in Projects, Programming, Technology

AdWords and Affiliate Programs

Google sold close to a billion dollars in advertising in 2003. Advertising on search results pages is very targeted – the ads can be matched to what you are actively looking for. Google also shows ads on Web sites across the web – with ads target to the content of those Web sites. In either case, advertisers are charged per click. Web sites hosting the ads are then compensated proportionately.

The great thing about Google is that they provide tools for setting up and managing targeted (“AdWords”) ad campaigns. Within a few minutes you can input a list of keywords, a short advertisement, and a credit card number. Your ads will instantly show on Google.com and across their advertising network.

Affiliate programs are another advertising concept that has been around for a while. Most e-commerce Web sites (Amazon is the most famous) have affiliate programs. If you have your own web site, you can become an affiliate of another site and earn money for every customer you send to their site.

While I was researching tools for automating the creation of AdWords campaigns, I came across an advertisement for an e-book which described the idea of combining ad campaigns with affiliate programs. The idea is this – if you don’t have your own Web site, you can identify niche search areas without a lot of ads and buy ads acting as an affiliate. You pay for each click, and hopefully earn for each sale.

Here are a couple examples that I tried:

Eminem’s new band, D12 just released a new CD. Just before they did, “D12” was one of the most popular search terms on the internet, and Amazon did not have any ads running on Google for this search term. I set one up and sent over 500 people to Amazon in a few days. Unfortunately, only 4 of them bought the CD. I might have had better luck if I only ran the ad after the CD was released.

A more successful example is Brecks Bulbs. Brecks had a great sale and was passing 30% of each order on to their affiliates. I spent about 4 hours setting up an ad campaign covering all of the different types of Dutch flower bulbs that Brecks sells. I came out ahead on this campaign – making about $100 in commission for $50 worth of advertising. I did this without setting up any kind of web site, just a bit of research.

The math is simple enough for choosing your “keyword niche.” You simply need to make more in commissions per click than you are paying on Google. The table below shows the sort of numbers I saw for these two examples.

Cost Per Click Commission Per Click
D12/Amazon $0.05 $0.01
Brecks $0.15 $0.30

I haven’t mentioned yet that ads on Google are ranked according to your bid. So an ad created with a maximum bid per click of $0.15 will show above an ad with a maximum bid per click of $0.05 (the minimum). The site Commission Junction (www.cj.com) allows you to manage multiple affiliate relationships and provides statistics on the Commission per click you can expect.

Another useful tool is the overture search word recommendation tool (inventory.overture.com). This tool will give you an idea of how popular a given search keyword is. Overture is another search engine and advertising company – their ads show on MSN and Yahoo.

Hunting for keywords and crafting ads for random products has been fun. Google’s text ads are like Haikus. Everything under the sun is sold on the internet and is a candidate for this “AdWord Affiliate” technique. However, it was quite difficult to find the right niche and turn a profit. Although I broke even in the end, there were several other combinations I tried that were not successful.

Most keywords worth advertising on are saturated with lots of ads. Affiliate commissions are for the most part quite tight, and don’t leave much room for buying ad placement. I’ve seen the best results with seasonal or sale items. I will probably have another try at Christmas when shopping on the internet goes way up.

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