Ask HN: Is it wise to use affiliate marketers to promote a startup? | Hacker News Reader

Ask HN: Is it wise to use affiliate marketers to promote a startup?

6 pointssrgseg9 comments

We've been developing some educational video products with a reputable author which we are planning to promote through Adwords.

We've been approached by a friend of a friend who claims to be able to use his contacts in the "affiliate" and "super affiliate" world to drive sales of our product. They were saying the product would be sold through Clickbank.

They've made wild claims, such as the possibilities of making tens of thousands of dollars in pure profit in just the first few weeks. This will apparently happen when the affiliates they have "relationships" with send out the offer to members of their mailing lists.

It sounds like we'll have no control over what the affiliates will do to drive traffic, which is extremely worrying.

They also warned that we might want to sell it under a second brand name, because some affiliates will create websites with titles such as "Is [product/author] a scam?" in order to get people to click their search result link. This page will apparently actually commend the product and then earn affiliate commission if anyone clicks to buy.

We'd hope they have legitimately aquired opt-in mailing lists to promote our offer to, but we simply won't know. I've seen lots of big brands such as 1-800-flowers use affiliates heavily to drive their promotions. Perhaps those big brands are only making affiliate deals in an extremely quality controlled manner, rather than opening it up to any affiliate that is interested?

They are willing to arrange this for us for free and share 50/50 in the upside with us, so at least that tells us they have some genuine intention of getting us real sales.

Is our caution misplaced? Could anyone share their experiences with using affiliates please?

Hi.

Yes, you can make loads of money through this method. I once launched a product and did $300K in the first week of sales and created a 10K list, all driven by affiliates, all from scratch, offering 50% commissions to affiliates. I got most of the affiliates myself through networking at marketing conferences and also had an affiliate manager, who helped get more.

Normally an affiliate manager works on a 10% commission, though that is just recruiting and managing affiliates - I don't know what else they are planning to do for you. I question 50%, but if your product needs to be positioned better, sales site done, etc, perhaps it makes sense. If all they are doing is putting you on ClickBank, then you are being hosed. A really good affiliate manager is in high demand.

The "scam marketing" thing is accurate, though 95% of your sales will probably come from the top 20 affiliates, so you can simple work directly with people who are likely to be the op 20 and set your rules and exclude everyone else. You can also make it very clear that if certain rules are broken, commissions will be forfeit.

It's preferable to use your brand name as your affiliates will build it up for you. Good affiliates will provide honest reviews and add value. Bad affiliates will hurt your brand.

Slightly unrelated, udemy.com might be something worth looking into.

Their pitch to us was that if we just placed our site on ClickBank, then it would be ignored due to lack of track record. However, they said their relationships could get us noticed by large affiliates from day one.

Does this sound like they can offer us something far beyond what an 'affiliate manager' would do for a 10% share? They will not be helping us much at all with copywriting/positioning etc. They say most of their value is simply in their relationships.

Is it true we will be mostly ignored if we try and put ourselves on Clickbank without their help?

Do you have any tips on finding an affiliate manager?

Thanks, much appreciated!

I just asked a contact who works at ClickBank. He said it depends on if it is a fairly competitive niche or something less mainstream, and if it is is fairly competitive, it will get lost among all the other products in a big niche, as people only look at the first couple of pages of results when looking for products. The main takeaway is that there is "basically a zero chance it will just get found and picked up by affiliates without an affiliate recruitment strategy."

He also agrees that "someone asking for 50% is WAY too high" (his caps) and agrees that 10% is more like it, though many affiliate managers also look for a flat fee in case the product doesn't take off, so there is that risk to keep in mind - though it still doesn't seem right.

Here's some things to consider:

1) How long do they get 50% of sales? Forever? Do they keep recruiting forever too? Put a time-limit on this, or an income cap so you can build your business later.

2) Make sure that it's a percentage of sales AFTER commissions, not before. So, like 50% of the sale goes to affiliates, 10% to the affiliate manager, 40% to you, out of which you pay processing costs, etc. Perhaps negotiate it to be after costs as well.

Finding an affiliate manager is hard as they are in demand if they are any good. And what you described is the bare minimum job an affiliate manager does for 10%, though if you can't find anyone else, and they make the difference between success and failure, 50% of something is much better than 0% of nothing.

The short answer is you'll need some way of driving traffic and affiliate marketing is an incredible way to do get quality, warm leads delivered to your site in a hurry. However, good affiliates often/should want to know how well your site converts before sending traffic, so they don't waste an opportunity to sell something else to their list or otherwise don't waste their time, which means finding a way to test it first - like as you planned with adwords.

I could go on about the right way to go about things for hours, but hopefully this is somewhat helpful. If you want to find another affiliate manager, network at Internet marketing conferences.

Terminology correction:

This person is a JV Broker, not an Affiliate Manager. An affiliate manager recruits new affiliates, communicates and motivates your current ones, etc. A broker connects you with their network.

Another question to ask, is if they have any success stories that would merit a 50% cut. If they are cutting their teeth on you, you shouldn't be paying premium rates.

Thank you so much for taking the time to educate us on this.

We're going to take your advice and find ourselves a JV broker that can do some quality control and help us safely build our brand.

We're not sure where to find one, and no-one is advertising on google for the term "joint venture broker", but we're hoping if we talk to a few big digital marketing agencies that we can get a connection somehow. We'll also try networking at conferences as you've suggested.

When anyone makes unverifiable marketing claims in an area that you don't know much about, you're probably getting taken. There are so many ways to get taken advantage of by introducing an affiliate program too early. I think you should have your own conversion data or having in house affiliates before you start an affiliate program so you know how much conversions really cost on some channels, the conversion rates, and the converting keywords.

A JV is a term used when you sell your product to someone else's audience (or visa versa). With this arrangement, both of you benefit by profiting from your existing audience, and reaching a new audience cost effectively.

The JV Broker puts these two parties together.

To do this well, you need to either be buddies with someone that has a massive list or have a product and landing page with a proven track record. When someone with an audience is looking around for new products / offers to test out, they're looking for cues on how that product will do with their audience. People with massive lists do not freely offer up their list to anyone. They are usually inundated with offers, so you need to prove your offer will perform first.

You're welcome. Drop some contact info here and I'll get in touch.

Thanks! Please do contact me via srgseg at yahoo.com (temporary address so it doesn't matter if it gets spammed by crawlers)

And you have no control over ClickBank affiliates. Everyone is in. If he has contacts, you might want to run your own program where you can let only the selected contacts in.

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