Top 3 reasons it pays to be a product vendor.
July 28, 2008
Most people who get into business online start off either building web sites for AdSense revenue or being an affiliate of other people’s products. That’s a reasonable way to begin, since there’s less work, less responsibility, and probably most important for people starting out, less risk involved.
But the truth is that there’s simply less earning potential in AdSense sites or being an affiliate when compared to creating and selling your own product online.
There are three major benefits of being a product owner over being the a site publisher or affiliate.
1. More earning ability than affiliate commissions, both initially and after the sale.
As an AdSense publisher, you get paid once when a visitor clicks an ad. As an affiliate, you get paid once when the visitor buys the product you link to. That’s usually where it ends.
As a product owner, you have a lot more opportunities to profit. When a visitor becomes a customer, then you have the most valuable asset any business can have: a customer! It’s ten times easier to sell to a happy customer a second, third and fourth time than to convert a visitor into a customer.
I’ve got customers who’ve told me that they buy my products without even reading the sales page! They buy first and then read over the benefits. “My credit card loves you” was the exact words of a loyal long-time customer of mine.
The obvious financial rewards aside, as a product owner you also have the ability to tweak things about your site to make it convert better – modify headlines, wording in the sales page, incentives, price. As an affiliate you can’t change any of those things about the product you’re trying to sell, even if you have a good idea of what would make the product sell better.
2. Greater growth potential as you recruit affiliates.
As an affiliate or AdSense publisher, you’re limited to your own ability to create growth in your business. It’s usually not cost-effective to have other people do the work for you. For example, you can setup a Pay-Per-Click campaign to sell the products, but you have to pay for every click, which cuts into your profit margin. You can't go out and recruit others to sell the product for you, either.
As an affiliate or publisher you’re usually just a one-man show. As fast as your fingers can type is as fast as you can put up articles or web sites that drive traffic to your affiliate links. There's no way to leverage other people's work.
As a product owner, however, you don’t have these limitations. Beyond sending an email to my list, I do no outside advertising of my products. I know that if I have a good product that it will be found in the PayDotCom or ClickBank marketplace by affiliates eager to sell the product. I know a portion of my my initial customer base will also look into becoming affiliates for the product.
After I create a product I just sit back and let the affiliates do all the work! They run all of the Pay-Per-Click campaigns, they write blog posts and do search engine optimization for their web sites and Squidoo pages, they write articles and reviews and submit them to directories. I don’t have to do any real promotional work at all. In my mind that makes it a lot easier to be a product owner than an affiliate.
Let me give you an example of how much traffic affiliates can drive to your site. For just one of my products, Instant Article Wizard, I had more than 42,000 unique visitors in June of 2008. Of that 42,000, only about 2,500 came from search engines. The rest came from the work done by my affiliates. Searching for the phrase “instant article wizard” in Google returns about 118,000 results – of which only half a dozen or so belong to me.
Do you have any idea what it would cost to drive that kind of traffic with AdWords? Even at only 50 cents a click that’s $21,000 for one month’s worth of traffic! The reality is that you probably couldn't find enough keywords to get that kind of traffic out of PPC, not without paying huge per-click prices.
Even at 50% commission, affiliates are by far the cheapest form of advertising for the volume of traffic you can get from them.
3. The money is in the list.
The third major benefit of being a product owner is that even if the visitor does not buy immediately, you have the chance to get them onto you mailing list with the offer of a free gift or some specialized information. Afterward you can follow up with more teaching and coaching until they reach the point of trust where they’re ready to buy.
As an affiliate, it’s usually a now-or-never deal. Either they convert and make you a few dollars right now, or they’re lost forever. You don’t suffer from this shortcoming as a product owner. You can grow your list and teach them and win their trust over weeks or months, and in time they will help build your bottom line by becoming a customer.
As an example: I have a core set of about 5,000 people on my 50,000+ email list that are my real buyers. They’re the folks who read every email I send, leave comments on my blog posts, and have bought at least some of my products. Every so often a “lurker” on my list – a person who, up until now, has only been feeding off of the information I give out – has enough trust in me to become a member of my core list.
It takes time to build someone up to that point of trust, and affiliates don’t have the luxury of that time. Only product owners do.
So why isn't every one a vendor?
If being a product owner is so great, why isn't everybody a product owner? Because there's more risk in putting time, money and effort into creating a product. If it doesn't take off, you're left holding the bill. As an affiliate, if your efforts don't pay off, you're still holding the bill, it's just usually a lot smaller bill.
Being an affiliate also means less responsibility: no customer support, no follow-ups. You make a few dollars and you go on your merry way.
I think it's a good idea to start off as an affiliate, but you'll hit a ceiling where you won't be able to go any further. When you hit that ceiling, it's time to move on to becoming a product owner.
Please leave your thoughts and questions in a comment below.
Comments
88 Responses to “Top 3 reasons it pays to be a product vendor.”
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Jonathan Leger has been earning his living online full-time since the fall of 2004. He regularly posts advice about search engine optimization (his current passion), AdSense and Internet Marketing. 
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Would this apply to physical products and/or service based products (like widgets or maintenance programs)?
I agree slot I have been doing my own products for a qhisle and started mynaown aft system for those products. It helps to awys grow your list but some people fail at it and it can be techs consumofng at times. I do find sometimes havingnyour own product is more beneficial Than aft marketing and others may think differently
Done on my iPhone sorry for typos
Thank you for this post! It has given me some real points to think about. I wonder whether my desires of a larger income are great enough to take the real risks of responsibility, time, money, and effort. I also wonder if my preparation is good enough at this time? Am I ready?
