I am old, so I remember the Walt Kelly comic strip from the ’60s called Pogo, of which the most famous line ever was “I have met the enemy and it is us.” In Internet marketing, it is so often true that we are our own worst enemies. I was reminded of that recently when I taught one of my many classes to veteran marketers looking to understand this Internet thing. Most traditional marketers have some amount of struggle with the Do It Wrong Quickly concept, but on this occasion I ran into one who was apparently so threatened by it that nothing was going to penetrate. And my diagnosis is that the fear she was grappling with was preventing her from moving forward—that she was literally her own worst enemy. And it happens to all of us sometimes.

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Affiliate marketing is a tough way to make a living these days. The competition is fierce, the commissions are slimmer than ever, and the marketing costs higher than ever. All this was brought to mind for me when someone sent me a question on affiliate marketing. This question was from someone with a lot of experience in Internet marketing who is tired of working for other people and wants a business of her own, in an area that she knows about, such as fashion or beauty. But she knows this is a tough business, so she wants to know what she should do differently.

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Easy Money Is BS

These multi-level marketing schemes aren’t limited to home parties for sex toys, BBQ accessories, and household cleaners, of course. They are rife on the internet. If you’ve spent any time in internet marketing circles, you’ll have seen hundreds, no doubt.

Worst business ever.

What Is Multi Level Marketing?

Multilevel marketing is where the salesperson sells items on commission – with a twist. The real “opportunity” – supposedly – is to be had recruiting a downline. A downline consists of other commission-only salespeople who try to recruit other commission-only salespeople. And so on. Some may even sell a few products!

Apparently you’re not allowed to refer to the triangular-shaped Egyptian icon anymore….

The Problem With Any Marketing Opportunity

One major problem with MLM, or any market opportunity, be it affiliate or otherwise, is the size of the market.

All markets are limited. All markets are limited because the number of people is finite. Some markets are significantly more limited than others. For example, the number of people who have $2K, or whatever, to spend on, say, a rapid-mass-cash-code-instant-money-generator is quite small.

That isn’t to say there isn’t money to be made, however the more people trying to flick products, or recruit a downline, and the more people trying to rank well in the SERPS, the less chance a paying customer will arrive via any one site. Claims about making a lot of easy money on-selling such products, therefore, should be taken with a large grain of salt.

Evaluating Market Size And Potential

Over-hyped marketing opportunities often fail because they attempt to sell commodity product into very saturated markets. Or, there may be very little demand for the end product. If there was a lot of demand, surely they’d invest money in experienced salespeople in order to grab market share ahead of competitors.

So how do you size up a market, MLM or otherwise?

If there was an easy way, well….life would be too easy Really, it all comes down to some educated guesswork.

Here’s one simple way of thinking about it:

Market size = the number of buyers in the market x quantity of product purchased buyers in the market per year x price per unit

You could get a rough idea of the number of buyers by looking at search volume against keywords you deem to have some level of buyer intent. Estimating the quantity they buy depends very much on the product. Does it need to be replaced often? i.e. a battery. Or is it a one-off? i.e. A house? When multiplied by the cost, you can estimate the potential size of a market.

There are a number of methods you can use. Some more complex than others. All involve guesswork. However, it’s important to have a rough idea when deciding where to best focus your efforts.

Quantifying the potential of a market is somewhat more difficult.

I could find out the size of the car market in the US using the above equation, but that doesn’t mean I could successfully enter that market. I would also have to evaluate my abilities, the level of competition, and the level of investment required.

This is often the mistake rookie affiliates/multi/level marketers make. They get suckered by the potential numbers, without stopping to think if those numbers make any sense. Even if they do, then does that mean the marketer can successfully enter that market?

Really, the marketing approach – be it MLM or otherwise – is irrelevant. The key questions to ask when considering any market are fundamental ones: how big is the market, how many competitors are there, and how can I compete?

Comments

For decades, we’ve hired sales reps to be hunters instead of farmers. We’ve even coveted our neighbors’ (competitors) hunters. Perhaps this recession, along with more effective gate-keepers, (receptionist and voice mail), and the “Walmartization” of buyers, shows us that hunting has become too tough and expensive.

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