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Affiliate Marketing Success Story
Jeff Ostroff, whose main website gets 10,000 to 15,000 visitors a day, was on his honeymoon in St Lucia 1996 when he got the idea for his first site.
"I thought it would be neat to create a website with photos I took for my family to see online so I would not have to make copies for everyone," he says. "I knew nothing about domain names or how to get a '.com' name."
His ISP provided the web hosting. It wasn't until 1998 that he bought the domain name BridalTips.com.
"I grew BridalTips.com with advice for other brides and grooms because I saw so many scams, and nickel and dime fees in the wedding industry, and vendors who make brides feel like dirt for not buying this or that," he says.
"I started to get a lot of positive response from couples going through the same problems we had, and added sections on DJs, photographers, limos, bridal registry scams, bridal shop scams. Then the idea hit me like a ton of bricks! The Internet is a pretty powerful medium to get your message out to people. It was time for me to start warning the world about crooked car dealer scams based on my past experiences with GM."
So his main money earner, CarBuyingTips.com, was born. He's been running it since 1997.
The site gives free advice on buying new cars, used cars, auto leasing and avoiding car buying scams.
"We hate to see you scammed by some of the morally challenged, so enjoy this politically incorrect site that dealer lawyers tried to shut down," the site tells visitors.
When I first interviewed Jeff in 2000 he had already set up ConsumerNet, created a bunch of consumer advice sites, and built a reputation as a consumer advocate.
He was also the top affiliate, or a top 10 affiliate, in several affiliate programs.
Co-workers became business partners
In 2003, Jeff and two of his co-workers, who choose to stay anonymous, quit their well paid jobs at Motorola to concentrate on the ConsumerNet websites.
"Two of us are electrical engineers, and the third partner is a software engineer. We all learned HTML just by working with it, trial and error," Jeff says.
Now, eight years later, the partnership is still going strong.
ConsumerNet's four biggest sites are CarBuyingTips.com, BridalTips.com, HouseBuyingTips.com and Debtwizards.com.
"We had about 80 domain names at one point, but let many lapse, as we decided we have our hands full... We own some travel related domain names and might do something going forward, or just sell the domain names if the right offer came in."
These days, CarBuyingTips.com receives about 10,000 to 15,000 visitors a day, Jeff says.
The site is very simple. In appearance, it has changed little in the past decade.
Heaps of useful content without hard selling
Where CarBuyingTips.com shines is its content.
Jeff is delightfully outspoken. On the site's main page, he publishes emails from angry car dealers, who write, "Dear Idiot..." (and worse) because they don't like his forthright advice on avoiding car dealer scams and saving money when you buy a car.
If you delve into the site, you'll see that a LOT of work has gone into providing hundreds of pages of free advice on topics such as teaching you how to find dealer cost and get the best price on new cars, with fair dealer profit, negotiating tips, free loan and lease spreadsheets, reviews of the best car buying and car loan sites, loan and lease dilemmas, dealer scams, ads, trade-in value, dealer cost, and buyer's offers.
There's no hard-selling of affiliate products.
Instead, Jeff comes across as a trusted expert who simply tells his readers what they should do, for example, get a credit report.
For example, look at this page...
CarBuyingTips.com Top 10 Car Dealer Scams
It has no banner ads, just heaps of useful advice with the occasional affiliate link woven in only where it's appropriate. It's the kind of writing that wins friends.
"We are very fortunate to have a fiercely loyal word of mouth following," Jeff says.
"We also use natural search results from Google and Yahoo!, plus we use Google AdWords, and Yahoo/Bing. The news website interviews round out the traffic. We are always looking at ways to use social networking sites to our advantage going forward."
Journalists provide free publicity
CarBuyingTips has received fabulous free publicity in a variety of news media, including the New York Times, the Herald Tribune, and Wall Street Journal, Bloomberg, CNN Money, Yahoo Finance, and so on.
"Every single news story and interview you see about us, they find us. I do have many repeat interviews, and freelance writers who liked the information we gave them for their story, so they come back for more when they write a future story for their news website, or another freelance gig they have.
"Never under-estimate the value of getting a free news story about your website. They don't always provide a clickable URL link to you, but they do mention your website name and you can sometimes get some very high quality traffic from them, plus Google considers them more a trusted site than some banner farms, when determining quality of your incoming links."
Jeff says the business is a lot harder and much more competitive than it was in 2000.
"Back then I could easily and rapidly manipulate myself into the top 10 search results in Lycos, Alta Vista, and Excite, the top search engines at the time. More and more 'me too' sites moved into our space, then all those search engines died off after Google burst on to the scene in 1999, plus we are dealing with the 800 pound gorilla Google, who change their algorithm all the time.
"It's feast or famine and it stinks to have most of your eggs coming from one basket, so we work hard to manage that basket."
