Big fish in little pond or little fish in big pond?
There was a thread on the A4U Forum recently where someone asked the rather pointless question, “how much do 1-man affiliates make”? I say it’s pointless because well, it is. It can be answered in about a million different ways and no matter what the answer is, its essentially meaningless. Instead of worrying what others make it’s far more important to worry about what you want to make and setting yourself a few goals in order to get there.
Anyway, the thread did throw up one bit of feedback which is a common mistake that I see a lot of other affiliates make. Here’s the part I am referring to:
“The interesting one is car insurance where we’ve got 25mln cars on the road, so that’s around 2mln insurance renewals a month, which have to be bought. 2000 is only 0.1% of that 2mln. Easy peasy.”
The author is assuming that because there is a massive market in the UK for car insurance then by only grabbing a tiny slice of the pie, he will earn £100k a year. If only it were that easy. BTW I haven’t fact checked the author’s figures on car usage in the UK but that’s by the by.
The point of this post is that just because there is a massive market for something, it doesn’t necessarily mean that it’s going to be easy to grab a share for yourself. Car insurance for example has to be one of the most saturated and competitive markets online ever. I know for a fact that the big car insurance comparison sites spend an absolute fortune on SEO for example, as well as having their own full time in-house staff too. Then there’s PPC costs, “car insurance” on it’s own is anywhere from £15 to £50 a click to get anywhere decent. Sure there are lots and lots of long tail keywords cheaper but with everyone and their dog targeting this sector I’ll be surprised if anyone unearthed any cheap ones. So as well as spending hundreds of thousands pounds online every year these guys spend even more in their offline advertising. I don’t know about you but I’m sick of seeing ads on TV for GoCompare, MoneySupermarket, Confused.com and so on.
Then of course there are the car insurance companies themselves, I’m talking about Direct Line, Churchill, Tesco etc. These guys are all chasing traffic too and it’s absolutely fierce out there.
Seriously, why bother even trying to crack a market like this? You’ll never get anywhere. It reminds me of a couple of years ago when people were still trying to set their own auction sites up to try to compete with eBay. I mean why bother? You’re never going to topple that particular giant. They were full of fire and brimstone though and insisted that they would take some of the beast eBay’s market share. Where are they now?
Likewise I see cashback sites springing up every week, literally. Again why bother? The market is dominated by Quidco and a handful of others, you’re never going to be able to compete. I’m seeing discount code sites heading pretty much the same way too. At the moment there are about 4 or 5 that dominate and maybe another 10 or so that do reasonably well. Again, why follow the crowd?
In order to have any chance of success online you either need to have some kind of killer app, i.e the next Facebook (not a clone) or you need to target the less saturated markets. 10 years ago or so I put up a page that compared broadband prices, at the time it was the first and the only broadband comparison site out there. I cleaned up. I made a silly amount of money as I was first to market. However you need to adapt and when the market became too crowded a couple of years ago I bowed out. It just didn’t make sense to operate in a sector where people like AOL, Virgin and Sky etc, were diverting millions of pounds of ad budget into PPC.
I guess what I’m trying to say that just because a niche/sector offers high CPA’s and at first glance is huge, don’t forget to look at the competition first. Do an analysis of the sites that operate in this sector. Can you match their budgets for PPC/SEO etc? Do you have a unique and fresh angle for your site that they have missed? Is your site better in any way (ask someone who is objective)? Can you create a better experience for the end user than your competitors? If the honest answer to any of those questions is “no” then don’t bother, do something else.
In 2009 I would love to see affiliates going the less obvious route. I don’t want to see any more cashback, discount codes or financial comparison sites. Instead lets see some creative thinking and some of the lesser niches exploited.
What I’m listening to right now: The Foreign Exchange Feat Muhsinah – “Something To Behold”
Sunday, January 4th, 2009 at 2:46 pm and is filed under Affiliate Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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Welcome to my blog. My name is Kieron Donoghue and I am the founder of ShareMyPlaylists.com, ContentNow.co.uk and some other businesses. I thought it would be fun to blog, writing about my experiences in Internet Marketing. I'll include some personal stuff too, probably about my other passions, music and cars. Please feel free to post your comments and thoughts too.
There are plenty of ways into the insurance market
Reminders services
Social networks for car owners
Facebook apps for car owners
iPhone apps for motorists
Car geek accessories blog
Special niche focus such as insurance for amateur motorsport when applied to any of the above
Advertising within frequently used offline items
That being said, I prefer other niches
Andy - agreed but the big players in this market are already using some of these methods. It’s amazing the reach some of these guys have. Good ideas though, and as I said in my post it’s not impossible, just very difficult to crack this market.
