If you haven’t already, read the first part of this Affiliate Bankroll series.
This article is targeted towards the majority of affiliate marketers. I’m sure many affiliates can take something away here, but this article will be more helpful to newbies or those that have been doing this a long time with little success.
The fact of the matter is most people will have to work from one tier to the next. Some will get lucky, but the majority will not. It’s all about managing your cash flow to get to a level where you are making a living, or a fortune.
There have been a few posts in the affiliate marketing space about cash flow. This is pretty much the topic, but no one really goes into too this much detail.
Calculating Risk in Poker and Online Marketing
In poker, every hand you play is a risk. Calculating risk is basically what separates your average poker player from someone who wins often. Some people can estimate the risk while math wizards can calculate to the exact percentage. Either way, calculating the risk is at the core of being a good poker player.
And just like poker, online marketing has risks. Every dollar you spend is a risk. No matter what you spend that dollar on, you will have more long-term success if you know how to reduce risk. It’s hard to pinpoint your risk with online marketing like it is in poker, but one thing you can do is reduce your risk as much as possible.
Reducing Risk
Research, research, research! This is the best way to reduce risk. The web is a big, big place and you can find out a lot of information fairly easily. Whether you are spending money or time – reduce your fucking risk!
For SEO, researching your competition is easy. A simple Google search with one of the many free plugins available for checking competition will tell you if you can actually get traffic for your website to generate revenue. If you spend a month building a high-quality content site and expect the world to show up, you will be in for a rude awakening if you can’t beat your competition with your current skillset. Pick something you can handle from the very beginning.
With PPC, you reduce risk by researching what the successful campaigns are doing in your niche. Keep an eye out on the ads, see which ones are sticking over time. Even better, spend an entire day researching the whole niche start to finish, not just the ads in Google. This allows you to come up with ideas that have a high risk / reward ratio – no one else may be doing it so you implement and if it works you’re ballin’. Another way to reduce risk to ask an experienced affiliate manager on what is working and how it’s working.
For Media Buying, research your targets if you are buying banners on individual sites (Is the traffic there? Is this my demographic?), or ask the people who know what they are doing when you’re going after big media buys.
What if you want to invest in a paid tool, seminar, or paid forum? Once again, research what you are buying. Be careful to not fall for the sales hype that is common to these products and services. Spend a little bit of time researching the people behind it and not dreaming about how much money you can make. Believe it or not, there are some tools, forums and seminars worth buying.
Same thing applies to outsourced labor. Research who you are working with or ask your friends for recommendations. Otherwise you will be going to through foreigner and foreigner on Odesk.
What to do with your Affiliate Bankroll – Tier to Tier
The tiers below refer to monthly revenue, not how much you have in the bank. And we assume you are making some profit from your revenue so you have cash to work with.
Everything I write is a generalization. There are no hard and fast rules here. I am also full of shit.
Under $1,000
If this is your revenue, chances are you are new, or not new and do not know what you are doing. You may not have cash to reinvest, but you have one thing that everyone else has, and that’s time. The options below take time and do not make you a killing, but they work well enough to generate cash flow.
SEO – Search optimization is not a mystery. It’s pretty fucking simple, especially when you have a website with value. Target one keyword, or one niche, and take it over. Spend every hour of every day coming up with delicious content, building links, building relationships with other websites, so on and so forth. Select a niche with at least one offer that you can promote on this site, or learn how to make the most out of Adsense (or similar services)
Leverage High-Traffic Sites – Post on the top forums in your niche, or answer questions on Askville or Yahoo Answers. You can build a ton of backlinks and traffic this way, but you must have a good website to be sending these people to so you have some staying power within these websites. Otherwise, you’re going to get booted off fast for spamming.
Article Marketing – Also known as Bum Marketing. I won’t get into detail because this is pretty straightforward and there is more information out there on the subject than you would ever want to read.
