3.5 (Painless) Internet Marketing Economics

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WARNING: Goo-roo’s ain’t gonna like this

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In this video I discuss:

  • Very simple and easy-to-understand economics I wish someone had shared with me early on
  • What you should be looking for in your niche at a very minimum if you want to make money
  • Discussing commission percentage vs. total purchase value, and how they should guide your niche selection

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3.5 Transcript Below

Okay, let’s talk about what sounds very intimidating on the front end but that’s why I put “painless” on the front of it: internet marketing economics.

I think people see the word “economics” and they go, “Oh no.” But I promise this is going to be really painless and easy to understand.

At the end of the day, the reason I want to visit this right now is because these are economics that I really wish someone had called to my attention when I was picking a niche.

So the cheaper the product… we’ve talked about this already in past training… but the cheaper the products in your industry, the more you have to sell. And that can be a problem because that means you need more traffic and the more traffic you need, the less likely that it is to happen.

Because again, remember: the internet is going to have much fewer high traffic sites than it has kind of modest… what a lot of people would consider low-traffic sites compared to a site that’s getting a million visitors a day – getting a thousand visitors a day – is a pretty modest amount of traffic but much more achievable.

On the other hand, the higher the commission or the higher the commission percentage that you’re receiving for a product, the fewer you have to sell.

So if you’re selling something that’s $300, you’re much more likely to succeed and make decent income off of a lower amount of traffic than something that is $10.

Just look at it: if each one had a 5% commission, the commission on one is like $0.50? And then the commission on the $300 product is $15. Still not a really incredible commission but $0.50 compared to $15? You need to make a lot less of the $15 commissions to hit whatever goal you’re trying to hit than the thing that costs $10 and you’re only making $0.50 off of.

The other way to turn that on its head is a lot of digital products, for example, have really high commission percentages – like 50% to 75% of the sale so even though it may only be $30, your commission on it may be somewhere between $15 or sometimes even as high as $25.

So it’s a really important thing to keep your eyes on and we’ll talk about exactly how you do that later in this lesson.

But as I mentioned, the fewer conversions that you have to get, the better you’re setting yourself up for success than someone that needs a ton of conversions to kind of hit the goals that they want.

So a really simplified way to look at this without getting face deep… without just really diving in and getting lost in the weeds… and you know, just looking at all the different commissions and different kind of affiliate offers that are out there… you really don’t need to do that. You don’t need to go that in depth when you’re picking a niche if you’re following everything else in this training and it could actually just result in you feeling a lot more overwhelmed.

So without getting face deep in commission-hunting, general rule of thumb: sell digital products that have higher percentage of commissions or sell physical products that are $50 or more that have lower commission percentages.

So I would even say $100+ products would be even better because even though the commission percentage may be lower, you’re only looking at maybe 5% to 7% – some instances even less.

Great example is computer. A computer is going to cost someone at least $400 to $500, so your commission – even if it’s only 3% on a $400 computer – is $12. And it’s a necessity, it’s something that someone is going to buy so they might as well do it through you.

And it could range up to… In the virtual reality niche, I’ve sold $2000 computers. The only unfortunate thing is that the commissions there tapped out at like – through Amazon at least – tapped out at like $25. So you don’t get the full percentage. They kind of have a cap, they say, “Hey we’re going to pay you this much percentage up to a certain point and then we’re going to cap it.” Which kind of stinks. But whatever, $25 commissions were still decent. They were still decent. So just keep that in mind.

And there’s kind of a third tier here that’s not written and there’s no way to really know without just doing a ton of research. And again, I don’t want to overwhelm you. I don’t want to push you in that direction because it just makes things more and more difficult and adds even more moving parts.

But industries where you might sell leads or there might be free trial offers – and there are a lot of different industries everything ranging from movie streaming services to (I mentioned earlier) credit repair or insurance quotes, things like that – that you can refer people into.

And then like free trial offers for supplements, stuff like that, there are always monetization opportunities like that, too. Which probably costs the consumer – your website visitor – nothing. But if you refer them through your affiliate link and they submit their lead information, you pay $5 or $10 for everyone that does that or more.

If you get someone to complete a mortgage application… those are always really high paying affiliate commissions because they’re difficult to get someone to do online. So if you get someone to do it, sometimes the commissions on someone filling out a mortgage application is $100 or $200+ for every single person that does it. So there are always kind of options like that, too.

But as a general rule of thumb: sell things, sell digital products with higher percentage commissions or physical products that are at least $50 that likely have a lower percentage commission.

At the end of the day, don’t try to sell a high number of low percentage cheap products because like people say, “I’m going to monetize by recommending books. I’m going to review a bunch of books.” And at the end of the day, technically it’s a valid niche, technically it’s a buying audience, but you’re just going to need so much traffic to get the amount of commissions you need to make money in that niche – make consistent good money in that niche. It’s going to be very, very difficult and your odds of success are that much lower.

So you’re not going to get everything perfect, right? I really want to clarify that. Don’t feel like you have to hit all of these nail in the head perfectly because if you line up at least the majority of these factors, you’re going to be much better off than someone that’s just kind of went into and picked a niche blindly based on half an hour of training – which on the surface seems like a lot. But once you dig in and now you see how much there is to picking a niche, you’re set up for success a lot better now that you’ve watched a couple of hours of training total on the topic.

And again, it’s just such a pivotal thing. I wish everyone taught it this well and this in depth.

So you’re not going to get everything perfect. Don’t worry. But the more you do – if all of these things line up perfectly – you’re looking at a really stellar niche. So the more boxes you check, the more likely you are to succeed.

So at the end of the day, don’t get too overwhelmed if everything is not lining up perfectly but just keep doing the best you can and I’ll talk at the end of this section about when it’s time to move on, when it’s time to just make a decision, et cetera. So don’t worry. I’ll equip you with everything you need before we move into Section 4.

But for now, that’s the end of this lesson. In the next video, I’m actually really excited because we’re going to do something called “Good Niche, Bad Niche” and we’re just going to basically go through example after example after example and talk about…. you know, kind of workshop some of these ideas. And I think that’s going to make so much more of these concrete for you because a lot of this is swimming around in your head and you may be a little bit overwhelmed. I think the best way to mitigate that always is simply by talking real world examples. Again, something I wish a lot more people in this industry did.

So, as always, if you have questions, feel free to post them to the Facebook group – that is free for registered members. And if you have any questions, I’ll see you over there. Otherwise, I’ll just see you in the next video.