Portfolio Diversification in Affiliate Marketing

This is a guest post written by Jim Liu.  Jim Liu resides in Los Angeles, California.  He is a member of the Click Consultants Forums and other Affiliate Marketing Forums.  Jim worked on the Wall Street for nearly 13 years before deciding to move to California.  He is also a black belt martial arts instructor in Brazilian Jiu Jitsu!

One of the benefits, of being a member of Click Consultants, is that I have the ability to ask questions and get responses from super affiliate marketers such as Mystickcal, Artamon, and Kellix. One of the key points I have learned is that it is extremely important that there is portfolio diversification within your affiliate marketing business. especially with my 1- on- 1 session with Derek Salyers (owner of Click Consultants).

So what exactly do I mean by portfolio diversification?  Quite simply, I’m talking about making sure you are running several different niches like ringtones, dating, weight loss, etc and not just running one offer!  The reason for this is because you can never be sure what’s going to happen in this business and what offers or niches may start to die or disappear.  (Ringtones for example)

I worked as a systematic trader in the currency markets for nearly 5 years. I had to carefully place my bets in the markets by doing research on past trends, and patterns in the currency markets. I understood, at that time, that portfolio diversification was an important component to keep volatility down and increase profits.

In affiliate marketing, portfolio diversification is also relevant. Having been out of the currency business for nearly 10 years, I am constantly reminded by Derek that I need to diversify my keywords (especially making it broad–instead of deep) and marketing niches.

When I first started my debt campaign, I took it to the extreme, and wrote a php script to  parse the  80,000 keywords into 3000 separate groups. When I turned on the campaign, I realized that tuning the portfolio was more than I could handle. I would regularly get IP blocked, by Yahoo, for too much activity, and had to go to the local gaming shop where they had 30 IP’s available to use.(I only used 3 in one session). Derek warned me about how many I should start with, and or course, he was right.

What I eventually saw, with a manageable portfolio, were the patterns within the keywords. I also saw how some of the long tail keywords were contributing to the overall profitability of the campaign. For me, the portfolio, as a whole, is much stronger than the few keywords that make the most money. I am beginning to think of the portfolio as an organic structure that will keep growing in profitability with time (with constant tuning).

Building portfolios in different niches, I think, is essential to survive in affiliate marketing. There is so much change due to advertisers dropping in and out, laws changing and etc., That is probably one of the reasons, why most successful affiliate marketers are younger, since they are able to change at a moment’s notice.

Comments

  1. Pay Per Click Case Study says:

    Awesome guest post. The importance of not having all of your eggs in one basket is essential to anyone.

  2. Excellent guest post, I guess it rings true with the old adage ‘Don’t put all your eggs in one basket’

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