Moving From Affiliate To Merchant & Becoming An Offer Owner

Moving from Affiliate to
Merchant & Becoming

an Offer Owner
Today’s Agenda for Become a Merchant
-
To show you how to effectively move from being an affiliate
to becoming an offer owner/product creator
-
To outline to you the steps and processes involved when
moving to merchant status
-
To help you compare the advantages of being an offer owner
vs. being an affiliate
-
How to know if you’re ready to embark to merchant status
-
How to develop credibility and authority as an offer owner/
product creator
-
How to attract the very best affiliates to promote your offer
Advantages of Being an Offer Owner
vs. Being an Affiliate
Affiliate marketing, especially in CPA networks, is one of the most effective ways to make money online. The main benefit is
that, you don’t have to worry about creating products or paying considerable startup costs,
But why do many affiliates eventually try to “upgrade” to merchant status? Here are some of the advantages and reasons why
being an offer owner might be a more lucrative source of money online (as compared to affiliate marketing):
1.
As offer owner, you earn a “bigger piece of the pie” per sale. Each time an online sale is made, a smaller
percentage is paid to the affiliates. An even lesser fee is paid to the CPA network. Normally, it is the product owner who gets
more than 50% of the earnings per sale, while doing less, when you take into account back end profits and lifetime customer
value. Of course, there are some exceptional offers who offer more than 50% commissions to affiliates, but basically the
income for offer owners per sale is hands free. There’s a reason why some CPA offer owners can give more than 100%
commission on the front end, it’s because their back end profits are significant.
2.
Front-end income for affiliates is RESIDUAL income for offer owners. Affiliates typically thrive on front-end
income, and this money stream is dependent on the daily grind of marketing activities. Literally, if the affiliate stops doing the
“dirty work” such as driving traffic, constant market testing and tracking analytics EVEN FOR A DAY, he doesn’t earn money.
On the other hand, offer owners earn a residual income from front end sales alone. Imagine having an offer with hundreds of
affiliates promoting it….the residual income potential is mind boggling! As stated above, if your backend process is strong,
tested, and in place, you can give up 100% commission on the front end and still make significant profits.
** Of course, the affiliate still has the potential to earn residual income by stacking offers on his list. However, the offer owner has a larger
potential for residual hands free income. **
3.
Affiliates compete with each other to build huge lists, but the offer owner consolidates all those
affiliate lists.
Here’s an example: If an offer has 100 affiliates promoting it, we can say that each affiliate has at least built a list to which he
promotes to. While all these affiliates compete in the advertising arena to gain a bigger piece of the market to join their list, the
product owner is sitting on the sidelines. Why? Because all the lists built by those affiliates are practically his! The product owner’s
list is more like a CONSOLIDATED LIST, composed of subscribers generated by each one of his 100 (or more) affiliates.Yes, the
money is in the list but it doesn’t have to be YOUR list. Keep in mind that all the while, the offer owner is building the best kind
of list, and that’s a buyers list.
4.
Offer owners have a greater opportunity to brand themselves and their personally created products.
Positioning is a vital part of overall marketing strategy. Positioning or differentiation is usually achieved by forming a strong brand
or product image.
Personal branding is one of the best ways to position oneself in any given market. If people can associate a certain product to its
owner/creator, that would position the product owner as an expert or authority in that niche.
Affiliates have limited opportunities to implement personal branding strategies because
1) they are not the ones who created the products

