The Growth Booth

Top 5 Mistakes People Make When Starting An Affiliate Marketing Business | The Growth Booth #51

December 27, 2022 Aidan Booth Season 1 Episode 51
The Growth Booth
Top 5 Mistakes People Make When Starting An Affiliate Marketing Business | The Growth Booth #51
Show Notes Transcript

What are the five biggest mistakes people make when starting an online business?

Welcome to the 51st episode of The Growth Booth Podcast, a show focused on supporting budding entrepreneurs and established business owners alike, towards achieving lifestyle freedom through building successful online businesses.

For 2022’s final episode, Aidan talks with Josh Jacobs, owner of a multi-million dollar affiliate marketing company about the biggest pitfalls and how to avoid them.

Whether you're looking for step-by-step strategies to start building an online business, simple game plans to grow your business, or proven lifestyle freedom frameworks, you’re in the right place.

Stay tuned and be sure to join the thousands of listeners already in growth mode!


Timestamps:

00:00 Intro

02:14 How Josh Got Into Affiliate Marketing

08:05 Mistake #1: Commissions

10:41 Mistake #2: Not An Overnight Success

12:15 Mistake #3: What’s A List?

13:07 Mistake #4: LTV

15:39 Mistake #5: Shooting In The Dark

20:58 Outro


Links and Resources Mentioned:


About Our Host:

Aidan Booth is passionate about lifestyle freedom and has focused on building online businesses to achieve this since 2005. From affiliate marketing to eCommerce, small business marketing to SAAS (software as a service), online education to speaking at seminars, the journey has been a rollercoaster ride with plenty of thrills along the way. Aidan is proud to have helped thousands of entrepreneurs earn their first dollar online, and coached many people to build million-dollar businesses. Aidan and his business partner (Steven Clayton) are the #1 ranked vendors on Clickbank.com, and sell their products in over 100 countries globally, as well as in 20,000+ stores across the USA, to generate 8-figures annually.

Away from the online world, Aidan is a proud Dad of two young kids, an avid investor, a swimming enthusiast, and a nomadic traveler.

 

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Aidan

Hey, everyone, Aidan Booth here. Welcome to episode number 51 of The Growth Booth, which is the final episode of 2022. Now, I know this is a busy time of year. We're going to try to keep this episode a little bit shorter than normal. I don't know about you, but I've firmly got both eyes now fixed on 2023, and I want to talk about what I think will be one of the biggest opportunities of 2023, and that is affiliate marketing, but more specifically, a subset of that. It's something we call CPA marketing. And our guest on the call today has a huge amount of experience in this. So, Josh Jacobs, welcome to the call.

 

Josh Jacobs

Thank you, Aidan. I'm very glad to be here. Thanks for having me.

 

Aidan

Now, before we dive in, what I want to talk about really today are some of the pitfalls and mistakes that people make. Because I feel like a lot of people's success doesn't necessarily come down to finding the right magic bullet or finding the right offer to promote, but rather avoiding tripping up in a minefield that exists with an online business. But before we get to that, I really came to hear a little bit about your background and how you ended up building a mega-successful affiliate marketing company that does millions per year in sales. So how did you fall into this?

 

Josh Jacobs

Yeah, so I got started with affiliate marketing. Actually, when I started college, I grew up knowing that I wanted to be an entrepreneur and knowing that I didn't want to get a regular job and answer to a boss in a nine-to-five setting. Nothing wrong with that. My whole life, I just knew it wasn't for me. And when I started college, I wasn't like a regular college student going and partying or anything like that. I spent all my free time learning how to build a business. And after doing a lot of research, I realized that affiliate marketing was the most ideal business for me to start at a young age, because, number one, there are very few barriers to entry. You don't need a huge budget. You don't need to stack products or wholesale or buy any physical inventory. There are a lot of advantages to affiliate marketing that make it easy for the everyday person to get involved. And as an 18-year-old college student with no money, that is exactly what I needed.

 

Aidan

It kind of sounds like you're telling my life story somehow. Listen to this. Is he talking about me or is he talking about him? Because I was kind of similar to that in college. I was probably more like 20 years old at the time, but it was sort of like diving down this rabbit hole. “Oh, wow. There's this other way that I could make money.” And I also fell into affiliate marketing. So anyway, sorry to cut you off there. I just wanted to share that.