He fondly remembers the early days of AdWords ...
"Around 2002 or so we started advertising in Google AdWords and it was great at first. As early adopters, we owned it! Then it was not long until everyone jumped on it, and many idiot extended warranty companies were foolishly playing $15 per click. So you pay $1500 to get 100 visitors to your site, and 1% converts to a sale, so each sale costs $1500 in advertising costs!"
Many foolish companies went under playing that game.
Spending tons of money on advertising
"We do still spend tons of money on search engine traffic, only from Google, Yahoo!, Bing. The others don't matter to me, and the quality of traffic falls off like a rock, with the majority of the rest of them being fraudulent pay per click traffic. Google market share is about 84%, Yahoo! is about 7%, Bing is about 3%. The remaining 6% are meaningless and shared among dozens of 'me too' search engines."
Jeff estimates that maybe a quarter of their revenue comes as a result of the advertising they do, but says it's hard to tell for sure.
"Because we don't sell a product, widgets for example, it's hard to track an affiliate sale to a specific pay per click keyword. For example, if I sell blue and red widgets, I would use AdWords to send all searches for blue widgets to my blue widget info page, and the same with red widgets. Then you know for sure which sale came from which AdWords keyword. The problem for us doing an exact tracking, is someone will search new cars, land on our page, but once they click off our site to an affiliate merchant website, we have no tracking over what that specific buyer does.
"All we can do is sort of paddle in the dark, and make sure we spend less on advertising than we make. Over time you can test spending and traffic on certain keywords to see if they are effective. If I double my spending on the keyword 'blue widgets', and double my traffic, am I seeing an increase in sales? If not, drop the spending back down. AdWords is a lot easier for a company which is directly selling a product."
He says they are always experimenting, both as an AdWords advertiser, and as a publisher displaying AdSense ads on their sites.
"The bottom line is Google AdWords only has a click-through of less than 0.5% for most of your ads. After all, as a user of Google, how often do you click on any sponsored ads? We have also found if the AdWords ads appear on any sites other than Google or major sites like CNN, Amazon, etc, then the quality of the traffic is very poor, and loaded with pay per click fraud."
AdSense ads almost hidden away
One thing you'll spot if you study Jeff's sites is that they have fewer AdSense ads than most affiliate sites, and the ads used are sometimes so unobtrusive you'll hardly notice them. Jeff is definitely NOT following AdSense's heat map advice.
"Our income from AdSense is very small actually, and somewhat by choice, as the click-through rate for AdSense is very low."
(Because of the AdSense Terms and Conditions, I can't tell you the click-through rate they achieve with their unobtrusive AdSense ads, but to get a good idea, think EXTREMELY low - and then halve it!)
They earn only about $1000 a month from AdSense.
"Remember that is by choice ... being consumer advocates we have chosen not to sprinkle AdSense ads all over our website.
"We hate how many websites slow down from ads. Have you been on CNN lately? With all those extremely annoying pop-up ads, stretching ads, pay per click ads, it takes often over 30 seconds for CNN to load. We try to work in a few unobtrusive AdSense ads into our site.
"And besides with the small click-through rates you get with AdSense ads, it makes no sense to flood your website with them, when they have such a low rate of return. If they had a 20% click-through, they would be all over my sites!
"Another thing that works against you, ironically, is Google has trashed the rankings of 'Made For Adsense' (MFA) websites. These are all those annoying websites that pop up in a search result that provide zero information to you based on your search term, but they are loaded with AdSense ads like a fishing net. I don't want my sites in any way to look like an MFA site. It's the kiss of death."
Copycats, scrapers and high tech criminals
One of the biggest changes Jeff has seen in the past 11 years is a large increase in competition.
"Every time someone like us paves the way with unique content, others come and try to duplicate our efforts, and ride off our coattails, but with a lot less quality. So we have had very foolish people over the years out-bidding us in AdWords, and losing out in the end because they spent too much. We have also had a problem with many sites copying our content. So we have had over 100 sites shut down.
"There's also the problem of scraper sites, who scrape our entire content, and use it to steal traffic from Google, yet the content is not even anywhere to be found on these MFA websites. They're very high tech criminals who know how to trick Google, feeding the search engine what it wants, without the content actually appearing on the site.
"The biggest issue we face, like everyone else, is falling into the Google algorithm changes, and you have to figure out what to do to crawl yourself back to top 10 listings.
"The economy has been a big issue for us also. When the U.S. economy tanked in 2008, we tanked right along with the auto industry, and many of our affiliate merchants went under. We are only now recovering as an industry in 2011. Some online auto finance affiliate merchants we have are trying to make a comeback. This is why you always keep your eye on the wheel, always make sure you are spending less than you take in, and always have cash reserves for the down times. There will be down times, so if you fail to plan, then you should plan to fail."
