The first cab off the rank in my top 3 favorite online business models is PPC affiliate marketing. Sometimes called traffic brokering.
The PPC to affiliate marketing game is really pretty simple on the surface. But the devil is in the details.
The basic mechanics of it says you buy traffic for less money that the affiliate commissions that you make from that traffic.
So for example, you send 100 people to an offer and it costs you 20 cents a click (so $20). If the merchant converts at 2% you should end up with two sales. With any luck, the commissions from those two sales pays more than the $20 you spent.
Back in the day, it used to be relatively easy to make this happen. Nowadays, it's a bit more difficult.
There is more competition as well as tighter rules from the PPC companies and affiliate merchants themselves.
Nonetheless, there is a huge upside for folks who can get a handle on the mechanics of the thing and find themselves a few nice niches to work with. Many find themselves making millions of dollars a year.
Most people I know who are very successful have a handful of winners that they dominate. To make the big money, it's about finding a few big winners and tapping into those for everything they are worth.
What are the start up requirements?
Other than knowledge, the start up requirements are really limited. You don't have to have a product, in fact, you don't have to even have a website!
It certainly helps to have at least a few hundred bucks behind you to get up and running. I can almost guarantee you'll lose money at the beginning while you're finding your feet. To get started, it's all about not going too far into the red while you're building and learning.
After you get the basic mechanics of it all, you can invest in products like SpeedPPC for improving your campaign building capabilities, as well as conversion tracking software. Nonetheless, you can do a lot of this manually during your start-up phase.
A good guide is probably the only “must have” requirement when kicking off this business. It's best to learn all you can from others before you learn the hard way (by blowing through lots of clicks you're paying for!)
What is the learning curve like?
The learning curve is not steep, but it takes a long time to become a true master. Depending upon which strategy you follow, there can be a lot to learn.
I think the best strategy when beginning is to find someone who's making money and just copy them. Not only in terms of the strategy, but also in terms of the niche you want to work within. I know it's not creative, but you're less likely to go wrong.
Mistakes in this game cost money (because you pay per click), so following someone else's proven formula is the safest road forward.
What are the risks?
Like most businesses, the risks are simply losing money and time. Unlike doing affiliate marketing through SEO, the traffic does cost money.
Overtime, this has become more competitive and you have to be prepared to move with the times to keep your competitive advantage.
Be warned, the landscape seems to shift very quickly. Some people get rich extremely quickly, while others can have their golden goose start laying rotten eggs almost overnight. The infamous “Google Slap” was an example of one of these unexpected shifts you have to deal with.
What is the potential?
Because you can control the flow of traffic, there is potential to get wealthy very quickly. It's a fast moving game. Once you've got some rhythm, you can move into new niches quickly and roll out highly profitable campaigns within a week. Most other business models have a much longer start up time and have a much slower and steadier growth path. If there was such a things as a “get rich quick” opportunity out there, I guess this would be it.
Who does it suit?
I believe that if you want to succeed in PPC affiliate marketing, you need to have an analytical mind. You'll need to be happy working with numbers. At the end of the day, that's what it's all about. It's about buying traffic for the best price, converting the visitors at the right rates and getting paid enough money. It's a balancing act. So if you're happy to stick your head in a spreadsheet every day if required, then you've probably got what it takes!
However, if you hate the thought of doing even the most basic mathematics, then I'd keep looking.
What do I like about it?
What I love about the PPC affiliate marketing business model is the ability to scale your income very quickly. For most “traditional” SEO based affiliate marketing, it's a slow and steady growth process. Often times you can only compete in the smaller niches, so the traffic is always fairly limited. With PPC affiliate marketing, you can target almost any keyword if you've got the other parts of the puzzle sorted out, like your conversion rates and commission payouts.
I also love it because it's exciting. Things happen quickly and you can see the results of your work overnight. There is always that anticipation of landing that next big fish that will give you another pay rise.
How do I get started?
The best way to get started is to get alongside someone who is already doing well in this business. Ideally you'll find someone to mentor you to success. It will save you making so many mistakes that end up costing money.
If you can't find a mentor, the next best thing is to get yourself a good guide. Surprisingly, there aren't too many really comprehensive guides around. There are a few ebooks on the market, but they don't give the complete picture required to really make it work. The Black Book DVDs ($1197) are excellent, as was Pay Per Click Formula (about $800) but that has been pulled off the market.
The latest one on the market is the new PPC Classroom 2.0 course that launches on the 14th of October, 2008. [UPDATE: Now closed to new members.]
Due to its low price, bang for buck, I believe it's the best PPC affiliate marketing resource out there. It's good to see a product that doesn't hold anything back just because it's cheap. In my opinion, there is no reason why someone with an analytical mind can't take the resources in PPC Classroom and build a big PPC affiliate business.
In summary, if you're an analytical person who is interested in a moderately risky (but exciting) business with a high reward potential, then the next step should be to get your hands on a comprehensive guide like the Black Book DVDs or PPC Classroom. Learn everything you can, then dip your toe in and earn your stripes.
If you're not suited to the analytical stuff so much, I'd give it a miss and check out my other two favorite online business models that I'll discuss in the next two weeks.[UPDATE: PPC Classroom is closed to new students. Here's another very good PPC education option, which is free and is REAL education. It's by a trusted name in the industry, Perry Marshall, who's THE expert on AdWords. 5 Days to Success With Google AdWords is a 5-day free email course. Perry tells you things like how to consistently pay less for Google traffic, how to make money with affiliate programs, and he shares a strategy that reduces your risk while increasing your profit. Make sure you download his Google AdWords Cheat Sheet. Highly recommended.]