James: Yeah. I think a book is a great thing to have. I’m in the same process of putting out a book. But I’ve taken a radically different approach. So it’d be interesting just to sort of benchmark the two different ways to go about it, see what happens, and then my thing is it doesn’t matter which one is right or better. It just matters that in the end, to be able to analyze it all, figure out what the next thing that I should be doing is based on everything I’ve learned to that point.
I do want to cover this other idea. Recently, I switched off my affiliate program. It happens at the end of the year, but I made the decision to integrate my marketing to bring back control of my brand and to earn the follows and to earn the links from other people, which has been tremendously successful. It already is in its last few weeks.
In the small part, because of the support that your crowd have been doing, we did an interview, which was great. A lot of the people in your relates sphere have sort of picked up or given me some credit for the “OwnTheRacecourse” ideas, and given me roll links. I have actually made sales from it.
So firstly, a big thank you. Secondly, what are your sort of thoughts on this? I know you’re quite passionate about authority market leadership. Can you give me sort of a window into the mind of Dan Andrews and where you see things going over the next year?
Authority market leadership
Dan: Yeah. I’m not sure how cohesive my thoughts are. I don’t have a super broad range of experience. But just as an observer, I noticed that, and I’m not talking about the Bluehost or the Market Samurai or the larger products that are looking for distribution out there. I’m talking mostly about service providers and the information marketers in the middle who are seeking to get their products out to a broader audience.
To me, the best way to build a great business is to have great products number one, and to have a passionate custom base, like one of my favorite articles is 1,000 True Fans by Kevin Kelly. I’ve written a follow up on it called 100 True Customers, and I’m actually working on one called 10 True Clients. So this is going to be a part of my book.
If you can please those 100 true customers or 1,000 true fans, they’re going to do all the sales you need for them. With the case between me and you, of course like you’ve given me a lot of value so I have no problem passing on great products to other people. The problem with the affiliate, tacking on say a 50% affiliate commission for people to pimp your products for you, which is pretty common, is that your signalling that it’s an inefficient product, that the distribution channel is incredibly expensive, and that you’re asking your customers to foot the bill for you.
To me, this always seems so boldfaced on the surface. Just because people aren’t writing blog posts about it doesn’t mean people aren’t thinking those. Because of course the internet marketing dogma is slap an affiliate program and of course incentivize people to go pimp your product, that’s going to make it better. I never felt that way when I looked at the internet, when I looked these products and thought, well this guy is charging $500 for it but I know why this person put it on their blog if they’re not getting paid $250 for it. So now I’m being forced to pay an extra $250 for this product because I read about it on this blog.
That can’t be good for the long term sustainability of this product. In the niches that I followed, there has been no such thing as long term sustainability, except when it comes to products that have reached some sort of scale. I think your products would have been a notable exception as well as the skilled service products like Bluehost and stuff like that. Yeah, that’s kind of the general idea but I’m actually more curious to see how my philosophical wankerdom sort of played out in your real life case.
James: We both have a mutual friend Dan Norris. The first I became aware of him was I got a Google alert for my product Traffic Grab. I went and looked at the YouTube video review of my product and lo and behold, he was reviewing it for his customers, recommending they buy it, and he was not an affiliate and had no intention of becoming an affiliate. This was quite unusual. Later on, he joined my community and he’s also in your community. He’s interviewed me and you interviewed me and then he’s one of the influences I guess. He’s a guy that said, “Hey, you should have a look at this.” He also recommends me other people. In which case, I’ve usually sort of just been there or just about to get there myself.
That whole philosophy was good but what you articulated with the inefficient marketing system, it hit the nail on the head for me because with those $2,000 products, I actually found that somewhat disgusting that they would just pay $1,000 to someone else to promote it, as you say, “pimp it.” Back early on in my affiliate marketing, that was the thing to do, was to sell those products with the whole product launch formula thing. But I quickly discovered that it wasn’t good for people to have those products. And that then as videos emerged, how they really feel about their affiliates, they’ve classified them as their A level and B level affiliates and then how systemized it was to just go around, and around, and around. I call it a circle jerk.
But anyway, where they share those customers, the only people prospering are the ones in the very first ring, and everyone else is really just a bottom feeder or a victim in some ways. Aside from the fact that people can make up their own mind to buy or to not buy, the only saving grace in my case was that I always gave people a bonus. In some cases, the bonus was me helping them on their business, a personal coaching, or things that would assist them get a really good result. So I felt good about that side of it, but I felt bad about the actual product itself until a few years ago. I decided not to promote guru products anymore, and just thought, you know what, I can do a better job of this myself, and I just created my own products. And I went to the market with a fair value approach.
The overwhelming feedback I had from products like Traffic Grab, which I sold for $79, whether that was a $2,000 product, sold for $79, and it really was a big, single finger pointed up at those guys who are ripping people off. And that product sold thousands of copies and formed the foundation for the community that I have now. And it also, interestingly, propelled my done-for-you services business, which as you’ve also identified. There’s this huge need for people who should not be doing it themselves, who aren’t suited to running a team, who might know how to do it, but just really need someone to supply it for them.
