As a newbie, you might face a big challenge: not having enough budget to spend in affiliate marketing.
I often get messages like these: “Hey AG, I wanna start making money online. I got $200 to invest. What can I do?”
Sadly, my reply is usually, “Go get a a job”.
Harsh truth. $200 is simply not enough money to even get you started on the right foot.
Just think about this: you will spend at least $100 for proper VPS hosting and a decent tracker. So there you have it, half of your money is already gone, and you haven’t even begun testing.
It like trying to bench 300 lbs when you’ve never been to the gym and you’re out of shape. Not gonna happen.
Let me explain the logic and the numbers behind this.
90% of campaigns start off unprofitable
When I was in high school, I loved science and lab. I also like statistics because you can formulate an hypothesis and then go about experimenting to find the right answer.
An example of an hypothesis is, “Eating Fast Food Will Increase Your Cholesterol Level”.
So here you have just 2 variables to test : fast food and cholesterol.
In affiliate marketing however, you will always have several variables to test in order to verify the validity of your hypothesis (aka is the campaign profitable?)
The variables are: the offer, the angle(s), the landing pages, the images, the headlines, the ad copy, the call to action…
To properly test a lot of variables, you need to perform a lot of testing.
A lot of testing requires money.
A lot of variables means a lot of testing, and you need money to run these tests.
To give you a simpler scenario, think of this: 2 affiliates with identical variables (headline, adcopy, offer, etc.) but different budget.
Affiliate A has a smaller budget and is able to test 3 offers. All 3 offers fail and he’s at loss.
Affiliate B has a bigger budget and is able to test 7 offers. The first 5 offers fail, however offer 6 and 7 are profitable.
With the profit from the last 2 offers, he makes money overall.
You see the difference?
Affiliate A leaves with a bitter taste in his mouth, because his endeavor was a failure.
Affiliate B walks away a winner because he was able to test more offers.
He was able to do that because he had more money to spend.
Moral of the story is this: However has the bigger budget wins.
How To Mitigate Variance
Variance is a nice word to explain the concept of “not everything goes according to plan”
No matter how perfect your planning AND execution is, there is always a random element – of luck or of bad luck.
There is one way to reduce the effect of variance: working with a bigger sample size.
For example: If you flip a coin 3 times, it may give you tail 3 times in a row.
However, if you flip it 100 times, the odds will more likely be 50/50.
Let’s apply this to affiliate marketing.
Say you launch a Facebook campaign.
Your initial results will dictate how Facebook is going to interpret your campaigns. Facebook first shows your ads to a small chunk of your audience.
If your ads perform well and get a good relevance score, you will be rewarded and the platform will show your ads more.
Otherwise, you will be penalized.
One way to combat this, if you start off with some bad ads is to create new adsets and new variants,
But again, more testing requires more money.
It’s tempting to assume that if your testing fails, it must be X or Y or Z.
But who knows. If your budget doesn’t allow for enough testing, you will come up with the wrong reasons why a campaign wasn’t profitable.
What Can You Do If You Have Limited Resources?
If you don’t have a bigger budget, you need one. Simple as that.
Get a second job, freelance.
Start selling stuff in your house that you don’t need.
One weekend I pulled out all the stuff I was no longer using.
There was an old bookshelf, a midi keyboard, a vase, a camera, and more junk I hadn’t used in years, sitting there collecting dust.
I made a list and posted it on Craigslist for sale.
By the following week I had $956 cash in hand.
How To Leverage Your Affiliate Marketing Budget
Get a “testing partner”. Say you have $1000 to test and another affiliate also has $1000 available.
Test the same offer, but each of you tests different variables. Team effort.
This way, at the end of the test, you will have tested more variables together for the same offer.
At the end of the day, keep in mind that losing money in affiliate marketing is part of the game.
You have to take risks in order to succeed.
Even when you lose money, that money is really never “lost”.
That money buys you data, knowledge and experience.
As you keep failing “forward”, you will start seeing patterns of unsuccessful and successful campaigns, and you will be able to recognize the early signs.
This will come with time.
So how much budget do you recommend to start with?
I personally recommend you save up $2000 that you can afford to lose.