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From $50,000/Month To ZERO – The Problem with Affiliate Marketing

written by John Chow on July 3, 2013

The Ultimate Online Profit Model

Most new affiliate marketers getting into the business do what I call hit and run affiliate marketing. It’s the model they’re all familiar with because it’s the one they hear about the most. The hit and run marketing steps goes something like this.

  1. Select an affiliate offer to promote
  2. Send traffic to the landing page with PPC/PPV/CPM/Solo Mailings/Media Buys/Etc.
  3. MAKE MONEY ONLINE!

Some affiliates do very well with this model. Most lose their shirts. One of the few who has been able to make a go of the hit and run model is fellow British Columbian, Tyler Cruz.

Tyler does hit and run affiliate marketing, and he’s very good at it. We have had numerous exchanges on IM where I tell him his type of revenue model is a house of cards that can come tumbling down at anytime because of the inherent flaws in the business model. Those flaws include:

  • The customer doesn’t belong to you.
  • You only get paid once.
  • You have to keep spending money on traffic or the money stops.
  • The advertiser may pull the offer.
  • The advertiser may lower the payout.
  • Google may slap your landing page.
  • Your affiliate network will rip off your campaigns (this happens more than you think).
  • Competition will drive up advertising cost to the point where the campaign is no longer profitable.
  • You can never tell anyone what offers you’re running for fear of them copying you (this is why they try to get you drunk at the Affiliate Summit, so you’ll talk!).
  • You have to constantly hunt for new offers to run because you never know how much “life” your current offers have.
  • I’m sure there’s more, but it’s all I can think of off the top of my head.

Tyler acknowledge these flaws but he doesn’t make changes that could put his business on a more stable footing. And one really can’t blame him when he’s pulling down results like this:

Affiliate Income

As you can see, Tyler was pretty much able to increase his affiliate earnings every single month, and making me look like an idiot. That all came to a screeching halt this month as Tyler came face to face with the problems of hit and run affiliate marketing.

hitandrunmarketing

Tyler now has to start all over again to test and find profitable offers and hope the train stays on its track a little longer this time. I have no doubt he’ll be able to do it, but I also know that I wouldn’t want to use a business model that puts you in a feast or famine lifestyle. I want to live the Dot Com Lifestyle!

Is There A Better Solution?

The number one flaw of affiliate marketing is the customer doesn’t belong to you. When you make an affiliate sales, you get a commission for your efforts. The problem is this commission is all you get. What you don’t get is the customer. He belongs to the guy who paid you the affiliate commission. He will then go and sell additional products to the customer and you won’t see a dime of it, even though you were the one who brought him the customer. If Tyler grossed $607,175.30 in affiliate commissions, imagine how much his advertisers made off those customers! By not owning the customers, Tyler left MILLIONS OF DOLLARS on the table.

Real businesses are built on repeat customers buying more and more stuff from you. How long do you think you can stay in business by using a business model that tells you to spend money on advertising to get a customer for someone else?

The secret to making money online is the big money is not in the first sales. The big money is in the sales after the first sale. The problem for you as an affiliate marketer is you only get paid on the first sale. Have you ever wondered why there are affiliate programs that pay 100% commissions? It’s because they’re making a killing on the backend, which they don’t have to share with their affiliates.

The backend income is the reason why successful affiliate marketers eventually develop their own products for affiliates to sell. My products include IM John Chow, Blogging with John Chow, WP Blog Videos, and Work From No Home. I pay affiliates 50% when they make a sale, and I am happy to do so because the customer belongs to me and I get 100% of the after sales, which is where the real money is.

The problem with creating your own product is it’s very time consuming and expensive. For example, the sales page for Blogging with John Chow cost over $7,000. Then there’s the video production cost, the content creation cost, the affiliate manager, customer support, servers, affiliate software, etc. Unless you have a substantial amount of money to put up, and a well known brandname, you’ll end up losing more money than doing just the affiliate marketing model! So what’s the solution?

My Top Tier Business

My Top Tier Business (MTTB) is a system that I have been testing for Matt Lloyd, founder of My Online Business Empire (MOBE). MTTB combines the low start up cost of affiliate marketing and gives the same benefits of being a product producer by allowing you to own the customer, and earning a commission on every after sale, for life. The result so far has been nothing short of amazing. I think it will become the number one way to make money online.