Scammers, hackers and liars
"There are a lot of scams out there. First and foremost is pay per click fraud." he says.
"All search engines lie to you and say 'We have the best fraud prevention tools.' That's a lie, because all these Russian, Chinese, European and Canadian scammers and hackers make mincemeat out of their security algorithms. They are so much smarter than the arrogant directors of security at search engines.
"We found over the years that only Google, Yahoo! and Bing have somewhat honest traffic if you get it only from them, and not the affiliates who send them AdSense traffic. I can rest at night knowing that Google is not sitting there clicking on my AdWords links all day long to generate income.
"The rest of the 'me too' search engines all get their traffic from resources that are low quality at best, and fraudulent at the worst. You had better get real good real quick, at determining whether the traffic you are paying for is high quality or not. That's why years ago we quit using FindWhat, 7Search, Kanoodle, etc, because we found almost 100% fraud.
"Think about it, what sites send them high quality legitimate traffic? And Kanoodle flat out refused to refund any money once we sent them proof positive data logs of hundreds of clicks coming from a fraud site over one weekend. Once we dumped all of them, there was no drop in income for us whatsoever, so we knew the search engine quality was not there for us."
What to do when affiliate merchants don't pay
"You'll find many affiliate merchnats that don't like to pay you, or they don't pay on time. Do not give them a long leash on this. If a company fails to pay you, take their links down. Depending on the company and your relationship, this would be by the end of 30 days. This is usually a sign they are in trouble, and if you leave their links up, you'll lose income.
"If they don't pay you by the 30 days, 100% of the time in the past it means they are in trouble, and you keep calling and keep getting lies from them, and no payment and no returned emails or phone calls."
But if a big site like CarBuyingTips removes their links, "Wow! Suddenly we get urgent phone calls from them the next day asking why we removed their links. They are watching their affiliate traffic from us for sure, and you just cut off their revenue stream like a kink in a hose."
Jeff says that often he doesn't put the links back up until the merchant has paid up.
A thinking, testing, brainstorming partnership
"You should also work closely with the affiliate manager from the company to see which banners, for example, have the best click-through, and what offers they are running that might convert more tire kickers into buyers.
"Affiliate marketing is not a just a link relationship, it should be a thinking, testing and brainstorming partnership.
"Watch out for companies who contact you and guarantee you #1 position in Google. Run as fast as you can from them.
"Here's my warning about banner advertising. Websites will call you all day long to advertise on their site. NEVER do run of site banner advertising, where your banner can end up anywhere, usually at the bottom of the page below the fold, where no one ever goes.
"Also all companies lie about click-through rates of banners on their site, so beware before you pay for any banner advertising. Click-through rates on run of site banners are often very, very low, much lower than you ever thought they could be, like 0.003% click through to maybe 0.1% at best.
"AdWords' typical click-through rates for their text based ads might be as good as 1%.
"So if a publisher is trying tell you their banner ads have click-through rates of 2% to 5%, that's a lie for sure and it's off by a factor of 1000! Your budget will not be off by a factor of 10%, or 30%, it will be off by 1000 times or more! All your income assumptions and traffic assumptions will be so far off from your projections. That's devastating. Think about it, how often do you click on a banner? Don't fall into these traps."
The essence of this affiliate marketing success story
I asked Jeff why he's a success while many affiliates are struggling.
"We are doing well because we have the quality where others only have quantity. We have built up our website over 13 years, with thousands of high quality inbound links and we have many repeat car buyers come to CarBuyingTips.com for future purchases.
"I often hear from people who used my site over the years for two or three previous purchases. So many other guys slap two or three useless 'tips' related to car buying on their site, which they just copied from another site anyway, and slap some AdSense ads and a few links up and think they will make a million bucks. This shortcut strategy never works. These me too sites will never get good Google search engine placement, hence no traffic. There's no real reason for anyone to visit their site either.
"Take a look at your site. What reason do people have to visit your site? Is your Internet presence a useful website or a fishing net? You need lots of high quality content, and lots of incoming links from high quality sites."
He says you can attract lots of high quality links only by having a long-term presence as a useful site that others want to link to automatically, or share with their friends on Facebook.
"Keep your incoming links out of banner farm sites, and don't just swap links with any site, only high quality sites," Jeff says.
When I interviewed Jeff back in 2000, I summarized the reasons for his affiliate success...
- He runs an interesting, useful, outspoken site.
- He wins the trust of his visitors.
- He selects programs which match the site's theme.
- He weaves affiliate links into text in appropriate places.
- He buys only carefully targeted advertising.
- He experiments constantly.
- (I should have also said he chooses topics he cares about.)
Eleven years later, he's still doing all those things because they work so well.
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MY COMMENTS: How To Be Like Jeff Ostroff
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