2) their work is more of a “backstage” job (such as merely driving traffic), or as anonymous middlemen.
5.
Offer owners or product creators have more control over backend offers and have more opportunity to
upsell their customers after the initial sale.
Very often, CPA affiliates make money from the front end offers but they have no control over which direction the customer
should take afterwards. Product owners, on the other hand, can start a chain of multiple sales automatically after the initial sale is
made. For example, if the front end offer is a digital ebook product, he can “pitch” his customers directly to a back door
subscription product by including (or attaching) a sales letter or free report within the original product. Or, within the ebook
being sold, the offer owner can provide links to other products he also has available.
Also, keep in mind that some of the best merchants are strong affiliates themselves. The backend of our current fitness product
consists of our own offerings as well as affiliate offers. No one says you can’t be a merchant and affiliate at the same time.
BOTTOMLINE: Affiliate marketing will always be a lucrative business. I love it, and have made a lot of money off it. You learn some
essential skills that many product owners don’t have, primarily, driving traffic!
However, for an internet marketer to truly climb the “ladder” of online marketing, he should take a look at the many advantages that
being a product merchant can offer.There is a bigger income potential in upgrading to merchant status.
Are You Ready to Be a Merchant?
1.
Expert knowledge about a particular market is an essential prerequisite to becoming a merchant. Often, affiliate marketing is a
good training ground, but once you obtain complete mastery and understanding of your target market, then it is one sign you’re
ready to move up to a higher level.
2.
Kick-ass list building know-how is another requirement to becoming a successful merchant. I know there are lots of
advertisements out there that claim you can make money without a website, a list, or any marketing skills. That’s just absurd.
Selling your own products is not that easy. You need to have a good background and experience on how to generate your own
leads and build a list. You don’t want to have to rely on affiliates. Affiliates will jump to the next hot offer at the drop of a hat. You
want to know how to drive your own traffic, build your own lists, and sell your own product. Again, you can learn these skills if
you start out in affiliate marketing and obtain the proper training.
3.
Having the FUNDS or CAPITAL necessary to produce your own product or brand is also needed. Lots of would-be merchants
like to go it all alone. They try to build everything from scratch. They do their own graphics, they fail to outsource minor details,
they write ALL their content. There are so many things going on when you’re a product merchant, which is why you should learn
to OUTSOURCE and SPEND MONEY on things that need to be done. Designing product logos, writing website copy, editing and
proofreading your content, and many other similar tasks can be outsourced, and you need to be ready to spend money in the
beginning, just like a true business owner.
4.
Deeper knowledge about your niche topic is important. If you’re producing information products, you have to make sure that you
are adept and savvy about your topic, or else, your market will see you and your offer barely valuable.
Steps Towards Becoming a Merchant
There are things that need to be accomplished before becoming a merchant or offer owner. Lots of people try to become
merchants instantly without knowing what it takes to be one. That’s the primary reason why they fail and go back to affiliate
marketing (or try something else).
Here are steps that will help you make the move from affiliate status to merchant status:
Step # 1: Obtain An Initial Startup Fund Or Capital

-
Being a merchant is similar to starting a traditional offline business. Without financing and startup capital to use for your
operating expenses, your business won’t last. If you want to succeed in your first product launch, make sure you have this
key resource in your hands – MONEY.
-
There are many ways to finance your move to merchant status. But one of the best ways is to use the concept from
“Greatest Man In Babylon”. Old book, I know. But here’s how it works: Each time you earn money as an affiliate, save 10%
of whatever income you earn. You need to have the discipline to set aside that percentage and add it to your savings. As
your savings pile up through time, you can then use it to finance your efforts to launch your own products and offers. The
amount you need really depends on your business model. Just simple promoting of a digital product, you can get away with
anywhere from $1000-5000, sometimes even less, but keep in mind in the beginning you’ll be driving the majority of your
traffic. If you were looking at getting into a rebill model, you’ll want high 5 to 6 figures of float capital.
Step 2: Obtain legal documentation or right to operate

-
Don’t think that this is boring. It’s not. Depending on your country, state, or type of product, the steps to getting the
necessary legal documentation will vary. For example, if you are selling a physical product, you would have to get your own
business name. There are a lot of CPA networks that require a business name from their advertisers. Applications for
merchant accounts also require a registered business name. So don’t take this step lightly (you don’t want to earn $1,000,000
dollars and then have the IRS knock on your door the next day, would you?). The recommendation in the USA is to form an
LLC. I have a registered corporation myself in Canada.
-
Research all the necessary steps that you should take in your country or state to be able to operate 100% legally. A common
approach that product owners use is to register their own business name as a publishing company with sole proprietorship.
-
If you can find a CPA network or affiliate community which takes care of the legal documentation on your behalf, the better.
Step 3: Develop your product, service, or offer.