 

Josh Jacobs

No, I love that. I love that. It's interesting, you meet people who start businesses at a young age and it turns out that they carry it on for decades. And that's kind of what happened here. I was in school, I learned the business, I made a lot of mistakes and it took me a couple of. There also wasn't as much training back then as there is today. And I made a lot of mistakes. And within a couple of years, I kind of figured out how to grow the business and I didn't give up. And basically, by the time I was 21, I had a multiple six-figure-a-year affiliate marketing business and really just thought that I thought basically that I was the king of the world. I was 21, I was in school and making all this money with all my friends who are working minimum wage jobs and it was amazing. Literally, I thought I was the king. I thought I knew everything. And that is when everything basically took a turn for me and the main products that I was promoting totally shut down their business.

 

All of a sudden, I had to figure out what to do because I didn't have a product to promote anymore. The thing that I'd spent two years building all of my traffic for, a huge audience for, went away, and I had to figure out how to restart and essentially build from zero. And that is when I decided that I needed a strategy that was going to work for the long term, that I'm not relying on any third-party company, that if that company stops selling this product or doesn't want this offer anymore, my strategy will allow me to continue operating and making money no matter what. And that catastrophic moment in my career of basically having everything go to zero was super necessary for me to restrategize and figure out what's going to give me longevity in this business.

 

And long story short, I figured out CPA marketing and lead generation and the fact that I could get paid an affiliate commission for generating a lead in addition to generating a sale. And basically, that was the point in my career where everything changed, business grew a lot. I learned that I would have longevity no matter what. Because regardless of who the company is that is buying the lead or buying whatever product, my traffic strategy, the way that I was getting customers will stay the same no matter what. And that has turned into the business that we have today, which as you said, is a multi-million dollar per year operation, and it provides all the freedom of affiliate marketing that I dreamed of when I was an 18-year-old kid learning how to start.

 

Aidan

I'm going to be talking a lot more about this, but when we're talking about CPA marketing, it is an interesting subset technically of affiliate marketing. You are earning commissions, but it's done in a very different way. I think at least the way that we do it is done in a very different way from how most people do affiliate marketing. So, for instance, we don't have to sell a product in order to actually generate a commission. We can make money just by capturing information about someone, and that's something that is, I think, quite refreshing. But then also we can really double down on a niche if we want to and provide a lot of value as well. So when we say CPA marketing, we're talking about getting paid per action, cost per action, getting paid per action that someone takes, which in our case, the way that we do the model and the way that Josh does the model is capturing an email address or capturing a zip code or something like this.

 

Now, obviously, in all the years that you've been doing this, you would have made dozens of mistakes yourself, but you also would have seen a lot of the pitfalls that newbies starting out tend to make. So I thought what we could do in the time that we've got here today is just maybe hit home on five of the biggest mistakes that people should try to avoid in 2023 if they're diving into any kind of affiliate marketing, but in particular the kind that we're doing here.

 

Josh Jacobs

Yeah, absolutely. I'll start off with what we were just talking about, which is CPA marketing versus regular affiliate marketing. As somebody would think of it, a big problem with people getting into affiliate marketing is they choose products that have low commissions. That could be a physical product that only pays out a 5% or 10% commission, or it could be a digital product that pays a small commission. But what I realized early in my career is that there are products that you can earn a 50% commission or a 70% commission, or in CPA marketing, you can earn $30 just for having somebody submit a lead form. Or in CPA marketing, an action could also be constituted as a sale, and the commission could be 200% instead of 10%.

 

Aidan

It could actually kind of be infinity percent because sometimes you get paid money for no money at all being generated. You just get someone put in an email and you get $30, $50, $100, whatever it might be. And it's like, that's not even a percentage of a commission at that point. It's just like an infinite almost return on the transaction, because the transaction is zero.

 

Josh Jacobs

And that's pretty much what 100% of our traffic is today for that exact reason. Because I've found over time that while we definitely do, we can create sales, and it's also easy to generate sales once you figure out the traffic strategies. But in my opinion, it's a lot easier to generate a lead than a sale. And that's kind of the model that we've run with, and it's worked out incredibly well. So I would say that one, just selling low-commission products when you have the opportunity to sell leads that don't pay any money and can make you a bigger commission than selling a $100 product out of 20% commission would, that's one thing.

 

I would say this is super basic, but I just want to hit on it because I think it's probably what stops almost everybody, which is just a lack of consistency. And that's in anything you do. Obviously, if you're trying to lose weight, you have to be consistent. If you're trying to graduate with a degree, you have to be consistent in going to school. Same thing with your business. There are so many people that enter this business space and think that they're going to get rich in two weeks when in reality it's a business and you can reap massive rewards if you are consistent. Just don't give up after two weeks. That's a huge thing.