Jon,
I agree with what you said. I started out that way also. but like you said its are lot of work promoting other people material.
I was using your 3waylinks for my adsense sites, getting decent money from them, but nothing like I wanted. So, I decided to my my own product. For the time being I had to cancel my membership to 3waylinks, in order to use the money to put towards my own product.
I have created an ebook & audio book dealing with health & fitness, which is now complete. Since this is my first product I'm going to be giving away 75% to my affiliates so I can continue to build my list.
You are about 1 of 3 other people information that I actually read. I can usually tell within the first paragraph if it's worth reading. Keep up the good work.
After all the years of spending money I can now start to make it back.
F.Y.I — I will be coming back to 3waylinks soon!
Thanks
Tarron Acuff
Being an affiliate is a good way to make money without the risks and costs involved in being a vendor. Info products and "product launches" frequently give the affiliate at least 50% of the gross and often as much as 75%.
This leaves the affils actually taking home more than the product owner without the overhead. Affils often have good lists, and super affils have good sites. Add in a tiered affil system and you can grab an additional 3-10%.
Most product launches have a short life span. Make a bunch of money in the first two or three weeks and then it slows down to almost nothing. As an affil you can constantly pick up the new launches and products so every week is launch week for something.
Non info product affil sales can be a nice source of very steady income. Match the vendor to your interests and your site and you can build a very loyal customer base.
Why even bother to go PPC? There's so many other ways of driving traffic and sales, especially with some out of the box thinking and a well segmented list. The only limits on affiliate sales are the ones you impose on yourself. Affils have a lot more freedom than a product owner. If the product they're hawking doesn't work with their audience, just switch to something else. No devel time lost, no programmers, vid producers or writers to pay.
Do your own products if this is where your interests and talents lie. But don't say there is a ceiling to affil sales. There isn't if you know your market and how to reach them. Smart affiliates know how to build sites and how to build lists and how to market products that will bring them money from whatever niche(s) they have chosen to pursue.
John,
The benefits to owning your own product are tremendous and i am one person who would love noting ore then to have my own being sold by affiliates. But like you said it all comes down to time and what you can do with it.
I think the biggest detractor is fear, i have a good adsense network built up but am afraid to branch out for fear of it losing traffic if i stop promoting it!
The old rock and hard place!
As a "lurker" reading blog posts for quite some time, I have come to really appreciate your insight, Jon.
I am also a small business owner selling outdoor furniture. You're spot on correct when you talk about vending vs. being an affiliate. I plan on adding affiliates to broaden my reach since my market and site is very niche-y, and I know adding affiliates will add to my visitor and revenue stream. While not software or tech-oriented, what I have to vend can benefit affiliates, too.
Thanks again for cogent, well written thoughts!
Jayson
Jonathan,
I always enjoy your posts. This one is good as well. I make money several different ways online now, but have never created a product of my own yet. I am starting a nich4 site with 5 other jv partners and will be having an affiliate program so we will see how it goes. I am looking forward to it.
Thanks for this artuile you wrote. I am sure it will help quite a few people take the next step themselves.
-Jeff Schuman
Hi Jonathan,
I'm in the process of creating my first product, what I have found is that it is almost more difficult to create the infrastructure (sales page, payment etc) than the product itself…
Of course it's one time investment (in time) because that experience will be useful for all the future products.
I have to heartily disagree as I regularly sit on both sides of the fence. Marketers wish they were product owners, and product owners wish they were marketers.
It all depends on how good you are, and what you have to sell.
Who makes the real money in this world? CEO's or salesmen?
In a lot of places its the salesmen (a.k.a. affiliates).
If you have a killer product, then go for it. If you have a killer sales/affiliate strategy go for it.. If you can do both, perfect.
Ultimately, a great product tends to have more potential than simple affiliate marketing. If you grew into a full fledged marketing agency over time you could quite well too. Good marketing firms make buko-bucks.
Definitely our experience too. It's a lot harder work to have your own product than to just be an affiliate for others.
But no other product said what we wanted to say, so we created our own, and thankfully our customers are very happy as a result.
It's also wonderful to have other people send you their traffic, rather than the other way round!
~ James
While I normally agree with you Jonathan, today I do not.
I think it is virtually impossible to "hit a ceiling where you won't be able to go any further" as an affiliate, as you put it.
With MANY new products appearing everyday that can be promoted as an Affiliate, I find this to be inaccurate.
I agree with this as well…it is part of an evolution.
By beginning as an affiliate you learn the ropes…
and then you graduate (if you want to) to a vendor.
All in all…a much more promising future, than
one as an offline employee…any day!
If you keep talking…I'll keep listening.
Scott
I agree with you. The ultimate goal for anyone serious about having long-term income success using the Internet should be creating their own product or service.
Testing the affiliate marketing waters is a must because you learn so much about this business, but it's like any ordinary job. In the end you are working to make others rich.
I say take advantage of both by building your own list before sending anyone to the affiliate marketing product or service you are recommending and then survey your subscribers and create a product or service based off the majority's response.
Hey Jon,
I really enjoyed reading this article. It confirmed what I had been thinking about for some time. Namely the time has come for me create my own products. I had planned release my first paid product earlier this year, but got sidetracked because of family issues.