My Top Tier Business is a 21-step system for making your first $1,000, $3,000, or $5,000 commission online, even if you have no experience with online marketing. In fact, this 21-step program works so well that Matt is willing to give it to you for FREE and personally guarantee that you will make at least $1,000 in commissions within 30 days or he will pay you $500 cash!

earnings

By Application Only

In order to qualify for this over-the-top guarantee, your application needs to be accepted and you need to actually go through and complete each of the 21 steps (all of these steps are simple, easy-to-follow, and can be done in your spare time) and work with your coach. Yes, you get a personal coach for free as well.

To ensure we get high quality applicants, we have put up a $49 application fee (refunded if your application is rejected). If your application is accepted, you will receive the following at no additional charge:

  • The Internet’s only Done For You direct sales system that will deposit $1,000, $3,000, and $5,000 commissions into your back account without you ever having to pick up the phone
  • Personal 1-on-1 coaching with one of my Top Tier Coaches (all of my coaches are 6-figure earners and bona-fide online marketing experts)
  • Daily training lessons, videos, and webinars
  • 21 simple steps to making your first $1,000 online even if you have no computer skills whatsoever
  • Insider access to the most effective sales funnels and best-selling products in the home business niche today
  • The secret “4th ingredient” to my master Sales Formula that can instantly double your income overnight
  • A professional sales staff that will make phone sales for you
  • Done For You product fulfillment, payment processing and customer service (I handle all the “grunt work” for the programs sold to your leads)
  • Access to my traffic-generation team that will get qualified leads for you

mttb2

This offer is being limited to the first 250 applications that are accepted. We have to limit applications because our coaches can only work with a limited number of people at any one time. The sooner your get your application in, the higher the chances that you’ll be accepted, so go apply now.

Click Here To Apply for My Top Tier Business

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{ 57 comments }

Bhanupriya July 3, 2013 at 2:01 am

Let me try your tier business. Hope I’ll be under first 250 applications. Thanks for the share.

IM How To July 5, 2013 at 5:27 pm

I agree with the type of affiliate marketing which can make you rich overnight and VV lol

Glenn Shepherd July 3, 2013 at 2:16 am

Hi John,

Thanks for the informative post. Affiliate marketing certainly has its benefits but, as you’ve pointed out, it has its pitfalls.

I believe that the real money is made when you’re at the stage whereby you have your own, quality products, again as you mentioned. But if you want a ‘best of both worlds’ solution then a system that you can be a part of where you promote someone else’s products but still retain the customer and receive income from the backend sales is definitely a good one.

It sounds like MTTB is an ideal solution and, although this isn’t for me personally right now as I’m already partnered in another similar system, I can certainly testify as to the effectiveness of this type of business model.

After years of trying and failing to make any money online it’s only since becoming part of this type of system that I have made my first ever commissions. Eventually I will scale up and have my own products, but for now I’m finding what I’m a part of to be invaluable.

In addition to having the products and making sales with this type of thing, the other benefit that I believe is truly invaluable is having the backing of a coach/mentor. When you have that kind of support it really helps to take things on to a whole new level.

Great stuff, John, I’m sure that many people will benefit from this.

Kind regards,
Glenn

Rodney July 3, 2013 at 2:32 am

Sounds like a great product! I like the personal guarantee of $500. Signed up, hopefully I get chosen :D

Rodney July 3, 2013 at 6:52 pm

Great! Today, I got chosen (Darwinism natural selection)! Excited to start!

ramm July 4, 2013 at 6:00 am
Sora Daniel July 3, 2013 at 2:33 am

Good Post ! Thank you !

sagbeec July 3, 2013 at 2:34 am

This is we call opportunist!!

Arwin Adriano July 3, 2013 at 3:04 am

Reality bites though I am very happy to see honesty on you John sharing the truth behind affiliate marketing. Most affiliate marketing wont share any story like this just to protect their business system but you are totally different and goes against the wave.

Randell July 3, 2013 at 6:03 am

Hi john,

This was a great post, yet again another informative post. It’s wonderful you give so much information for free, your a champion John.

I personally have not heard of this style of affiliate marketing, well i have but never had a name given to it. I can see why it’s a risky way to run your business, i think you summed it up perfect by saying it puts you in a feast or famine lifestyle, so true.

Thanks again john for another excellent post, i always enjoy getting your emails on new posts like this, it’s always a pleasure.

have a great day john and stay groovy.

Brian Williams July 3, 2013 at 6:28 am

Your assumption of affiliate marketing doesn’t account for guys like me who are a new breed of affiliate marketer. My buyers are subscribed to my YouTube channel. Williamsbrianl That is my list and I can sell to them again.

wsolist July 3, 2013 at 11:49 pm

The money is in the list. Acquiring new customer is getting more expensive so we need to sell them more than once to make money. Thanks for great share.