Spam – You have time to learn how to program. When you can automate something to take advantage of an opportunity in a service, you can make money. For example, the automatic Myspace friend-adder from the days of long-ago.
Outsource Yourself – If you have nothing else, outsource yourself. There are a ton of article writers on Wickedfire with great talent that are making much more than $1,000 a month. If you can design or program you can sell these skills too. Obviously you have to always be improving; otherwise people will figure out your services suck and stop using you.
Site Flipping – This tactic has been mentioned on a few forums and books – the information is out there. If you are starting from ground zero, build a site that gets traffic and some revenue and sell it for 8-12x months revenue.
$1,000 – $5,000
Ok, so you’re making a respectable income for most people. Chances are you got to do this level doing at least something mentioned in tier above. Or maybe you’re balling with some Pay Per Clicks?
At this tier, you have some money to spend on scaling. This needs to be dispensable income (% of your bankroll you can afford to lose) because sometimes shit is just not going to work out. You test new traffic and nothing works, or you hire a programmer that is a bum. The idea is to not blow your whole bankroll so you can keep chugging along.
Reinvest in Tools for Automation – If your focus is SEO, you probably know something that can push up your rankings if only you automated it. Spend $1,000 or whatever you need to get these tools built. There are also a few great tools out there pre-built that you can invest in (SENuke, for example for around $150 a month)
Unfortunately there is a lot of shit being sold, so try before you buy. The best solution of course is to pay for what you need done and keep it to yourself. If you are buying someone else’s tools, research is the key to not getting burned.
Scale What’s Working – If you have something that works, try new traffic sources. For PPC, there are a ton of 2nd and 3rd their PPC engines to test out. If you’re SEO, buy links to push up your rankings (touchy subject) or buy banners on popular websites in your niche. At this point you should outsource getting additional articles written (more content = more traffic) and more links built to your website (directory, blog directory, social bookmark submission)
If you’re still fucking around with articles, pay some Indians to write them for $2, then sell them to Associated Content for $4.
Domains – You’re not going to get rich buying a domain that are available to register. All the good domains are taken, and the great ones – forget about it. But you can spend $500-$2,000 on a really good domain. You can flip it for more than you bought it for if you can find the right buyer. That buyer usually won’t be found on a domaining forum. It will usually be an individual or business you have to seek out yourself. Once again, research is key.
$5,000-$20,000
This is actually an important tier because when you generate this much revenue, you can get on weekly payouts from affiliate networks (which usually require $1,000 per week minimum in revenue). This improves your cash flow and allows you to make moves quicker than month to month.
SEO – This may be where many SEO-focused websites reach critical mass. There are only so many visitors you can get via Search for one particular niche. At some point the work you put in will begin yielding fewer results.
If you can keep growing (there is room for more domination), keep growing by adding social features (forums), services (invest in a programmer to build you a service your niche needs. A diet tracker application is an example), or buy out your competition (just straight up offer to buy their website).
And if you have done everything you can do, the obvious option here is to bust out a new website in a new niche. But now you have resources so you can outsource content and traffic generation, making the process much faster than before.
Site Flipping – I have found that it is much easier to take a website getting 300 visitors a day and turning that into 1,000 visitors a day fairly quickly then it is to grow a brand new site from 0 to 300 visitors.
There are plenty of opportunities in this space. People may have spent the past 3 years of their lives working on a website in their spare time that never made them any money, but they had fun doing it. Then they realized they can sell their website for a few thousands bucks to pay some bills.
Here’s where a savvy marketer like you comes in. You buy the website because you see it can be worth a lot more with some simple changes at first, then a little bit of elbow grease. Whether it is adding banners in the right places, adding great content, building links, or all of the above – there is value in what you know and they don’t.
Paid Traffic Channels – If you’ve gotten to this level with paid traffic, then chances are you already know what you’re doing. Just scale the motherfucker! 
The problem with most advice regarding paid traffic is the lack of disclosure on how much money you really need. If you want to make a traffic source work for you, you need a lot of cash on hand. Statistical relevance does not come from 17 clicks a day.