 

Aidan

I think just building on that one as well. People that do come into trying to start a business and see these magical returns in a couple of weeks, really are shooting themselves in the foot. Because if you do give yourself a longer runway, which is something I kept coming back to, and think about building a new business in 2023 and think, “Hey, I'm going to give myself six months, or even just three months to give this a really good go,” then you put yourself in a position to win. Because then you've got a bit of time to build a foundation and do something. And you don't need a miracle. You don't need that one-in-100, lucky shot kind of a thing. You can just play the percentages, do the basics, and be consistent for not all that long but a few months. And I think the odds of succeeding are huge when you do that with the right model. So I totally agree with you there.

 

Josh Jacobs

Absolutely. And to build off of that too, with consistency comes momentum. And what you learn by being consistent and going over time is a couple of things. This is related to a couple more mistakes that people make. One, some people, when they get into affiliate marketing, do not build a list. They generate traffic and send it directly to the offer without ever capturing an email address or a phone number or a pixel or anything to allow them to follow up with that user. Again, what that means is if that person doesn't buy or become a leader on the first visit, then you have no opportunity to follow up with them if you haven't collected their information anywhere. So one, you always want to build a list, you always want to collect their data. And two, that's going to allow you to increase the lifetime value of each user that you get.

 

And that's another thing that you will see with consistency is that some people don't factor in the LTV to their acquisition cost. Meaning if it costs you $10 to acquire a lead or a customer and you get back $8 immediately, you think to yourself, “Okay, well, that means I'm losing 20%.” But in reality, if you put them on your list and you send them a few offers over the next week and they turn into $15, you're actually making 50%. It just took you a week to do it. And I think that a big mistake that people make is not building that list and not factoring the LTV into their acquisition cost. And again, consistency is what's going to help you figure out those numbers and grow your list and bring those margins that you're making off of people up to a high number where you're profiting a lot of money off of every single lead that you bring in. I think that's super important to point out.

 

Aidan

Yeah, that's awesome. I think we've already had some pretty good big mistakes that people make just to recap on some of them. So poor choice of offers, specifically regarding the payouts, not having that consistency and sticking with something, really shooting for an overnight success when if you took things a little bit more systematically, looked at it like a business, you would skyrocket your chances of success not building a list. Big one. This is one of the biggest mistakes that I ever made. It took me about two years before I realized I was making this mistake and started building a list. That was a long time ago, thankfully, and not factoring lifetime value into the acquisition cost of a lead. Before we go any further, can you just explain what you mean by acquisition cost, and then we can take the next mistake that you've got there?

 

Josh Jacobs

Absolutely. So acquisition cost just means the amount that it costs you to acquire a lead or a sale or a customer. In our case, since we're talking about lead generation, it's how much it costs us to acquire a lead. If we were trying to sell a product, it would be how much it costs us to acquire the customer that buys the product. So if we acquire that customer for $10 and over the next 30 days, we can make $20 off of that customer even if we lost money the first day we acquired them. Long term, they are a very profitable user to have or lead to have.

 

Aidan

That clear setup. I'm sure some people would have been wondering. So what else have we got there? Anything else that comes to mind, mistakes you've seen other people make or that you've made yourself that people should really be aware of in 2023?

 

Josh Jacobs

Yes, there's obviously a handful, but I think the last one that I'll focus on is tracking, because everything that we just discussed in the last few minutes can only be figured out through tracking. And that was another thing. As you said, it took me a couple of years to figure out building a list building. It took me a couple of years to figure out list building, and it took me another couple of years after that to figure out tracking. And I think tracking is the most important thing you can do because in all of your advertising campaigns, with all of your leads, if you are not tracking and you don't know your numbers, you're shooting in the dark. You won't be able to figure out what you need to do to scale or to become profitable and to make this successful. So it's super important to track. And there are so many platforms out there that make it incredibly easy to do this.

 

And basically what this tracking will tell you is how much you spend on your customer acquisition costs and how much you make from each of those campaigns. And what that will allow you to do is see “This campaign is profitable, and this campaign is not profitable. So I'm going to kill this campaign and I'm going to scale this campaign.” And if you didn't track, how would you know which of those campaigns were profitable and which weren't? So that is super important. Always track everything that you do.

