all over the web, and to be honest, I never click on them, and often think “who does?”. You may have seen an ad of a sexy woman or something, that most likely linked to a dating offer, but it was more just a gimmick to entice you to click. I’m not saying ads don’t work. If none of them did, no one would bother with them, obviously. What I am saying though, is that to compete in an arbitrage capacity, you need real money to test with.
For instance, the only ads I have seen that I would ever consider clicking on, are in Facebook/Instagram, or native ads (the kind of ads that sit at the bottom of articles that look like other news stories). You know the kind. You click on some moronic article in your Facebook feed that takes you to a page about whatever, and at the bottom are the ads, that look like part of the content. Those ads are really expensive to run, so to find something profitable on there, you’d need to spend a few thousand. And that’s just to test them properly. I’m sure there are those that found success spending less, but most newbies wouldn’t want to take the risk.
But something that a lot of affiliates don’t think about, is if they actually get successful doing arbitrage, is it all that great? You get a campaign into profit. Great, so now what? Do you watch it like a hawk until it dies? Do you hustle your ass to get the next one up? I mean, OK, you’re making some money. But anything can happen to your campaign. The offer could disappear. The profit from the offer could die off due to competition. The traffic costs could go way up. The ads could get removed from the traffic source. And on and on. The problem here, is that you are completely relying on third party entities to keep your business running. I met for coffee with a guy who had a successful campaign running at the time. I met him for 45 minutes, and he couldn’t put his phone down the whole time, because he needed to watch his campaign to make sure nothing went off the rails. And what do you do during the daily grind? Deal with that stress day in and day out, knowing that your income could go to zero at any time? Man, if you are in a position do to that, or don’t rely on the income as your main source, then I guess it’s fine to carry on that way. But if it is a part-time venture, then you can’t possibly give it 100% of your effort, so it will never be able to scale to the size you think it could achieve.
The money is in the list is what we keep hearing. Drive traffic to your landing page (more specifically, a squeeze page), and get their email first. In fact, if you don’t do your arbitrage this way, most other affiliates will chastise you for your lack of forward thinking. I won’t disagree with this point. However, now we are talking about more work, right? To do this properly, you need to pick the niche, build the page (or pages), connect it to the email autoresponder, write the email sequence, and insert the affiliate links within that. While it’s true that you can market to that person for free now, you need to put in a considerable amount of time fostering that relationship. I’m not sure how much of this you would be willing to do when just testing a market. But, people do. And it works. But I can’t guarantee that they are delivering a lot of value.
And that is the key word right there. Value. I think the bottom line here, is you need to deliver value. If you aren’t delivering any value, then what the hell are you doing really?
If you aren’t delivering me any value, then I don’t give a shit about your offer. I can be sold, but you need to demonstrate that this is something I actually need. If I am fat, and your diet pills actually work, then you basically need to guarantee that they work (which they obviously won’t). Because if they don’t, I’ll just angrily return them. If everybody does the same thing, how long do you think you will be in business? See, there is no value to this. You are just scamming someone out of their money if you are doing it this way. So, what’s the point? Why bother to even do this?
Just build something legit. Sure, it takes effort. But so what? What is actually wrong with putting forth effort? A lack of immediate return? What good is an immediate return if it is totally temporary and scams people? Dude, there is no real point to it. Just spend your time doing something useful and valuable. Sell shit to people that they actually want. It’s more sustainable, it doesn’t make you feel bad, you can do it for the long term, and it is totally scalable. Stuff like creating a useful blog. The information is there. It’s useful. People will like it.
I am noticing a trend where affiliate arbitrage bloggers are either dialing the affiliate marketing posts way back, or have quit completely. Finch from FinchSells.com has stated that he has stopped promoting affiliate products. That guy is such a gifted writer, I’m not sure why he wasted his time with arbitrage, which he obviously loathes if you read his posts. He could easily create more value though his writing. Hopefully that is what he chooses to do more of in the future.
So, to sum up, I think paid affiliate arbitrage isn’t a great business model – at least not anymore. If you are doing it with success, then that’s awesome. If you read this, and thought “this guy doesn’t have any clue what he is talking about”, you are missing the point. The average person isn’t going to get to your level. The stats are like 5% success rate, while the other 95% get nowhere. This is why.
I’m just saying that there are better ways to make money than this. They just take some effort, and some planning toward the future. Just build something valuable and sustainable. You get to decide on what that is going to be.
Final thought:
Affiliate arbitrage works in a limited capacity from a money making perspective, but won’t offer any value or meaning to your life, and will have a mundane day to day routine attached to it. Might as well do something more interesting and sustainable if you have to put forth the effort and time anyway.