Whether it’s PPC, PPV, or Media Buying, you need an ample amount of cash to burn. You need variations of your ads, landing pages, and offers ready on day one when you pay for the traffic. Once you find winners, you need new variations ready immediately to find further improvement.
Testing all of these variables means you need statistical relevance to find success, and the only way to get statistical relevance is more traffic. That traffic costs money.
And there is the chance a niche or traffic source will completely blow for what you are doing. A lot of people won’t stop until they make it work, but if you can’t make it work at some point, you’re going to start over.
Domains – Same rules apply, but the quality of domains you can buy greatly improve. There should be some good deals these days on high-quality domains as domainers are selling off their inventory in droves as revenues decline and the economy goes into the shitter.
$20,000 – $100,000
You are unofficially at ‘super affiliate’ status. Good for you. What the fuck do you want? A plaque to put on your desk and a pat on the ass?
You can apply everything already mentioned on a larger scale. Instead of testing one traffic source, you can test 5 at once. Instead of buying a $2,000 website to flip, you can buy a $20,000 website. Instead of one good domain, you buy a premium (great) domain and have the resources available to build a long-term website that will generate revenue forever – never fearing the Google / Facebook / Ex-girlfriend slap (You can finally buy that bitch some shoes!)
$100,000 +
If you made it this far, there is little barman can tell you. But I will write some shit out anyway.
Affiliate Product Development – You can start your own product that affiliates like to push. A few big affiliates have gone this route if you haven’t noticed. If you are at this level, you understand how affiliate marketing works and you have the relationships to make your product work.
You Own Product Development and Marketing – You do not necessarily need to come out with a credit report offer or colon cleanse rebill. There so many opportunities in creating your own offer. It really is limitless. You can find dropshipping for a product no one else is selling, or maybe find someone local that needs their product rolled out on a world-wide scale.
And you do not necessarily need a ton of money to do this. You can start small for a few grand and re-invest as you generate more revenue.
You don’t need a physical product either. Facebook apps can make a killing. Services that can be sold by the box or through a subscription service are needed in every niche.
Start a Network – Instead of developing a product, you can of course, start a network. Obviously you need more than $100k on hand to do this. You also need real experience in the industry and business know-how to run a successful affiliate company. It’s not for everyone, and it is not mandatory once you reach a certain level. Just know that there are a handful of affiliate networks started by affiliates that are very successful and continue to grow.
Of course, many will test their luck just because they think it’s where all the money is. After a few months these networks fall apart, fail to pay, and generally catch an ass-whooping on affiliate forums.
What Did You Learn?
If there is any lesson you can take away from this post, it is to stop having delusions of grandeur. Stop falling for marketing tactics for guru-products where the headline reads “I made $51,012.92 this month doing nothing.” Stop motivating yourself with money.
Broke newbies fall for this shit because they think they can go from $0 to infinity by just buying this one product. But they ignore the time and money spent in-between, and don’t realize the hard long hours needed, and the experience (something you can’t buy) gained from failure.
Focus on one thing until you master it. Stop moving from idea to idea if you’re wondering why you’re not getting anywhere. When you master it, the money comes easier.
The next thing is taking care of your bankroll. Don’t drop 5 figures on a car if that’s all you have left. You can only take advantage of the opportunities out there when you have the cash to do it with. It’s easier to turn $10K into $20K then it is to make $10K starting with nothing.
And the last thing to take away is to know that there is opportunity everywhere. I only discussed a few of the most popular ways to make money online. Like I’ve said before, “there’s more than one way to fuck a fat bitch!”
For example, I see Facebook ads running for a seminar in my city. The ad is targeting business owners looking to grow their business with e-commerce. So you fill up your seminar with businesses eager to grow, convince them that the only way to grow is to spend money with you, then get them to buy your e-commerce solutions. Skadoosh!
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