I think having my own products, will be great for my affiliate marketing business.
Jonathan you are a good marketin teacher. I believe you have this one right, except in the case where it is desirable to minimize the amount of time to be spent.
Tru Keesey
Disaster Recovery
Who makes the real money in this world? CEO's or salesmen? In a lot of places its the salesmen (a.k.a. affiliates).
I must disagree — not that CEO's make less than salesmen, as I don't know. But I do know that small business owners usually make more than the salesmen. For instance, who earns more, the car dealership or the car salesman? I've talked to car salesmen, and I know the answer is by far the dealership.
Being an affiliate is a good way to make money without the risks and costs involved in being a vendor.
Absolutely.
Info products and "product launches" frequently give the affiliate at least 50% of the gross and often as much as 75%. This leaves the affils actually taking home more than the product owner without the overhead.
Not true. If you have 100 affiliates all selling your product and earning 75%, your 25% cut is vastly greater than one affiliate's 75% cut. If you have thousands of affiliates.. well, the result is obvious.
Let's say you're promoting a $100 product. Your 75% cut is $75. If you make 50 sales that's $3,750. Not bad!
But if I have 100 affiliates who each make 50 sales for me as the product owner, that means I've made 5,000 sales at $25 a piece (my 25%), which is $125,000.
So who's better off?
Affils often have good lists, and super affils have good sites. Add in a tiered affil system and you can grab an additional 3-10%.
That's true, some affiliates do build lists — and that's a great idea. But most don't, and it's a lot harder to establish yourself as an authority if you're not the product creator.
Most product launches have a short life span.
Only if they're poor products. My products have been earning for years.
Non info product affil sales can be a nice source of very steady income. Match the vendor to your interests and your site and you can build a very loyal customer base.
Sure it can! My point is that you're more limited as an affiliate.
Why even bother to go PPC? There's so many other ways of driving traffic and sales, especially with some out of the box thinking and a well segmented list.
Sure you can, but that takes extra skill and time. That skill and time could be put into creating your own product, with the obvious benefits I've outlined in this comment.
Affils have a lot more freedom than a product owner.
Yes, but it comes at the price of having less earning potential.
Yes your own product is very good to have. It would be nice to have my own product which I plan on doing in the future.
Plus is great fron traffic and affiliates do great promotion for you.
Lately, my affiliate sales have been going very well with $500 per day in my sights and my end-of-year goal being $1,000 per day which is pretty damn good in anyones language. However, I am currently involved in 3 projects that I am working on part-time as the vendor. 1 is mine and 2 others are JVs. I'm excited about all and we have October set as launch dates and Yep, I am really looking forward to recruiting affiliates and leveraging off potentially hundreds of other people working at promoting my sites - cool. Making money as an affiliate can be easy but is still a heck of a lot of work and although being a vendor is a huge amount of work to set up and create a product, if the formula is right and the product is good, then it can be incredibly rewarding which is why I'm personally intending on being the vendor in the future. However, as my affiliate sales have become buoyant, I certainly will be continuing to market others as an affiliate and I believe that both avenues are worth investing time and energy in.
Jon,
I love your timing. I have been and still am an affiliate for many business owners, but I have now launched my first online business. Seize Eternity Christian Clothing. I have made more money in the first 2 weeks with my business than I ever made as an affiliate in an entire month.
The other main benefit I have found and I think is way more important than the money is my heart is in the business. I am 10 times more motivated and focused since the buck starts and stops with me. It is exciting and scary at the same time.
Lastly, If you are reading this and are thinking of starting your own online business I strongly suggest learning the ins and outs of doing business online as an affiliate. Once you are able to make consistent sales as an affiliate then start thinking about starting your own.
Your Online Business Buddy
Gilbert
I like this blog and the fact that comments can be left .Could you tell me how you do this please? what is the procedure? is any special code required to achieve this? host?e mail me thank you.
"Not true. If you have 100 affiliates all selling your product and earning 75%, your 25% cut is vastly greater than one affiliate's 75% cut. If you have thousands of affiliates.. well, the result is obvious.
Let's say you're promoting a $100 product. Your 75% cut is $75. If you make 50 sales that's $3,750. Not bad!
But if I have 100 affiliates who each make 50 sales for me as the product owner, that means I've made 5,000 sales at $25 a piece (my 25%), which is $125,000.
So who's better off?"
Let's look at affils from an affil manager standpoint. Only 20% of your affils will make 80% of your sales. So you have a $100 product - you get $25 - and for the sake of this math example we'll even say all your affils are equal and each one sells 10 products.
As the product owner you've sold 1000 products for an income of $25,000
But let's take one of those 20% guys - the super affiliate, the guy who's spent some time learning his craft and honing his skills. He's a little on the lazy side so he only sells to his list once a week, and he takes Christmas week and New Year's week off.
But he sells 10 - $100 products every time he sends out that email. And his cut is $75 per product. He's selling HALF of what you are and working far less yet he is grossing $37,500 while you are making less even though you're selling twice as much.
If your talents and inclination are for product creation, you may do well at it. It is not as easy as the "guru's" try to say it is. You need to know the right people to JV with to get a good launch going, you have to have an extensive skill set and you have to have a lot of luck to do well. You can't just toss it up on Clickbank and think you'll be rolling in money the next month.
