Thursday, February 8, 2007

Working With Affiliate Programs: Conversion Rates

Gracie answers questions regarding making money with affiliate programs.

Most folks ask the basic question, "How can I make more money from affiliate programs?" The answers are based in several key areas: traffic, audience, encouragement & authenticity. Before we get into those answers, we need to be clear on some basic information first.

One of the most confusing things about affiliate programs is the phrase "conversion rate". Most affiliates do not fully comprehend what this is.

Conversion rates are based on clicks that result in action such as buying a product, signing up for a newsletter or becoming as a member etc. Typically presented in percentages, these rates are determined by the number of sales over the number of clicks sent.

As an affiliate, you are not talking about the number of clicks to that site from yours, but the number of sales you made at that site. In other words, what is the percentage of people you sent via that "Join Now" link who actually joined?

Part of the confusion comes from the fact that many business articles discuss the conversion rates of retailers not affiliates. This article, for example, says that Amazon's conversion rate is 12.8%. Saying that 12.8% of the people at make a purchase is much different than saying that Amazon Associates have a 12.8% conversion rate. That would be an incredible affiliate conversion rate ~ incredible because I don't know of a single affiliate program which can say such a thing credibly. It would be an amazing claim, and likely made up.

The reason that many retailer conversion rates are much higher than affiliate conversion rates is due to branding and site popularity. Plenty of people type in '' in their web browser (or have it bookmarked). These people likely have already decided to make a purchase, or at least are looking to see if a specific work is available. A person at your blog or website who clicks the link to a book or whatnot at Amazon may be mildly curious or politely looking at what you point to, but isn't necessarily interested in buying anything at the moment. Since the traffic you send is likely less interested in making a purchase than the determined person who goes directly to Amazon, you'll have a smaller conversion rate than retailer conversion rates.

These retail rates can be used to evaluate affiliate programs, if one assumes they are honestly reporting them. Sometimes conversion rates, retail or otherwise, are just plain not available. They are part of the vast hidden numbers which lie in the dark inner chambers of webmasters, site owners and other gatekeepers of knowledge.

Internet Retailer has info on affiliate conversion numbers (from 2005) which is clearly mainstream numbers. In reading and talking with adult webmasters, I believe that the average conversion rates for adult affiliate programs fall between .025% to 2% ~ the latter called 'ridiculously high' by some. Don't take my numbers as gospel because, again, the info is heavily guarded and those who have shared their numbers with me did so privately so I won't name names ~ but be it sex toy sales, membership joins, phone sex calls, or video downloads, the numbers for affiliate sales are slim. This doesn't mean you can't make money, it just means you need to rethink your expectations ~ and use this knowledge.

With conversion rates for affiliates relatively low you'll need to pay attention to your traffic ~ even if the conversion rate stays the same increasing eyeballs increases the number of sales. But more than that, you'll need to think about where to place affiliate ads/links, how to make the most of them, and what you can do to be an authority so that your recommendations are trusted.

Next week's newsletter will be all about authority and authenticity, so if you haven't yet subscribed please do so.

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