There is a five-phase process to developing a new product. This is the same process used by big corporations to bring a new
product in the market (often referred in business school as the NEW PRODUCTS PROCESS), and you can apply it to CPA
marketing and online marketing as well:
Phase 1 – Opportunity Development and Selection
Based on your understanding of your target market and your affiliate records, try to spot some opportunities in the form of unmet
needs and unfulfilled wants of people in that market. Again, use brainstorming here. List as many needs and wants of your market
that you think you can fill in a unique way.
After listing all the possible opportunities, zero in on ONE need or want (or one set of needs) that will be your main basis for
creating a product.

Phase 2 – Concept Generation
Based on your identified market opportunity, try to think of a product concept. Will you choose a traditional digital product like an
ebook or audio seminar? If it’s a traditional info product, what UNIQUE information will it contain that will differentiate you from
the competition? What’s your hook? Or, alternatively, will you choose a more technical product, like a software, game, or useful
tool? Those are the type of questions that you should ask yourself when you generate a new product concept. At the end of this
step, you should be able to have an idea of what type of product will you create, and what medium will be used (audio, video, or
plain text).

Phase 3 – Concept Evaluation
After having a great product concept, don’t just rush into product creation. Evaluate your concept. This is the part where you count
the cost of developing that product. How much money is needed to develop it? Who are the people that you should ask for help in
developing it? What tools and resources are necessary? How long is the estimated timeframe for completion? By evaluating the
pros and cons, as well as weighing the details, you will get a clearer idea of what needs to be done to give birth to your new
product.
**I highly recommend running test campaigns to a test offer page or sales page in order to determine whether or not people
actually want your offer. This is called “dry testing”, and it can save you tons of time and money before getting into product
development. Now, if you’ve done your market research properly, chances are your dry testing will work out in your favor.
Dry testing is just like any other campaign. Usually within $500 you can split test and determine market viability.**

Phase 4 – Product Development
Assuming your dry testing works out and it makes sense to invest in your concept, this is the part where you develop the product.
You can divide this into two activities:
1.
Technical activities – these activities involve the actual “dirty work” or forming the core content of your product or offer. It
may involve writing, editing, video or audio recording, computer programming, etc.
2.
Marketing tasks – this involves writing your business plan, polishing your market attack strategy, preparing your brand
concepts (such as logos, website headers, ebook covers, product name, etc. )
It is important that you don’t confuse the two product development tasks. You have to outline each activity required and put them
in a to-do checklist so you won’t overlook any step needed to finish your product.
Don’t rush, but move quick. Outsourcing can speed things up dramatically, and speed truly is the key in product development. Those
that launch and implement the fastest, win.