I’m new to affiliate marketing myself but even I get sick of those questions, like ‘how much can I expect to earn?’, ‘what/how many cars do you drive?’, etc,.
It’s almost like people are trying to weigh up the rewards vs the effort before they’ve even tried, when the reality is everyone has their own approach and quite rightly keep their playing cards hidden.
I do think such markets are saturated but there is always a niche somewhere as Andy pointed out. When companies go giant they’ll throw their money at targetting the general populous rather than spend it going after the minority, which is fine by me.
The adverts also get right on my t*ts.
Kieron - what about a comparison site that compares the big 4 comparison sites. It could be called comparethecomparisons.com - surely a potential niche?
Putting the efforts to less saturated markets is also not easy. there is lots of competition in the market from car insurance to social networking deals. No one is quite easy to chase.
I agree. Too many people that are entering the affiliate market for the first time make the same mistake of thinking that they are the first to have the idea. Taking time to research who is already doing those sites will save them hours of time and perhaps tons of money. The first thing I do before I even buy a domain is to search for the keyword in G and see who comes up for both natural and PCC. This gives me a very quick and superficial view. If I see some big names, I think ‘are they beatable?’ on this term. Sometimes they are.
It’s not only what type of site you make, for example a discount code site, just doesnt have to be another discount code site.
It’s how you market it… what about a discount code site marketed to students? You could have flyers put in the universities and colleges and do a lot of offline guerella style advertizing…
what about a discount code site aimed at pensioners…women…
If you’ve got ideas, promotions will allow you, or anyone to create a discount code site, for free
Lol Doug (free discount code sites) you never miss an opportunity do you?
Woops, as the author of the ‘have a go at the insurance market’ post I thought I’d better chip in. Actually I started the post in a sceptical mindset looking at how many gift days etc. you would have to sell to get to £100,000 a month profit a month. Looking at CD’s was even more off-putting, or for that matter most other things.
I was going along the same vein with the insurance numbers - they impress a lot of folks I guess - a piece of that sounds nice until you see how much competition there is.
Unfortunately my ‘easy-peasy’ comment was subtley sarcastic - actually so subtle that now I’ve re-read it, its not sarcastic at all !! Never mind. Interesting debate anyway.
I’ve never had any urge to try the insurance market, although oddly enough, after thinking about the 0.1%, I’ve got some vague curiosity about whether a small enough niche would make it possible. However, imo the key thing is now that the public have been ‘trained’ to do price comparison using one of the main sites, so you might not ever get a single commission. They’d look at your site and then head off to give the cookie to a PC site.
Nice thing about affiliate marketing is that it is actually possible to get a small slice of a very big market, which turns out not to be that small after all.
(By the way, I think it is possible to compete with ebay as long as you don’t do an auction site. There are plenty of folks who can’t stand ebay. Even if thats only 5% of the population, that’s a lot of people who want to buy and sell stuff).
Bob.
Agreed.
I’m programmer turned affiliate marketer. I’ve been attacking affiliate marketing thing firmly with my Unique Selling Positioning in mind. How I can be different.
I have been coding a slick PPC tool which I believe will make me a huge profit. Once this has worked, I hope to get into Facebook/iPhone once I have staff to leverage.
Nice post Kieron. So what are you working on at the moment?
Zac
Spot on Kieron and HNY to you while I’m here. OTOH I quite like people chasing the impossible dream, especially if it keeps them off my patch(es).
Last year we had a glut of new affiliates just reinventing the wheel, all set on cracking existing sectors that in some cases had been established for years. The PR companies were happy to take their press releases of course, no matter how unfounded their claims of uniqueness. Perhaps they were fooled by the plethora of user testimonials these brand new, unranked sites published, all written in a remarkably similar style.
The majority of these sites claimed to have a USP, but the USP was more of an afterthought and it was hard to see how they added any value over and above what was already out there.
As Kieron says, what is the point in building another price comparison site for insurance? If a new well funded price comparison site springs up and takes a chunk of the insurance market share, who would benefit most? The new site owners of course. People searching for insurance deals could just have well used the existing price comparison sites.
If the primary goal of a site is to make money for the owner, then the service the sites provides for their visitors is always going to be second to that at best.