And learning more than the intro stuff for being an affiliate can be a great way to make good money. Looking at affiliate sales as merely a way to "learn the ropes" is a disservice to internet marketing. There is no limit on either product development or affiliate sales if, and this is a HUGE if , you take the time to learn your business.
You can be a good affiliate making good money without being a product creator and you can be a good product creator without ever having been an affiliate. Both require only one absolute - know and understand your market.
You hit it right on the head. I have built up a few products over the years but have yet to make any real $$. After reading this it has made me think I am going about it wrong. I try and optimize my sites and try different tricks just to keep spending time and $$. So now Tonight I am going to get my products into click bank and stop working so hard….. Thanks for the wake up..
My experience is telling me that there're not all the marketers can be affiliates or owners, this is the reality, but I think that be the owner its the best and the hard way. As I know 98% of the marketers are not getting success, of course there are many reasons, even when i writing now i talking myself that i need to be a owner or own affiliate program.
The question is are we ready to pay the price?
It's not easy but not impossible, since i started this crazy marketing world i promised to myself that i'll be on the 2%.
Well we read here from a experienced marketer and we need to be open to learn and see what this words means for us. Be the head or the…
Thanks for your wisdom,
Let's look at affils from an affil manager standpoint. Only 20% of your affils will make 80% of your sales…As the product owner you've sold 1000 products for an income of $25,000
The super affiliate, the guy who's spent some time learning his craft and honing his skills…he sells 10 - $100 products every time he sends out that email. And his cut is $75 per product. He's selling HALF of what you are and working far less yet he is grossing $37,500 while you are making less even though you're selling twice as much.
You're assuming that this superaffiliate sends out 1 email per week (taking two weeks off) and earns $37,500. That's great, and certainly easy money for him/her.
But if I'm the product owner, even if my affiliates only sell 100 products a week, I'm still earning $25 x 100 x 52 = $125,000 — 4 times as much as your superaffiliate. And since the affiliates are doing the work, I still get to take my vacations off, too.
You're assuming that I as the vendor will only earn one time — on launch day. That's simply not true. A solid product will earn week after week, year after year. Mine certainly do.
And as of right now, PayDotCom tells me I currently have 15,632 active affiliates who make hundreds of sales a week. Just think about the potential of leveraging all of those affiliates compared to the limited amount of work you can do as a single affiliate, "superaffiliate" or not.
Great article as usual when they are coming from you.
I agree completly with your opinion, even if I just start selling my SEO product last month. The starting effort was so heavy, however I am now surpassing my Adsense earnings.
Even if I wasn't yet been able to start an affiliate team, taking note of the limited number of portuguese language, it is my next goal and I hope in a very short period to have multiplied my income at least 10 times.
Thanks for all your shared ideas.
@Beth, I think your assessment is very good about knowing your market regardless. It does make the assumption that an affiliate seller does take the time to build a list - which has been pointed out as being one of the critical themes in a successful Internet Biz.
Jon's point regarding a product being more profitable also has another angle that might not have been covered - pricing. When you maintain the ability to control pricing you can adjust to the market you understand. If it will bear a premium then your upside becomes that much greater. I personally learned this lesson when selling various products at multiple points of 24, 99, 129 and 399.
I can tell you that the better percentages always lie within the smaller core of your list when you can sell 1,000 of anything at $399! It's a great rush when you do it within a week too. Making the same type of return with a $24 product increases almost exponentially!
One the side of being an affiliate, one of the biggest markets there is, in my opinion, is the "make money online market".
Who isn't interested in making money. However, people like Jon have special skills and interests that lend themselves to creating products for this market. That's where you have to ask yourself serious questions about the market your are catering too. It it's not the making money market then it needs to be pretty big for anything substantial from affiliate stuff (unless you spread across many markets)
From my experience, I'm in a small enough market that my total market may not even exceed 10,000 people I can reach. There is little, if any "affiliate market" and only through producing products can I make a better than decent living. I've been selling one product consistently well since 2004 and it kicks down an extra 50-80K a year with my last effort having been updating it part time (within a month) in 2006.
Admittedly, I've not tried the affiliate route myself and would love to meet people who are doing it effortlessly. Once you put a produt out there, if it's a winner, it just keeps making sales and you don't have to keep the wheel turning to make it happen.
Jon, as far as I've seen, your desire to help others make money is to be highly commended, but I wonder if factoring in talent/ability should be a consideration for this type of topic. Not everyone can make a "make money on the Internet product" Especially if they've not had the experience you've had.
Jonathon,
Great post as always and your points are very valid when it comes to generating vast amounts of wealth from your own product. Personally I feel it's very important for everyone to get started making money online in some less intensive fashion before graduating to the creation of there own product. Once your able to have enough wind at your back financially by all means trade up. I would like to eventually try my hand at being a vendor but that's not before I'm making 6 or 7 figures in other ways online. Product creation takes time and money, if your in need of money now it's definitely not the way to go about it if you or your family is hanging in the balance.
I have a product too. An you are right, my earning from selling product is more than I selling other people product. However, to build own product is not as easy as selling others.
Jon, I've been with you a long time. We've agreed and we've disagreed. I leaped off the high dive early in the game with my own products, and through Clickbank, my own very small group of affiliates. My niche is SO longtail, that the whole affiliate thing didn't take off.