Phase 5: Launch
This is the part where you introduce the product to the market with a bang. We’ll talk more about this later.
Step # 4: Develop Your Main Product Website
-
Many aspiring product merchants lose steam when it comes to this part. They feel intimidated with all the technical stuff of
website building and working with web hosts and servers. Terms such as file transfer protocol, file permissions, and custom
style sheet truly scare a lot of people and cause them to feel incapable.
-
The good news is, you can outsource this part. You can hop on Elance.com or Guru.com to look for individual expert web
developers who charge an affordable price for helping you set up your website. I’m very experienced with web design, but I
outsource this as well.
-
I still recommend that you study the website building basics, though. Website building can be learned, and it is an extremely
valuable asset that will pay you many times over. Start by studying other great websites. What awesome graphics and
navigation bars make their sites presentable to the eye? Then hop on Photoshop or any image editor to study how to create
your own graphics and basic shapes. This should be a good start for you.
-
ANOTHER IMPORTANT THING: The most important part of your merchant website is your SALES PAGE or offer page! All
the product development, market research, list building, and website design will be USELESS if your offer cannot convert into
customers!
-
Your goal for your sales page must be to have the highest conversion percentage possible! If you think you suck at
copywriting, or if this is the first time for you to write copy, please do yourself a favor – DON’T DO IT! Have it outsourced.
Let an expert do it. Again, I recommend Ca$hvertising, the Ultimate Sales Letter, and Gary Halberts work.
-
If you are an experienced copywriter, still make it a point to consult other copywriters and pick their brain for ideas on how
to maximize your conversions through your sales page. A good combination of killer ad copy, kick-ass web design and targeted
traffic is the simplest definition of MONEY IN THE BANK.
Step # 5: Launch The Product
After the long process of developing the product and putting up your web presence, now is the time to announce it to the
world. The key here is to get as much traffic on launch day and gain the attention of the entire market, as well as your
competitors. Here are some ideas for launching your product:
1.
Use the build-up approach. Several days (or even weeks) before your product launch day, contact your list and start giving
them free stuff related to the product you’re selling. Then initiate a countdown about the date of the launch. This will
generate buzz in the marketplace and cause people to look forward to the product you’re about to introduce.
2.
Try striking joint partnerships with fellow affiliates. If you’ve developed some good connections during your days as an
affiliate marketer, you can then leverage the help of other marketers who have massive lists so that they can help you
promote your upcoming product to THEIR LISTS.. Remember, they’re in it for the profit too, so make sure you offer them
juicy commissions for the sales they make. Also, keep one thing in mind. As an affiliate, the number 1 thing you want is a
converting offer. It’s highly recommended you’ve done your own testing and can show affiliates solid conversion stats before
trying to recruit them.
3.
Launch a “beta” or trial version first. During the launch, you can offer a beta version of your product with an “introductory
price”. This introductory price will be lower of course. For example, you can let them download your product for only $1,
and they will only be billed 15 days later if they decide to keep it (or not return it).
Use “good-old” coupons and discount promos for early birds.You can decide to give coupons and discounts for the first 100
customers, or for people who order within the first three days or so. Be creative and make sure that your coupons are truly a
treat for the customers.
Developing Credibility & Authority
