I'm not saying that we're heading for a recession [2015 edit - so I was a bit wrong], but people that don't have any economics training (I managed a 2.1 degree) are also worried about the economic signs at the moment.
Without going into boring detail; the level of personal debt is horrendous - at low levels of interest rates you can cope with it. But look at the level of bankruptcies and how they have doubled in the last couple of years, the lack of confidence in the banking industry, the increase in oil prices and international conflicts, consumer confidence is being knocked.
What every affiliate should be doing now?
1) Review your ROI on every programme you promote. You should be doing this already, but if you're a PPC affiliate go through your costs and returns and set out a minimum ROI you are willing to accept now, and what you accept in a downturn. Some may say that if you're making a profit then you should still run a program.This is fundamentally incorrect.
This is the wrong view to take for a number of reasons:
- If you're concentrating on a programme giving you a 5% ROI, is it really worth your effort? Are you earning an effective rate of £5 an hour or £50?
- Could you be spending the time monitoring the campaign developing more profitable campaigns? Perhaps campaigns that work better in that economic environment?
- Will the risk of merchant non-payment or delay in payment too great and affect your cash flow? Increased economic uncertainty would also put pressures on your merchants. In an economic downturn all companies look to extend their payment terms and pay even later than normal - how will that affect you?
2) SEO affiliates should look at their ROI too. How long does it take to make a new site profitable? Some of my sites I'm not looking to make returns for 6 months, a year. How would it affect your cash flow if you had to wait that long? You should be trying to make your SEO self-sufficient. You should be focusing NOW on building authority sites.
3) MFA (Made For Adsense) sites should also be looking at the potential fall in CPC rates and hence your ROI. At the moment CPC rates are particularly buoyant. In an economic contraction advertisers cut budgets. During my time at TopJobs I went from spending £60k a month on advertising to nothing in a few months during 2001 - others will be doing the same.
4) Review your target industries. Consumer electronics and foreign travel sites would suffer as people cut back. However, traffic to debt consolidation, personal finance and recruitment sites would increase. I won't do your market research for you, but it'd be wise to have a think of which products and services do well when people are cutting back. Look at the switch between premium brands and "low cost brands".
5) Build or maintain your "war chest". I've made a few quid out of the industry but I'm a boring git with it. I don't go out and waste money on fast cars or big toys to make myself look cool or massage my ego. I prefer to have the peace of mind that money in the bank gives. The best time to grow your business is when others are crappng themselves about their own. This brings me on to ...
6) Be prepared to invest now. Start to build a sustainable affiliate business now. If you've got total conviction in your ability to still make good levels of cash when it will be difficult for others and you've got some great ideas, don't be afraid to invest in them. Large returns will still be available for those that have the balls to take risks. Invest in website technology, spend time on research and ...
7) Build a support network. I'm lucky to have people that look-out for me. And I support others when they need a bit of advice or promotion. If times are going to be hard it will be important to help others and be helped in return. Never be afraid to ask for help and make the effort to go to get2gethers. This would also help if you need to ...
8) Build an escape route. If things do go "tits up", you'll need to find something else to do. If you're in position to ride out the storm or retire - good on you. But others won't be that fortunate. If you've recently come out of an industry to go full time in the affiliate marketing area then make sure you keep the contacts you made before and keep up-to-date with the career path you could get into if you needed to.
9) Build up a mailing list NOW. If you can you should be building up a mailing list on every site. This way you won't have to go to the expense of attracting new customers. You should also be looking at other low or now-cost marketing strategies such social networking groups, blog comments, link building etc. etc.
10) Don't bury your head in the sand. Be aware of the fact that the economy is changing and look for products that will be coming to the market in 2 years’ time and get prepared for them now. Even if affiliate success isn't solely related to the domains you own, but having good ones can make life so much easier. Do your research and look for future products now. I won't tell you how to, that's my secret, but start looking for next Christmas' products and the ones after that!
There is one thing to consider: even if we don't go into a recession, what harm would there be to review your affiliate proposition anyway?
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