A Guide to Forecasting Affiliate Revenue
We work with a lot of bloggers, and we have a deep history with Affiliate Marketing. So when these two worlds meet, we’re often asked, “how much money can I make from affiliate marketing via my blog?” Here is a guide to help your forecast affiliate revenue.
How Affiliate Marketing Works
This isn’t an in-depth guide on how affiliate marketing works, but in case you don’t know:
- The blogger (publisher/affiliate) partners with the brand (advertiser/merchant) – typically via an Affiliate Network
- The blogger places tracking links, given to them via the affiliate network, in their blog posts
- The blogger discloses there are affiliate links in the post by using a disclosure plugin
- Visitors to the site read the post and click on the tracking links, taking them to the merchant’s website
- If the visitor buys something, the merchant tells the network (via a tracking pixel)
- The affiliate network then rewards the blogger with a commission.
So, how much money can I make from affiliate marketing via my blog?
That question is answered by measuring everything you can, making some assumptions, and doing a little bit of math.
Affiliate Revenue = Visitors * CTR * CR * AOV * Commission
Start by logging into your Google Analytics (or similar) to determine your top pages. Sort by visitors (unique, if possible) and start at the top, working your way down.
Is this post talking about something that can be sold online? If the post you’re looking at is a review of a meal delivery service then YES! But if your most popular post is for “Campfire Breakfast in a Bag” – not so much. Identify the posts which have the potential for affiliate marketing success.
Now, look at how you attract visitors to this page: is it via SEO? PPC? If so, what keywords? Social Media? What networks? You need to get inside the head of your visitors. Users sitting at their desk with their credit card shoved in the number keys, standing upright, will convert much better than those who end up on your site as they browse Pinterest while sitting on the toilet. This is where you need to make an educated guess to your Conversion Rate (CR).
If you’ve made it this far, you’ve:
- Identified a top post…
- … with a product or service that can be bought online…
- … with visitors who are in a situation and are likely to buy something.
Next, you need to find if and where the merchant has their affiliate program. The quickest way for this is to go to the merchant’s homepage, scroll to the bottom and look for “Affiliates” or “Affiliate Program.” If you can’t find that, try searching google with “site:merchantdomain.com affiliate” and if that fails, log in to the top affiliate networks and search for them. Sometimes the merchant doesn’t have an affiliate program and you can’t monetize your traffic that way. If so, you need to get creative (do they have a referral program instead? Maybe instead of earning money for referring users to a merchant, you earn credits for free products or services).
When you find the affiliate program in the network, you should be able to see some stats like Average Order Value (AOV) and Commission Rate. If not, ask the Affiliate Manager (or OPM)!
Now you’re ready to multiply a bunch of numbers together:
Affiliate Revenue = Visitors * CTR * CR * AOV * Commission
ex:
Affiliate Revenue = 4000 (per month) * .15 * .05 * $145 * 12%
Affiliate Revenue = $522.00
or:
Affiliate Revenue = 200 (per month) * .08 * .07 * $19 * 20%
Affiliate Revenue = $4.26
Sometimes, the only way to figure out these numbers is to give it a shot and measure them yourself. For example, the conversion rate will vary based on traffic source. With SEO, your conversion rate will even vary based on what keyword was used to find your site:
As you focus on keywords further down the funnel, you’ll see increased conversion rates.
What are some examples?
Let’s say you write a post titled, “Bean Box Review.” It receives 300 visits per month and your click-through rate is 10%.
Bean Box’s affiliate program is through ShareASale (Awin). The average sale is $11.54 and the default commission is 10%:
Your review post gets a 20% CTR and you’re converting at 20%:
Affiliate Revenue = Visitors * CTR * CR * AOV * Commission
Affiliate Revenue = 300 * .2 * .2 * 11.54 * .1
Affiliate Revenue = $13.85
But if your post was titled “Bean Box Review and Coupon Code” you’re now moving your focus keyword further down the funnel. While you may not receive as many visitors, your CTR and CR can go way up:
Affiliate Revenue = 200 * .5 * .33 * 11.54 * .1
Affiliate Revenue = $38.08
Then, you contact the Affiliate Manager or OPM and ask for a commission bump to 15%:
Affiliate Revenue = 200 * .5 * .33 * 11.54 * .15
Affiliate Revenue = $57.12
Just by moving your focus on a keyword further down the funnel and working with the Affiliate Manager, you’ve quadrupled your revenue from this post!
Every time you increase any part of this formula you’ll make more money with affiliate marketing.
Measure everything, analyze the results, understand why something went up or down and once you’ve found the winning formula: repeat it again and again.
If you’re already earning some revenue with Affiliate Marketing and want to earn more, or if you think your site has great potential but are just too overwhelmed to get started, contact us about our Affiliate Channel Management services.