Two good things to have when you are just starting out being a product merchant are CREDIBILITY and AUTHORITY. The
degrees of your credibility and authority are important factors that will influence general market perception towards you. Here
are some ideas for developing these two things:
1.
Start out with a few press releases. Your goal here is to craft an attractive press release about you and your
products. Submit only to top quality press release submission sites. If you have to spend money here, do it, but take the cost
into consideration as well.
2.
Gather Testimonials. The question that most newbie merchants ask is, “How do I get testimonials if no one has tried
my product yet”. The answer is this: Before your actual product LAUNCH, let a few people try out your product for free.
These people could either be anyone of the following:
-
Your most loyal customers during your affiliate marketing career
-
Fellow affiliate marketers who can vouch for your integrity and expertise
-
Offline experts or key people in your field
- Blog/Site owners that have good followings in your market. Sponsored reviews are my favorite.
Here’s how you should proceed:
Write these people a “testimonial request letter” or email. Indicate that you are giving them a free copy of your product plus
a sizzling free bonus. The only favor you want to ask is for them to leave personal feedback or testimonial about the
product. Here’s a sample letter:
Hi Michael,
I was reading your blog post about “picking up women at break-neck speed”, and I thought I’d pass this along as it could be a
good fit for your readers.
I’d like to send you a free copy of my new product, “How To Get A Girlfriend In 10 days”. Right now it’s still in beta-testing stage
and later I might price it at $47. Here’s the thing: I’m in the process of gathering feedback and testimonials about this new
ebook. I’d love to get a review or testimonial from you. I think it’d be great to do a guest post on your site to give your readers
some good content as well.
If you’re willing to do this, just reply back and I’ll send you the beta-version plus the link to the testimonial page (where you will
post your opinion about the product). As my way of saying thanks, I’ll also send you the (NAME OF FREE BONUS) that you can
provide to your readers at no cost.
Looking forward to hearing back from you.
Thanks very much,
Chad Hamzeh
Here’s how you should proceed:
Write these people a “testimonial request letter” or email. Indicate that you are giving them a free copy of your product plus
a sizzling free bonus. The only favor you want to ask is for them to leave personal feedback or testimonial about the
product. Here’s a sample letter:
Hi Michael,
I was reading your blog post about “picking up women at break-neck speed”, and I thought I’d pass this along as it could be a
good fit for your readers.
I’d like to send you a free copy of my new product, “How To Get A Girlfriend In 10 days”. Right now it’s still in beta-testing stage
and later I might price it at $47. Here’s the thing: I’m in the process of gathering feedback and testimonials about this new
ebook. I’d love to get a review or testimonial from you. I think it’d be great to do a guest post on your site to give your readers
some good content as well.
If you’re willing to do this, just reply back and I’ll send you the beta-version plus the link to the testimonial page (where you will
post your opinion about the product). As my way of saying thanks, I’ll also send you the (NAME OF FREE BONUS) that you can
provide to your readers at no cost.
Looking forward to hearing back from you.
Thanks very much,
Chad Hamzeh
Do emails like this work? They do! If you send them to people who already like you, trust you, and know how you deliver
awesome value. The key here is, make it really specific to them, and offer to provide something to them and their readers/
subscribers. Good bloggers and site owners are always looking for good content to provide, so do them this service.
Having at least 5 to 6 testimonials is already a great boost to your credibility.