Andre July 3, 2013 at 6:29 am

Very, Very Informative post JC! This will help me an most importantly the many others who want to expand their knowledge and $ flow. I would like more info on MOBE because I here you talk about it a lot. Thanks.

uzoma eze July 3, 2013 at 6:37 am

I think the real deal is by having your very own product, be it software, hardware of readable stuff, what matters is try to spread out with whatever you have

Great information post though

yangding July 3, 2013 at 6:37 am

It is really inspiring.And I totally agreed with you.Even the advertiser give you 100% commission,he still can make much more money from the follow up product or service.What I do believe is that you can not build your business only depend on others.If others changed their mind,turns you down.You will left nothing but to start all over.Eventually,you will have to build your own product or service if you want to make your business a gold mine.

Thanks again for sharing.

Patty K July 3, 2013 at 8:08 am

Thanks for this important lesson. Can you explain to a newbie (like myself) how all of Tyler’s campaigns just died overnight? I can understand a couple of campaigns expiring — but ALL campaigns? In addition, why would an ad affiliate network rip of one’s campaign? Did Tyler do something unethical? You mentioned that is happens more often than we think. Thanks!

Randell July 3, 2013 at 9:12 am

what a great question id like to know this aswell.

John Chow July 3, 2013 at 10:34 am

All campaigns can die when you only have a handful. The typical affiliate marketing is happy if he find two money making campaigns out of ten. So we’re not talking a huge number when Tyler said all his campaigns died.

Did you know that at my most affiliate network, the biggest affilate is the network itself? Networks has been known to do all kinds of bad things. From “Scrubbing” the leads, under reporting commissions, non payment, to outright stealing a profitable campaign from an affiliate.

Patty K July 3, 2013 at 11:08 am

No, didn’t know networks can turn on affiliates in the way you described.

Can you write a blog post series on what networks do to undermine their affiliates and how affiliates can be proactive about this? It is difficult to ask the right questions and plan proactive strategies when affiliates are unaware that they are being undermined. How does one “un-scrub” the lead to being more aware of commissions?

Thanks!

faisal July 3, 2013 at 9:09 am

I though being a affiliate made you king?

Big Mike July 3, 2013 at 10:23 am

John, while your intention of this post was a good one, and lots of the information was valuable, i also believe it was one sided and a bit misleading. The picture you paint of affiliate marketing, specifically CPA marketing, is one of straight arbitrage, where you buy traffic and send it straight to a CPA offer, and generate a commission, I don’t know how Tyler runs his campaigns, and i think more details are needed. But CPA offers go down all the time, budgets get capped, campaigns get pulled, its a reality of the space.

I would make the argument that most “lose their shirt” in the opportunity your promoting as well, which is just another high ticket direct sales program who’s products are bunch of rehashed info products. Listen, it doesn’t matter what type of “home based biz opp” program you promote, 95% who get involved don’t make a dime, don’t make it sound like your MTTB opportunity is the exception to the rule.

How do you get over the disasters that you outlined in your post. You build sales funnels, and sales processes that you own! You build lists and databases that you own! Funnels that are tested and optimized, built on upsell, cross sell, and back end sales structures. Sending traffic to a CPA offer and making a commission is not a business, its a profit stream. When you own the sales process, you can plug in offers and campaigns at a moments notice, because the process works independant of the offers and campaigns. I build processes based on chosen niches, and rotate a variety of offers, products, services, and campaigns through the sales funnel that i own, so that i can market to my lists over and over again.

There is a right way and a wrong way to do affiliate marketing, and i think in your post you tell a very one sided version of how this business works.

John Chow July 3, 2013 at 10:36 am

I told the affilate model that most are exposed to. The way you do it is the same way I do it. Much more stable and profitable in the long run.

michael baker July 7, 2013 at 1:53 am

What is CPA?
Mike

Colin July 3, 2013 at 10:24 am

In terms of affiliate networking unethical behavior, I believe John is referring to link jacking. People basically steal from you.

That’s the great thing about Network marketing. 100% performance based, residual income not dependant on a “make a sale, wipe you hands clean” type of business model, and having your money working for you. Finding the right industry is huge too, and having a PHYSICAL product backing the business. We all know most e-books aren’t anywhere near as valuable as your email address :). Why not just replace it with a product and take the guseswork out of it?

caralee s July 3, 2013 at 10:44 am

affiliate marketing is a b.i.t.c.h so much competitition i know exactly what this guy went through its happened to me before… its pretty crazythis is why i switched over to do micro/freelance jobs on 5spot.ca

Blaine Bullman July 3, 2013 at 11:19 am

Hey John, this sounds like an awesome opportunity. I’m taking a look at it now.

