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Watch Cashflow in Affiliate Marketing

Mar 7, 2008
When you start affiliate marketing, it is all too easy to spend money and not make it. Here's how to control your spending and let your profits run. It may sound dry but this is cashflow affiliate marketing.

Once you have signed up for some affiliate programs and got a web host or blog host, you are already spending money. Not much, hopefully, but with registering a domain and paying three months web hosting you have shelled out about $40. You probably think that this is such a small amount it is not worth recording.

You need to record it anyway, because this is a business expense which you can set against your affiliate earnings to reduce tax. Oh yes, once you start making money the IRA, or local tax office will want their cut.

That is not a reason to spend lots of money on your business, though! Only spend what you need, and control it with cashflow affiliate marketing.

Control your advertising costs

Once you start advertising, you will need to watch what you spend on ads carefully. At most of the pay-per-click search engines, like Google Adwords and MSN Ad Center you can decide what your maximum bid should be for each ad, and you can decide your daily or monthly spending limit.

With cashflow affiliate marketing you will be deciding in advance what you want to risk on each ad. This will depend not on what you think about your ad or the product, but will be a set amount of the funds you are ready to spend that month. Let's say you decide to spend $300 in the first month, and want to divide that between three campaigns. This means you will limit each campaign to $100 in the first month, or $3 a day.

Work out how many sales you need for each 100 clicks

Also, once you find out what your pay-per-clicks actually are for each ad, you will need to work out how many you need to sell for each 100 clicks to make money. This will determine whether the campaign is worthwhile. Again, this is cashflow affiliate marketing.

You may think $3 a day is not much, but your aim with your first ads is to find the profitable ones. Of course, in each campaign you will run two ads at the same time, and set them to run for half the number of impressions so you can see which is the best ad.

After a week, you replace the ad that is doing worse with a new one, and keep comparing. This is one of the principles of cashflow affiliate marketing.

Set an end date

The next most important thing is to set an end date for each ad, and this will be at the end of the month. If you decide not to run the ad that long you can easily stop it. On the other hand, if the ad is profitable, you let it run, increasing the daily or monthly spend limit.

The reason why it is necessary to put an end date on each ad is that it is easy to get involved in doing other marketing, and to suddenly find that a losing ad has run for two months.

After two weeks, you may have enough impressions to decide whether the ads are worth continuing. Really, you need 100 clicks to be sure, but if you get to 75 clicks and no takers, and the cost per click is quite high, you might want to can the ad.

Follow the principles of cashflow marketing, keeping records of each campaign, and you will find you make money, not lose it.
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