That business is powered along, too, in the last year or two. So I guess from my own point of view, the thing you mentioned about inefficient distribution was the most resonating point and the second thing is the support from your own community, guys like the AdSense flippers, guys like Dan Norris, and Tim Conley; they’ve all come from that same sort of environment and that’s the support that I guess I needed for that last step.
But over the last two years, I’d weaned my affiliate percentage of turnover from 25% to 15% to 5% because I’ve got a very efficient marketing distribution arm with my own team. My team are traffic specialists. They build high-converting websites, and they can rank anything. So that’s been our own growth. In the end, the people who squish my face around into the wrong proportions and misrepresent my brand or even worse, just pass off as me, just scraping people and adding no value, that really got under my skin, to the point where when I finally had an affiliate fraud happening while I was away, then that was it. End of story. And I don’t think I’m likely to revisit that affiliate program in the immediate future.
Dan: You know James really, this conceptually could be a 5-hour discussion. The affiliate model, especially the $2,000, with a thousand dollars worth of gravy on top, is really more suited to selling opportunities than it is to selling sort of specific solutions. So the problem with opportunities, this incredible amount of frontage, so they’re sort of for anybody, and they’re kind of at anytime, and that’s why people that are in the opportunity space, sort of quizzically can constantly launch in sort of the same thing over and over again.
They’re not really doing anything much different. So I think I have this article that you might find fascinating. It’s called “The Anatomy of the Internet Marketing Gold Rush.” I think part of the reason that I latch on to what you’re doing and to what the AdSense Flippers are doing is that I see you guys as manifestations of the fourth generation of Internet marketing. I basically list out a bunch of examples of stuff of differentiators between these generations. So that might be a cool thing to link up to in this podcast.
James: Yeah, I’ll put a link to that. I have read it and I really enjoyed that. It was part of the idea formation behind it. I agree about the opportunity guys. A lot of them come to me privately and ask me to help them fix their broken business because they’ve become launched dependent.
When I was in Mercedes-Benz, a really interesting thing happened. Mercedes-Benz came to Australia in the 1960’s and set up a distribution, which was run by the factory and then about six or seven years ago, this guy ran a sale, and we’d never run sales and there was always high value in the marketplace and there was no discounts on Mercedes-Benz, and it wasn’t expected and that’s just how it ran. And this guy did a big discount sale. I believe that was when the whole market was finished from then on.
I see sales all the time in the marketing. It makes me a bit sad but they became promotion dependent and it just trains buyers to hold back and wait for the big sale. So that’s one aspect of it. Secondly, it takes the whole focus of value. I think people should be building real businesses and a promotion is just a spike. It shouldn’t be the whole business. I had this lady come to me during the week. She spent tens of thousands over the last year or two, not made a single dollar back, and she was looking to get SEO for an MLM company that she just joined last month, and she pretty much wanted a guarantee of results and that I would be finally able to get her some money back.
This is the scariest part for me, she denied that this thing was even an MLM company. I said, “With this MLM stuff, you really want to consider if this is the path you want to go down.” She said, “No, it’s not an MLM company.” It is an MLM company. She says, “No. This is affiliate marketing.” So they’ve even gotten so sneaky in this particular company to push the whole focus away from it. But this lady had zero business experience. And it’s kind of sad to think with all these launches, they only work because there are so many people out there who just keep loading up their credit card and buying the crap.
Dan: Yes. And those people aren’t great customers either. I mean there’s always been this dogma that, you know, the beginners … I think it’s all BS. They’re selling to affiliates, they’re not selling to customers. They kind of convince people to put up affiliate websites. It’s all crap. This is like Microsoft dead. Right? It’s like, it’s fine. It worked for them in 2007. It’s not going to work for people looking for opportunities now.
Here’s the thing. I think that a launch is like the Internet version of a billboard or a Super Bowl ad. I mean traditionally, these things have sort of worked and stuff but I mean I think if you have to do the big sale and scream loud about what’s going on, that’s a barometer that your product isn’t working out. You’ve got a long-term sustainability issue. And so if you’re sitting around on your back office concocting sales, what you need to be doing is concocting stories and better products or better conceptions that are worthy of people’s attention. That’s a long-term strategy.
Sitting back, figuring out clever ways to scream your product about your product is really a symptom that your business is heading downhill – or it could be. I don’t know if I can make a universal statement. But I think one of the things that you said to me, you gave the analogy of when you make an offer, it ought to be that you’re just dropping it into a magnet, into a sort of a bowl of metal shavings and the ones that have the right qualities, you’re going to stick to that offer. And then they’re going to pull them right back out. It doesn’t have to be, especially nowadays, this big, loud, screaming affair.