Over the years, lots since 1994! … my primary Internet income has been the Gold Mining Camp Town Store. The one providing services or goods. To the mebbe-not-successful-goldminers. Who still had to eat. From Elance.com (2 rather stellar years, but whoo boy! high stress!) to freelance, to consulting with a few big dawgs. And my share of 'vending' affiliate programs. But the Town Store has been my bread and butter. So, in a way, that is in line with your posting today. Mostly services, it is still my own 'product.' Unlike what you are actually referring to…. it does not grow a list. It does not incur reoccurring income.
So, over the past several months, I've put on the speed to begin creating product. However, these are in very current hot topics with their own sites. And will be marketed through Clickbank and PDC. Again going the affiliate team route! I think you are right on target.
If the Big Dawg wants to keep you as a secret weapon…. there won't be any lists, any growth, any JVs, and not even 'word of mouth.' And when the 'man of my word' results in not being that… then the Town Store really suffers. Won't happen again. I am now gearing up, and have produced three solid months of exactly what you've described here.
And by the way, apart from products I've bought from you (a couple with whipped out credit card, and not more than a quick read on the sales page)…. one of your finest gifts to IM humankind, is…
GIST!!!
Thank you from the bottom of my heart. What an incredible tool. Wish I'd had it in the 10 years in academics, 3 degrees. Whew. I reel and faint, thinking of the HOURS I could have saved!!
Thank you!
Leanne
Hi Jon
Thanks for your valuable thoughts. I have to agree with others who have posted comments here, that you're one of the few internet marketers whose information I actually read, mainly because your stuff actually works and has a good logical, technically sound basis for.
However, regarding your post, I was wondering whether you would like to comment on the value of having master rights to PLR products, as a way of "having your own product" and being a vendor. Wouldn't that take all the work and risk out of product creation and yet give you all the advantages of having an army of affiliates working for you, as well as list building? Can you see any disadvantages with having a PLR product, over creating your own from scratch?
Cheers
LOL ok you don't like that math, I could argue the point and show you that a good affiliate can make more money than a product producer, but let's change to proven facts, not hypotheticals. The most successful people online in the IM world are undeniably the major JV's. They make major money on product launches that are not their own products with their lists. Over and over and over again.
What are JV's? besides major movers and shakers - super affiliates. People who have learned how to sell to their lists, develop those lists, and deliver sales to the vendor from those lists. Everyone wants those guys in on their product launches because they can help make sure the launch is successful.
Everyone wants those guys to keep promoing their product because they are the ones who can really deliver the numbers. And those guys are nothing more and nothing less than top notch affiliates.
There is no ceiling on affiliate earnings. And JV's in the IM world and Super Affiliates in the conventional world are prof of that statement.
GREAT ADVICE!! I started out with aff. marketing — then I created my own product specially designed for a HUGE JV GIVEAWAY event. It was well worth it, I gained hundreds of responsive subscribers and future customers on my list. With creating your own product — You gain a reputation in your 'niche' and also grow your business in leaps and bounds. Thanks again, Jon!
Inspiring post. Creating product is very hard for beginners. Creating product needs skill, market research, hardwork, creativity, passion and much time. But the income result is usually great. We need sophisticated ideas on creating product from Jonathan. Thanks again for good post.
Ardi Panondan
Thanks for your article, very helping me for some idea.
Jon:
I think that, effectively, is a good thing to create and sell your own product. The problem is that not many people know the how. I guess is not easy. Maybe some day I'll learn.
Jesus
i reckon its definitely more rewarding having ur own product..and tt's what all internet marketers shld aim for..
but doing it the first time is always the hardest..and the new challenge is enough reason why most ppl delays the launch of their product and procrastinate.
-thriftsols-
It can take time to create your own original product but, I think it can better to have your own products than be an affiliate. You have more control, more profit & your own affiliates. Being an affiliate can be great too if you choose the winning products to promote.
Good points, but wouldn't it be better to work the 3 together as a whole…. or at least Adsense & Product Development? That way you could investigate the links for the niche target you are attempting to reach (as long as you don't click on your own AdSense links, of course) and keep ahead of the trends by knowing first hand who is setting the trends in the first place.
I agree that creating your own products can be very lucrative.
But I don't think it's so cut-and-dried.
I believe there are people born to market and sell, and there are others born to create good stuff. And they are usually not the same people.
As a vendor, the risk of failure and loss is very real. After putting in all the effort to set up your own product, you still might not make it. A lot of products sold online today leave a lot to be desired in terms of substance and quality. I doubt that these products can continue to sell and churn out profits indefinitely for their creators.
Affiliates have an easier life. If a product does not perform to expectations, then he just drops it and finds other products. And if he puts in the effort to learning the art, he can become a superaffiliate. A superaffiliate, even some normal affiliates, can earn way more than many product owners.
Or look at it another way. If affiliates started creating their own products to sell, they would also be putting in less effort in marketing others' products. And where would product owners be without the affiliates?
As for the 'ceiling' on the affiliate's earnings, I think this is due more to the affiliate's capabilities and resources, rather than due to affiliate selling in and of itself.
This is a true story. A friend, who worked as a salesperson for her company, was drawing a basic salary of $5000 and 10% commission on sales. She was so good that she consistently earned $20,000 plus in commissions alone every month. The next best salesperson was earning about $5000 in commissions per month. Her bosses, including the top man in her regional office, were earning around $15,000 basic salary, with no commissions. In other words, she was earning much more than them. So what did they do? They promoted her to a management position, so her salary became the same as theirs.