What would you suggest someone do to prepare to really give this their best effort?

Tyler Cruz July 3, 2013 at 12:17 pm

Hmm… I may just have to do a blog post in response to this… ;)

Much of what John says is true, but he also left out a number of things, such as:

- How often I’ve told him that my campaigns died, only to get things back up (I tend to be a bit dramatic). Just look at the past 6-months of data in the screenshot he posted.

- That not everybody is “John Chow” and can harness a strong brand, authority, and big EXISTING e-mail base. Sure, it’s easy to tell people to just create your own product and pitch it to your lists, but it’s a hell of a lot harder when you’re starting from scratch.

- At the end of the day, I generated over $210,000 in net profit over the past 6 months. My campaigns may have died at the moment, which DOES hurt, but it’s not like I’m exactly starving. I’d much rather make $210,000 in 6 months and then have my campaigns die than make $2,500 per month each month.

- The power of quick money. I totally agree that having a sustaining long-term and dependable source of income is key, but this is EXACTLY what you can do if you make a lot of money quick. With affiliate marketing, you can make millions of dollars with just 1 good year. Even if everything goes down the drain after that year and for some reason you can’t get things going again, you now have good seed money that you can use to buy existing profitable businesses or purchase a bunch of properties to rent out.

- That with affiliate marketing, you can absolutely build an e-mail list of your own. You buy the traffic, and then have them sign up to your list, and then you pass them onto the offer. You can then follow up later with other offers to that list. I personally don’t do this yet, but many guys do.

There are many many pitfalls and downsides to affiliate marketing, there’s no doubt about it. But there are many pros as well which John didn’t include.

Hopefully I can get back on my feet and set new record months just so I can stick out my tongue at John :P It would be interesting to see how my affiliate marketing campaigns fare to his MOBE earnings in 1 year’s time.

Lastly, it is not fair to use me as the only affiliate marketer in this example. I am actually very smalltime compared to many affiliate marketers. For example, I have a friend who does 8 figures a year.

Frank July 3, 2013 at 8:31 pm

Hey Tyler,

Wasn’t really fair of JC to put your business out there on the street, but he does have a point, and it is one that I have pondered over for a long time as an affiliate.

The ‘hit and run’ philosophy is always a short term business proposition. I have proven this in my own business time and time again.

When money was coming in it was great, but when things fall over, then there is always a period of time where you have to get back on your feet again.

This takes time and money.

Which made me think – why put myself through it.

Why not use my affiliate marketing skills to own my customers – as JC puts it. Then you can go deep with sales, instead of trying to get more through the door.

And if your traffic source or offer stops, for whatever reason, then it doesn’t matter because you have your own traffic source – your list.

Anyway, I look forward to you getting back on your feet bro.

Nimrod July 11, 2013 at 2:00 am

I think I’m gonna listen to you Tyler.. but I’ll also build a list nevertheless. I have already experienced the power of having your own list.

I. C. Daniel July 3, 2013 at 1:04 pm

Nice number over there, hope he learned a good lessom out of this.

Best regards from I. C. Daniel

Erwin July 3, 2013 at 1:04 pm

Hi everyone,

you absolutely right John we need do the IM the right way.

And affiliate marketing is an option but not forever. We need to build our list

All the best.

Erwin.

Gugulethu July 3, 2013 at 4:22 pm

Tyler should just write a book about this and I bet it will be a best seller haha… :D

Mandeep singh July 3, 2013 at 10:37 pm

Great post. Its nice to learn about some affiliate marketing techniques.

Vishnu July 4, 2013 at 12:45 am

Thanks for great info.i was just a beginner inspired by your blog.

Nicks July 4, 2013 at 12:47 am

Feeling inspired.
Nice post Tyler.
Affiliate marketing is sometimes feels harder to deal with but, we need to stay aware what we are doing.

Elena July 4, 2013 at 1:41 am

Affiliate marketing isn’t for everyone – that’s for sure! I am not quite ready to join the program right now but I will wait for updates of those who joined – I am sure there will be some :)

lexicool July 4, 2013 at 2:43 am

Affiliate marketing is a long term business!!!

Santhosh July 4, 2013 at 11:14 am

Hi John,
Good article, Every time I am motivated by your blogs. Wait little bit for water to be medium hot or to watch and talk to somebody reached other side of the online ocean(-)

Jason July 4, 2013 at 6:49 pm

“think of how much the advertiser made”….. let me tell you, from the advertiser side of things, I WISH i made 50k a month and didn’t have to worry about chargebacks, mids going down, FTC, FDA and everything else… I know I’m not the only advertiser on the other side of the coin saying this…

Aff’s have it easy bro.

