When eBay sent an e-mail to all of its Commission Junction Affiliates that its top affiliate was paid over 1.2 million for December 2003, I hurriedly ran to the Post Office to see if my check was there. It wasn't there, of course, nor was "the check in the mail."
Considering that eBay pays $0.05 per "Buy it Now" or bids and $5.00 per active registration, you can visualize the massive amount of traffic one affiliate had to send to eBay to receive a gross revenue of 1.2 million.
We can only speculate the spread between bids and registrations, but for simplicity sake, let's only review the higher payoff of registrations. eBay has a seven-tiered active registration program starting at $5.00 and increasing to $16.00 as you register more users. The second tier -- or breakeven point -- starts at 250 registrations where registrations increase to $8.00.
The metrics collected by Commission Junction indicate that the conversion rate for eBay is about $5.00 per 100 clicks or $0.05 per click. Coincidentally, this is the lowest price you can bid for an ad on Google Adwords.
After you register your first 250 eBay users, your gross revenue is $1,250 while your advertising costs are $1,250 -- a net profit of zero. With your next 250 registered users, your gross revenue increases to $3,250 while your Adwords cost only increases to $2,500 for a net profit of $750.
If you solve all the equations, you'll find that to gross 1.2 million it takes roughly 76,360 active registrations. Moreover, if the affiliate used Google Adwords to generate the traffic to eBay, the advertising costs were about $381,800 with a net profit of $818,200.
As indicated, this is all speculation on how the eBay affiliate generated this type of cash flow. However, I can testify that the process of using Google Adwords is a valid business model that we use 24/7 to generate affiliate leads and sales.
Although, with trail and error, you could implement a Google Adwords campaign to generate sales, it will cost you a signification portion of your advertising budget to fine-tune and optimize your ads. Or, you could read "Google Cash - How to Earn Thousands Writing Google Adwords Part Time" and take the headache out of a pay-per-click campaign.
Google Cash is a well documented step-by-step process on how to use Google Adwords -- in conjunction with Affiliate Programs -- to generate affiliated leads and sales. The author, Chris Carpenter, outlines several case studies which he uses to generate substantial revenue. Follow his advice and you will operate successful Adword campaigns.
Based on our experiences, the processes outlined in Google Cash generate revenue. But keep in mind that you have to find the correct products to sell that give you the highest leverage for your advertising dollar. Remember our 1.2 million eBay affiliate? The breakeven in advertising cost was $1,250 using Adwords. Read Google Cash and you won't need a large budget to generate positive cash flow and the check will be in the mail!