If you are really good in something, the sky can be the limit. 'Ceilings' are usually other factors that come into the picture.
The trick is to find out what you are good in.
Yes Jon, i like the phrase:
"They run all of the Pay-Per-Click campaigns, they write blog posts and do search engine optimization for their web sites and Squidoo pages, they write articles.."
Before you sell something, you have to create something!
Andy
I've also been, and still am, on both sides of the fence. My experience is, there is more profit for less work marketing your own product. But it takes a lot of work to create the product, sales page and then make sure it all converts.
To create quick cash flow, affiliate marketing is the way to go. Selling other peoples products is also essential to learn which sales pages convert well and how to market well. Essential knowledge for your own product sales process.
But either way you need to make sure you are building a list, because that's where the money is.
Ian
Being a product owner has it's ups and downs as well, but generally I do agree with you. At the end of the day the person who has his / her own product and database of customers always has the advantage.
i agree jon, with creating product and selling product i think it's more difficult than publisher, we have to learn abd understand how to write salesletter, making landing page, building huge list, how to maximize convertion but if we have that skill selling own product could be more benefit than other program in the internet…anyway thx again for your article
Thanks for a great post, Jon. Yes, while most of us start with someone else's products, the ideal is to develop our own in time. It really isn't that impossible. It can be done and it will pay off big time.
Having been on every side of this particular discussion over the years, in a wide range of markets, some truisms from the pit face:-
1) "20% of your affiliates do 80% of your business"? In non IM markets make that 5% of your affiliates, if that.
2) Customer support is HELL, even with fantastic products, and should never be under-estimated. It is the most appalling time- and life-suck.
3) Most affiliate systems are lousy at tracking reliably and affiliates would be surprised (or perhaps not) by how many sales get 'lost' (i.e. not attributed to the originating affiliate).
4) Product creation and marketing is infinitely more satisfying than selling as an affiliate and definitely more profitable - Jonathan is absolutely spot on there.
5) If it's done right, affiliate selling takes just as much time as selling as a product creator (i.e. not using cookie cutter templates etc.).
Overall, product creation and marketing has it, but thanks be for the legions of affiliates out there - even if most of them are irredemably lazy and fickle (and remain so, no matter how much effort you put into them).
Actually, customer support is money in the bank. Customers tell you exactly what they want and why. What better market research could you ask for than -paying- customers contacting you with hard data on what the market wants?
LOL I was being generous on the 20%. But is it that affils are lazy? Or is it that they have been led to believe it's easy and doesn't require much work - just a "system" that they can buy from somebody?
There are only three things an affiliate needs to know to be successful.
1. How to build a site - templates just don't cut it
2. How to write good copy that sells and makes the search engiens happy
3. How to get traffic
Leave any of these areas unlearned and you wont' be very successful online
Yes there are lazy affiliates, but there are many more with unrealistic expectations and yawning chasms in their knowledge.
You are speaking from your own experience. However, take into account that most people don't start off with the large customer list that you have when they develop their own products, and don't have the ability to attract affiliates as easily as you.
Presuming that you can attract affiliates, having your own product is a good way to go. But if you don't have any list and are an unknown person in the internet world, it is very much harder to find affiliates to help you sell your product, whereas you create your own traffic to sell other people's products.
What I am saying is that it is not always easier to have your own product. If you are able to find affiliates that do what is necessary to sell your product, it is great, but if you don't have any affiliates, you still only profit by the amount of traffic that you are able to drive to your website yourself.
Thanks for the interesting post.
Day Online Trading:
Keep in mind that I didn't always have a large list. It wasn't always easy for me to attract a lot of affiliates. But once I produced a great product, it didn't take long. Things got a lot easier a lot faster once I figured out how to do things right. If you never try, you'll never get to that point.
Having a product doesn't guarantee you'll get affiliates that bring in lots of sales. If you don't have Jonathan's reputation, it may take some real effort to find them and keep them.
Plopping your info product on Clickbank is no guarantee either. Go to CBtrends and check out the pathetic performances of most Clickbank products. It's quite the reality check.
There's more to the learning curve than is revealed in this post.
All the same, it's still an interesting post.
Oops! Day Online Trading already made my point.
One problem I had as a vendor, was when some idiot decided to send out spam promoting my product.
The spam emails all had my (uncloaked) site name on them, and my web host nearly closed my site down.
The only solution was to remove the sales page page from my site, and replace with a page apologizing for the spam .
Marc:
My purpose wasn't to emphasize the difficulties around being a vendor versus being an affiliate, rather, it was to emphasize the advantages of being a vendor.
Of course being a vendor takes more time and effort, and has more risk involved.
As a new vendor it is more difficult to get affiliates, but as time goes by and you build a reputation it gets easier and easier, and you eventually reach the point of "critical mass" where you no longer have to put out any effort yourself on the promotional end beyond emailing your list.
You still can, of course — getting JV partners and recruiting more and more affiliates. I just choose not to do that. I'm in this business to take stress away from my life, not add to it, and so I opt to be happy with what I achieve now without having to put out all of that effort.
My philosophy is this: if you create a great product and get a spark of interest started, the rest will take care of itself. Yes, it will take longer that way, but a great product will almost always succeed.
Jon,
I believe that both sides on this issue are correct. Some people are just not good at creating products. Those that are could go nuts trying to promote other people's products…
Some do not have the background that you do. Software products have a much greater perceived value than e-books so you because of your software development background have a large advantage over most who would create their own product.