MJ July 4, 2013 at 7:13 pm

Hello John,

This was a great post, however, I was just wondering why wouldn’t Tyler have his own product with the kind of money he’s raking in? I mean affiliate marketing should be a part of your online resume not the complete resume.

The ‘hit and run’ philosophy is always a short term way to make money online but not the ONLY way. Most of us who venture into the affiliate arena should think of it as a learning curve toward building your own brand.

Thanks for the great post John and keep up the good work!!!

MJ

Richard Takemura July 5, 2013 at 9:33 pm

Sounds like a really good product. I’ll be checking it out myself.

Tamal Anwar July 6, 2013 at 7:25 am

I am really excited about this program John but money is not the only thing to WOW at and join. I will need to learn more about this business idea MTTB formula. I got to know Matt Lloyd from you and seems like you are a part of the program too.

I will join this one once I have researched well, this one is for me and for my tribe to make good money online.

shani munna July 8, 2013 at 12:38 pm

thank you

Josh Brancek July 11, 2013 at 6:40 am

Wow John, this looks like a cool opportunity!!!

HCL Delhi July 16, 2013 at 3:40 am

Nice Post
Sounds like a really good product. I’ll be checking it out myself.

Rahul Parashar July 16, 2013 at 6:13 am

I got your email the other day, but presumed that it’s too good to be true and didn’t join, but it’s…………….too compelling to not do so. Alright, I can’t resist no more…………going to jump in.

Soumen Siddhanta July 16, 2013 at 6:28 am

Very good, very informative post and awesome opportunity!

Danbert July 16, 2013 at 6:38 am

Wow! I never thought that this could also happen to big time money makers online. Thanks for this post..learned a lot.

Kunal July 16, 2013 at 6:43 am

Hey John I this is really cool. Based on your video in car you gave to Matt, I have signed up for the program. You don’t say it but you definitely guarantee what you advertise. Thanks MAN!

Wadud July 16, 2013 at 8:11 am

Hi John,

Great post! I agree that the affiliate marketing model is hit or miss and takes a lot of effort and skill to consistently sell other people’s products. Some are really gifted at this but the sad truth is most aren’t and the competition is serious.

Branding yourself and stepping out there with the big doggs is definitely the way to go. You just have to look at the market, dig deep, and think about what it is that YOU have to offer. If the people don’t know you at first, they will soon enough.

Setting up a business plan and sticking to it will definitely prove more beneficial in the long run. And if you make your own products – that do what you say they will do – you will have your own market share and a list you can market to for a long time.

Thanks
Wadud

Norm July 16, 2013 at 9:04 am

You so right about that type of business model. However like anything there is no full proof model. But once you have a good process…milk it as much you can and improve it and continue to plug any holes that potential caused the pitfall. Like you suggest your own list.

Brandon July 16, 2013 at 10:03 am

I will take $250,000 over a six month span any day. If you are able to rinse and repeat this process over and over it’s a no brainer. Trust me, there are CPA guys out there doing double this amount on a monthly basis.

I say keep going Tyler and keep kicking butt man!

Greg De Tisi July 24, 2013 at 10:03 am

We Must Learn To Give Value Where We Can In Order To Get LOyal Subscribers So We Can Then Repeat Sell To Them. This Is Why It Is Imperative That We Follow What We Love To Do As It Is Much Easier To Sell What You Love. My 6 Books And Website Are In The Coaching Niche However I Have Many Products Being Created Within This. DO I Still Use Affiliate Marketing? Of Course! I Have Multiple Streams Of Income As This Is Key And I Only Have Business In What I Love To Do. I Use The Products And If I Don’t I Know That They Are Amazing So I Can Promote Them. Money Comes And Goes But If You Have A Solid Brand And Foundation Then People Come To You And Buy From You Over And Over. It Works For Me And I Totally Recommend It Longterm. Short Term Try This And See If It Works For You It May Be Amazing! :)

Cheers
Greg

aryan July 25, 2013 at 8:23 am

wow its amazing post…..thank you

Mary July 30, 2013 at 8:27 am

i got confused. you mention MTTB is free coaching program, why still want to charge $49 on order page?

John Chow July 30, 2013 at 9:21 am

MTTB is free. The $49 is an application fee to keep out the tire kickers. If you can’t invest $49 in yourself, we don’t want to invest our time in you.

Mary July 30, 2013 at 7:40 pm

besides $49 application fee, how much need we still spend ?thanks.