 

Aidan

I think if you're not tracking, it's kind of like you got a blindfold on. You're trying to drive a car with a blindfold on and you don't really know which way to go, and you're sort of guessing. You don't have any feedback mechanism. And I think if you're sitting there thinking, “Well, you know, tracking, I've tried that in the past, that was difficult,” you can always have someone else set the tracking up for you. I mean, you can go to Upwork five or pay someone $50. Probably not even that. I mean, probably $20. It's pretty simple. It's just a case of putting a special piece of code on certain web pages, which any programmer can do for you. And it will probably cost you $10, $20, maybe $30 to be able to do that. And then you'll be able to get the most amazing insights into the traffic that you've got. You'll be able to see exactly which segments of the traffic are converting like gangbusters and making you a lot of money, and which areas of the traffic are not making you any money. And then what can you do? Well, you can just double down on the ones that are making you money.

 

So I think that's a really good point to sort of finish up here on because if you take nothing else away from this episode, I think tracking and just understanding how important it is, and I'll add here that it doesn't matter if you're running paid ads or if you're getting organic traffic. You should be tracking the performance of that traffic because that is just gold dusters. It's just intel that no one else can get, that only you can get. And it's going to be 100% specific to whatever it is that you're doing. And by the way. It doesn't matter if you're doing eCommerce, it doesn't matter if you're doing affiliate marketing. It doesn't matter if you're selling info, products, or software. It doesn't matter. You need to be tracking the performance and the metrics around your traffic. Otherwise, you got this blindfold over your eyes and you don't have any feedback mechanism to be able to make strategic decisions.

 

Josh Jacobs

And technology has gotten so much better over the last decade. Like when we were starting out, it was a lot harder to track accurately. Now it's so easy to set up, it's so cheap. You got to take advantage of technology and be able to have binocular vision in your campaigns. So if you do that, I'll end with this. I'll just say affiliate marketing, I got into it because I wanted to live a freedom-based lifestyle where I didn't have to go into nine-to-five. I could work from anywhere. I have unlimited earning potential and that's exactly what this industry does.

 

So I just want to mention that for anybody out there who's looking to start a business that provides them with freedom, that gives you an unlimited earning potential, affiliate marketing is an amazing industry to get involved in. It gives you all of that and all you got to do is have a little bit of determination and consistency and you can make this business work. So I just wanted to add that in there for sure.

 

Aidan

Absolutely. I mean, when we talk about the Holy Grail business model, it's pretty hard to beat not just affiliate marketing, but in particular the type of affiliate marketing that we're doing. If you'd like to find out more about this right now, if you are listening to this around the end of December, then we're running what we call our 12-Day Giveaway, which is a pretty fun and entertaining 12 days where we give away $1,000 every single day as well as some really good content. And in that, we talk a lot about lifestyle freedom and achieving financial freedom, time freedom, and different things that you can do. And a lot of that ties in with what we're talking about here on this episode of The Growth Booth. You can head over to the12daygiveaway.com to find out more and participate and potentially win some cash as well.

 

So Josh, thank you so much for taking the time out of your day here to share a few tips. I think we've crammed a lot of value in here and I'm going to recap them real quick here for people. Don't make a poor choice of offers. Think carefully about the kind of payouts you're going to be able to get. Stay consistent with it. Don't think about your online business and “I've got to make money in seven days” kind of a thing. Give yourself a little bit longer time frame. It doesn't have to be years, but give yourself a few months to get some runs on the board. Start building a list on day one, and don't fall into the trap that I fell into thinking about increasing lifetime value. You don't just have to worry about recovering your investment or making as much as you can on day one, think about what other money you can make from the customer and the audience that you are generating.

 

And finally, if you do nothing else, make sure you track, because then at least you're going to have some metrics that you can fall back on and use to make smart decisions.

 

Josh, thank you once again for being here. Buddy, I'm going to have to get you back because I know that we could speak for hours and hours about this thing. So I'm going to be hitting you up, asking you to come back. And in fact, let's make a deal. I'd love to be able to get you back here maybe in a few weeks' time and talk about email marketing because I know you are an absolute email marketing machine and there's a lot that we could talk about there. Love to have you back, buddy.

 

Josh Jacobs

Absolutely. Thanks. I appreciate it.

 

Aidan

All right, guys, you know the drill. Head over to TheGrowthBooth.com, navigate to episode number 51 to see a video of this, to be able to download the transcript, get all the links that we've been talking about and everything else, and I will see you in 2023 in the next episode of The Growth Booth. Thanks for listening.