A point that I think you missed in your examples of how much income one could expect is that an affiliate can set up many websites promoting products as an affiliate. Over time this could become substantial amount of money.
It is much easier to set up a website to sell other people's products than it is to create a high quality product from scratch.
I do not think that it is a 'one size fits all' thing. I believe that one should go with what suits his/her wants and abilities.
Just my 2cents…
Jim
where can i join as an affiliate to market this product ?…i dont see an affiliate link on instant product workshop
I think it pays to have one's own product. Although it can be a pain in the neck to create a good in demand product, the rewards are definitely worth it. A great advantage is that affiliates will grow your customer list without any extra work on your part.
I believe its the money thing that holds back most (I know it is for me)
Create your own product is another hurdle.Maybe starting with a product you can afford with master rights.
Sometimes I wonder if its just not meant to be that most struggle.
A story:
Farmer watches a little chick breaking out of the egg and feels sorry for it as it is very tired after breaking thru that shell.The next one he takes his pocket knife and helps it to break thur the shell…. a few days laterr it dies.
Struggle can be good.
I just cannot seem to overcome the $$ thing.
Hi Jon,
I'm an avid student and customer of yours and for a while. Considering that I only have spare time at this point I can agree with your position to begin as an affiliate and go from there.
My question is, when do you know you can go to the next level? Is it because you have an idea you think will work or maybe you have outsourced a few tasks over time and understand how to do that without being ripped off (since you will most likely need to do some from what I've learned) or …?
There are so many aspects of producing and releasing a product that even though I've bought courses on it, I still can't grasp it completely or trust myself enough to do what I've learned (I don't have a lot of extra money to risk!)
What are the minimum "capabilities" one should have before attempting to go the product route so as not to lose their investment foolishly?
Note: I understand investing in yourself and your business to make money and I have successfully done so at times in the offline world so I know all business is a risk. What I'm talking about is risking it foolishly because you actually don't have or know what it takes to do what you are setting out to do…hope that makes sense.
Thanks,
Van
No Jonathan!
Perhaps this thinking was relevant, say at the first few years of the Internet marketing… BUT NOT ANYMORE TODAY!
First, all those things you mentioned as 'advantages' for the product owners are now, also POSSIBLE for the smart affiliate marketer with good knowledge of business and marketing:
1) List Building
2) Recurrent commission
3) Special Reports
4) Being seen and regarded as authority in the niche/market
5) Email newsletter to build loyal fans
Today, Jonathan, let me tell you that many of the highest paid internet marketers are not product owners… but AFFILIATE MARKETERS.
You see, there is no use hinging your argument about getting traffic on PPC alone. Now, see this little idea:
Let's take your product your mentioned in your post as an example: Assuming an affiliate create a squeeze page…drive traffic via all manner of sources and build list. Then he, recommended your product (and similar products)… he makes money from you and others in your market. And he can continue to do this, and at the same time, build his list and grow consistently.
Cheers!
YES! I totally agree with you Jonathan. Being an affiliate is only good for the starters BUT eventually you need to own your product to grow your online business.
You can easily own a product even don't need to create it actually.
My site is helping people how to realize it.
Don
As always, you have a great post. I'm one of those affiliate marketers that is still struggling to move forward. I've received a lot of good information from you, and credit you with a lot of the ideas that actually make me money. Thanks for all you give.
Nice posted Jon,
I've been doing what you already told and it worked! Thanks Jon.
Back in th day I had an ebook for ebay sellers and had the same results - hundreds of Cickbank affiliates promoting my book on there web sites….did very well for while.
Product ownership is the key to long term success.
Thanks for creating this posting…gets the brain juices flowing again.
Dave
Yes John, that's why I started to make this site called apmart.com to sell ebay products. But seem like Google is deindexing/punishing eBay affiliate sites.
Am I doing anything wrong here that apmart.com is having PR4 but it's not ranked anywhere for my post titles? For example I can't find my page Used Cars Under $1000 on Google when typing the exact keyword Used Cars Under $1000?
In regards to building lists; I generally agree but I have yet to have much success building a good list. I have found that most of the people signing up for my lists do not convert into sales.
Very interesting subject.
I see from the comments there is some disagreement. I can definitely see where your coming from. If you look at the people who tend to make the most money online, they seem to do both. I think diversification is very important, so i think that's where I'm headed.
I'm still in the adsense sites and affiliate promotion stage, but as soon as i can, i would like to get into the product creation site of things too.
Jayen
Really good article. I think I am in the Stage where I will concentrate on Affiliate Marketing. I think having your own Product can really pay off and put quite lucrative.
In all due respect, I will have to say that there are plenty of Afiliate Marketers I have run across who have built a very substantial Living off an Affiliate Product without any kind ' Ceiling ' to slow them down.
I myself am a product vendor, although I originally made money through AdSense. Selling your own product is so much more fulfilling, not to mention profitable. But it's a harder business to get into than affiliate marketing, which is fortunate, because the more barriers to entry, the better for me!
Jon,
Do you think selling products like e-books are really get me the profit you're telling in this article?
Make Free Money Online:
Oh yes, there's a ceiling. One person can only handle so much of a load by themselves. At some point the curve becomes impossible for one person to grow out of. That doesn't mean that you can't do quite well as an affiliate — of course you can! But there is a ceiling.