3.
Obtain Social Proof. Buyers need confirmation that you are REAL person and that you have some degree of influence
in the community. Once they see you and your offer, they will instantly look for social proof (or how society validates your
claims). As a merchant, you can do some things that will help you obtain social proof:
-
Buy a domain with your own name on it. The webpage (or blog) must be all about you, some relevant details about
yourself, your track record in the industry, as well as your credentials. Make it a point to build a “personal bio” page that
tells a story about you, perhaps about how you started out on your journey to success, or a description of your humble
beginnings. The personal bio page must be written in the THIRD PERSON.
-
Be seen in popular industry forums and discussion threads. Often this is where key people in your market hang out. A big
mistake made by many marketers is that they TRY to promote and market in the forums. If you’re a true pro, use the
forums only as a public relations strategy. Comment on issues, give advice, answer questions, participate in guru
discussions. Don’t sell or give away “selfish” links. If you have a VERY good writer/VA on staff, this can be outsourced to
save time but they MUST be good at this.
Attracting High Quality Affiliates
When I say “high quality” affiliate, I’m not referring to those who can sell 1,000 product units in 1 day (although if you have those kinds
of affiliates, great).
A high-quality affiliate is someone who can represent you well, knows how to build a list (or is willing to learn), doesn’t lean towards
black hat tactics, and a full timer (or is dreaming of doing affiliate marketing F/T).
Typically, the best affiliates already have some background in list building and online sales. If you have to define and explain what an
autoresponder is to that person, maybe you should pass. However, sometimes you never know.
Simple, ignorant, “virgin” affiliates can turn out to be kick-ass marketers in the future, so keep an eye on them.
Often, being in a reputable CPA network is the key to attracting high-quality affiliates. The screening process in these elite networks is
enough to filter the bad ones and retain the good ones.
-
Develop a way of contacting your affiliates on a personal level. Email them. Let them reach you through phone or skype. Give them
your facebook page. If you want, you can setup a conference call for your affiliates monthly, and during that call discuss some
effective ways on how to promote and advertise effectively.
-
Don’t keep marketing secrets from your affiliates. They are not your competition. If you learn a new strategy or traffic method
that works, SHARE IT WITH THEM.
-
Sometimes, there will be affiliates who are BETTER SKILLED than you are. They are great assets to the team. Learn what you can
from these people and also make sure that they are satisfied with the commissions that they receive from you.
- Offer a high front end commission. Ideally you have guys driving high levels of paid and e-mail traffic. This stuff costs money for
affiliates, so they need to make a good ROI
- Above all, test your offer, and provide good affiliate support if you’re running an independent affiliate program. You should be able to
provide solid conversion data over a variety of traffic channels (e-mail, PPC, banner, etc.). You should also provide copy and past e-
mails for your affiliates, banners, text creatives, etc. Make their life easy and give them a high converting page to promote.
One last thing... what to do with an
established cost-per-lead...
Remember how in the list building video we discussed establishing the most we can pay per lead? Well,
one excellent reason for creating a front end lead capture offer is to drive more opt-ins to our list via
CPA networks.
So, if you’ve established that you can pay $2.25 per lead to break even, then you know that on a per lead
basis you shouldn’t pay more than $2.25. Placing your opt-in page on CPA networks as a front end e-mail
submit offer, assuming it’s in a large vertical, will allow you to pay only per lead generated.
Often times via CPA networks you can pay $1-1.50 per lead. However, if you go this route, it’s
recommended you build a 3rd party tracking solution in order to track the quality of leads generated by
the CPA affiliate.
This is one of the more “entry level” ways of generating leads via CPA networks. Once you have your
maximum cost per lead in place for your opt-in page and back end process, you may be in an excellent
position to scale very quickly by placing your opt-in page on CPA networks as a front end short form
submit offer. Affiliates with good back end processes can go this route as well.
Many CPA and affiliate networks will give you assistance in setting up the backend process for advertisers
but often times a strong tracking system will be up to you. Entry level advertisers use systems such as
HasOffers.com, but a custom solution is recommended, unless your CPA network has specific
recommendation. Think of CPA/affiliate networks simply as another front end lead generation vehicle.
One last thing... what to do with an
established cost-per-lead...
About taking an offer to CPA networks....
Taking an offer to a CPA network isn’t like putting an e-book up on Clickbank.Yes, you can make lots of cash as a
merchant on Clickbank, nothing wrong with it. Clickbank is safer since the affiliate takes the hit if there is a refund.
Whereas on CPA networks, you pay the commission regardless (assuming you’re doing a cost per sale). That’s why
fraud/sub-id tracking is so important. It’s also why having an established and converting backend is important. A few
other things to keep in mind when taking an offer to CPA networks:
• You’ll want an already high converting, mass marketable offer. As I said before, your landers should convert well before
you try to recruit affiliates. That’s why knowing how to drive traffic and knowing how to write copy is so important.
• You’re going to need to sign an insertion order as you would with a media buy. Here, you’ll be paying for X amount of
leads/sales upfront. This isn’t Clickbank. Just like with traffic networks, the CPA networks will want you to commit to a
large amount up front. Again, everything is negotiable.You shouldn’t have to pay any setup fees or one time fees.
• Merchants are known as “Advertisers” in CPA. Affiliates are known as “Publishers”. They’ll refer to your product or
service as the “Offer”.
• You’ll want to know your sites EPC, and ideally for various types of traffic. EPC = Revenue/Clicks. Ideally your offer has
an EPC of 60 cents or higher.
• Make sure you specify geo targeting if it applies to you. Maybe you want to segment your lists when paying per lead
between US, UK, and Canada. In this case it’s wise to do 3 separate offers.
• Try not to go exclusive with a network.Volume is the name of the game, and you want to keep your options open.
That’s it for this module, hope you
enjoyed it!

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Moving From Affiliate To Merchant & Becoming An Offer Owner

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Moving from Affiliate to

Merchant & Becoming

Affiliates have limited opportunities to implement personal branding strategies because

1) they are not the ones who created the products

Step # 1: Obtain An Initial Startup Fund Or Capital

Step 2: Obtain legal documentation or right to operate

Step 3: Develop your product, service, or offer.

Step 3: Develop your product, service, or offer.

Step 3: Develop your product, service, or offer.

Step 3: Develop your product, service, or offer.

Step 3: Develop your product, service, or offer.

Having at least 5 to 6 testimonials is already a great boost to your credibility.

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