If you’ve embarked on the affiliate marketer route, you might already be very successful with pay-per-sale, pay-per-lead\/pay-per-action, and maybe even the new-fangled pay-per-call business model for a network or merchant-direct program. But are you awesome of the awesome profit potential of lead generation for local businesses?<\/p>\n
There’re a number of marketers who’ve shared their experience in this space:<\/p>\n
Taking an example. If you got a $100-200 payout for a finance-related lead, at a cost of $30-50 in lead generation costs, which works out to a 275% margin. Which sounds attractive.<\/p>\n
However, the finance service provider might make a commission\/profit in the magnitude of $1,000 to $5,000 on the customer, about a 19,000% gross margin. Factoring in a 20% default rate and operating expenses of 30%, the customer value is a healthy $1,500 (assuming the provider manages their risks prudently).<\/p>\n
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So if you’re an affiliate, would you prefer to make a $150 commission per lead or $1,500 per customer?<\/p>\n
Just remember that a number of CPA affiliates who’ve tried to go down this route have given up because of the extra administrative and operational effort that is involved.<\/p>\n
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I’ve been coaching a client in the real estate industry about the mechanics of lead generation and he recently spent $200 in a test PPC campaign, which generated 8 leads, and resulted in 1 conversion translating into a gross profit of $4,000.<\/p>\n
Aside from his costs, his time spent was marginal, so he’s coasting at about 19 times ROI.<\/p>\n
Note: this was a test campaign, so you should not go out and extrapolate a linear ROI from starting a $5,000 campaign.<\/p>\n
However, he applied a number of points which led to the success:<\/p>\n
Note: unlike the example above, you don’t have to take on a local lead generation campaign from start to finish, and instead work with insurance agents, realtors, service providers to hand the leads off to. Contacting a local partner, having an agreement in place, and periodically auditing the process to ensure that all leads are being tracked accurately, can be a very profitable income stream to complement your existing efforts.<\/p>\n
One line in the Dennis Yu guest post bugs me though “To many SEM specialists, this is a golden opportunity. But then, they have to realise that Singapore is a small market. And it cannot sustain their ROI, just by focusing on one market alone.”<\/p>\n
Given that Singapore’s GDP is $240 billion (2008 estimate) and is ranked 46th in the world, with a stock of money rated at $52.57 billion (31 Dec 2008) [Stats from CIA World Factbook<\/a>]. I can’t help but feel that guest poster Gerald Neo either is pretty naive, or didn’t do his homework. Hopefully, it’s the latter.<\/p>\n Choosing one of the industries listed at the Economic Development Board of Singapore’s industry sectors<\/a>, such as Aerospace, Petrochemical, Alternative Energy, Biotechnology, or Microelectronics can potentially be a business worth a couple of million dollars. That’s anything but a “small market”.<\/p>\n –<\/p>\n