Make Money Blogger:
Absolutely. As a personal example, I earned over $25k off of a report I wrote and sold for $7, and it only took me 3 months to do it.
Good information can sell well. Of course, it helps to diversify and have a number of informational products in your product list.
Hi John, this is a very interesting post.
I have a question for you… how did you build your big list? it is really big
Thanks,
Diego
I like JL's website because it has more integrity, and real helpful information, thanks Jonathan.
I have a question if anyone can tell me what is/are the diference between Instant Article Wizard Pro and Instant Article Wizard? Thanks in advance for your answer. I seem to favor the Instant Article Wizard over the Instant Article Wizard Pro, the Instant Article Wizard Pro lists too many references/links of the original text.
Jonathan, I have listened to your audio article(how to write an effective sales letter) was informative and to the point, thanks for your valuable marketing tips. However, I wanted to ask you if someone want launch a new e-book, guide, report, etc but don't have testimonial yet because the product is not tested in that sense. But the fitness training guide has been tested during my long time (more than 8 years) personal training and on myself too. So how do I go about that second point you mentioned PROOF. Thanks a lot.
Moe
You went into quite some detail on this subject, thanks Jonathan.
I think it's best to do all kinds of making money online tasks such as Adsense, affiliate marketing and selling your own products. Then, at least you should have some success in one of these areas rather than being too narrowly focused on one "good idea".
And I do do all these things, but I found product development is tough to get right. Even creating a free report has it's problems where you can make a small error that people pick up on and all you get as feedback is questions and criticism. So you need to be thick skinned and resolute as a product vendor.
Now there is so much high quality information freely available online, it is hard to create a product easily that people will pay good money for. It can be hard to give away a report or eBook to build your list even.
It's one big puzzle and game for many of us.
Yeah, I think being or having your own product can be quite lucrative. I think for right now , though, I will continue being an Affiliate representing others' Products. Maybe in a year or so I might bring some of my own product ideas to light
Hi Jon, Great article! Lots of excellent points.
I reckon reason No. 4 is:
4. When you sell your own products, your affiliates promote YOU as the expert. They work ever so hard to build your authority and establish your credibility.
I'm on both sites of the fence.
As an affiliate, I hired my first full-time employee in 1999 and now have employees and contractors in three countries, and an office I don't go to. It's not the usual pattern, but affiliates CAN grow a decent business and get leverage.
However, I also love being an affiliate merchant. Affiliates are very keen to earn the $248.50 commissions we pay them to promote SpeedPPC.
As an affiliate, I worked for more than a decade to get known and build a reputation. In contrast, as a vendor, if you have a really good product, you can get a heap of excellent testimonials and have people saying wonderful things about you the day you launch your product.
John,
i was always an adsense guy and after reading your post started promoting one of your products and have made a few sales thorugh paydotcom. Its nice to make the same from one sale as i do from a days worth of adsense earnings. I think i may start moving in another direction! Thanks for the motivation
Jon,
Your post was timely and encouraging. I have just finished my first product and am very excited about finally being a product owner.
It is a whole new skill set, and of course there is a learning curve involved. I think if you just take it one day at a time, and one step at a time it is totally worth doing. It can be tough to figure out all the parts and how they go together. However, as an affiliate I have made plenty of relationships with others who know how to do what I need to do. It was easy enough to ask some questions and figure out how to do what I needed to do.
I am looking forward to getting my affiliate program set up and going. I see you use paydotcom AND clickbank, do you have a recommendation for first time product owners, where to go for their first affiliate program?
Thanks,
Jackie
That is some high quality support for becoming a product vendor. I'm more of an information guy myself, but I'm sure I could be much more successful selling things.
I guess, starting from a small one helps a lot. Because of the knowledge and experience you learn from it. Step by step you'll eventually achieve success. Starting as product vendor, you can learn some ideas that helps a lot.
The benefits to owning your own product are tremendous and i am one person who would love noting ore then to have my own being sold by affiliates. But like you said it all comes down to time and what you can do with it.
Building my own product just seems a bit too daunting. Thanks for the post though. I have been quite successful with affiliate promoting so I will keep with that. Domaining is my next hobby. I will work with a limited budget to keep from getting out of control though.
Rick
I think it can be time-consuming to own and sell your own items or ideas, but I believe that it is often better to own your products than to simply be an affiliate. You are given more power over your assets and you control a large percentage of the profit - my wife and I sell outdoor patio furniture and have been able to pay off our remaining student loans with the extra cash we've made.
Hi,
Being an affiliate is a good way to make money without the risks and costs involved in being a vendor. Info products and "product launches" frequently give the affiliate at least 50% of the gross and often as much as 75%.
I agree with everything you said in your post Jon. I've made my web site an online application because there are so many flat, static sites that do nothing but sit there waiting for someone to stumble upon them and then to click on an AdSense ad.
What I've been busy doing is creating software that works through my main site and then giving away that software freely. I can offer both AdSense ads and affiliate programs within my freebie software as well as.. and this is important I think.. software that actually does something people want done!
Product on the market. That's so intriguing.
I wish I could clarify the thought process and move on from "affiliate marketing" to a product that will help grow.
It's an interesting phenomena.
Another factor to consider when you decided to become a vendor is the demand for the product.
If no one is interested in it, you might not be able to make much money.
Nevertheless, like you say, vendor usually earns more.