I wrote a quick blurb on Snowdrop’s website describing the three ways to be successful in affiliate marketing.  Here’s my main point:

Beginner affiliate marketers rarely see high returns in their first few months because they focus too much on increasing sales volume and not enough on decreasing the cost of a lead/action.

I think it boils down to this: because online advertising is so easy to track, analyze, and tweak, it’s insane not to be ridiculously efficient when purchasing a lead.  And that’s what you’re really doing – you spend money on advertising to purchase a lead, and you succeed if the cost of that lead is less than the revenue generated per lead.

That’s why I’m always confused when I hear about companies that have fixed budgets for advertising.  In reality, a business should have a fixed budget for “experimental” advertising, but an unlimited budget for successful advertising.  For example, if every time you handed me $1, I gave you $2 back, would you cap yourself at handing me $100 per day or would you continue to trade me dollars for more dollars ad infinitum?

Can PPC advertisers bid higher than their target and make up the difference in volume?  That was the question.  Now there are many websites that will give short (but still valid and helpful) answers –  and yes, sometimes a quick answer is all you’re after.  However, this article goes beyond a simple answer and actually uses mathematical formulas to prove their argument.

Proof via Logic

I had to post this if only because the nerd in me loved it.

This diagram by Chris Anderson (of The Long Tail fame) illustrates the different business models of free or “freemium” products.  This is one of those things that you think you understand, and something you probably do have knowledge on, but is simply better illustrated in a compact diagram.

The Long Tail – Wired Blogs