An upset affiliate recently stated that Hydra Network screwed him out of $25,000 because the advertiser said that he was sending bad leads. The affiliate contacted Hydra Network, but apparently they wouldn’t give him any of his money back. This is definitely a bad sign and means that Hydra Network must not be looking out to well for their affiliates.

That’s a lot of money to be lost and if you are an affiliate I would urge you to stay away from Hydra Network so you don’t get screwed over yourself.

For more information check out the WickedFire Hydra Network thread. ]]> http://www.nicklarson.com/watch-out-for-hydra-network/feed/ http://www.nicklarson.com/watch-out-for-hydra-network/ http://feedproxy.google.com/~r/nicklarson/~3/bDKLpN6pd3k/ http://www.nicklarson.com/analyzing-businesses-with-fermi-problems/#comments Fri, 19 Dec 2008 22:32:23 +0000 Nick http://www.nicklarson.com/?p=161

Hey how’s it going?!  Just got done with a hectic week of finals and now I’m ready to head back to the Twin Cities and relax for Christmas break.  What are your plans for Christmas, anything cool going down?

I spent a little time looking around at this relatively new site called Theme Forest (part of the envato network).  It’s a bad ass site full of really cheap, yet awesome templates for sale.  They prices range anywhere from $8-$25. You can even become an author for them and sell your own templates via their site.

One thing that really bothers me about Theme Forest though is that they take up to 75% commission every time your template is sold!  This bothered me right a way because it made me wonder what would happen if sites like eBay and Amazon charged that much commission every time you sold something.  That’s right, they wouldn’t exist!

I decided to register under the usual “nickclarson” and start a thread about the issue.  It sounds like a lot of authors on the site are bothered by the really high commission price because it seems like Theme Forest is doing little to no work yet making most of the money.

I also proceeded to analyze their business further with a Fermi Problem.  The following is a summary of the analysis I made.

Calculating total Revenue:

Based off the november popular users and how much they sold lets be conservative and say 1300 templates were sold in November. Looks like the most popular themes are the html templates which sell for around $10-12. So if we consider that some higher cost wordpress and joomla themes were sold as well lets have the average price per theme be $15 (also a relatively conservative estimation). That comes out to $19,500 revenue in november.

Calculating Costs:

Based on a few factors that we discussed in the thread  we can conclude that the maximum being paid out to authors is 37%. Lets just use the 80/20 rule and say 80% of the authors are selling 20% and 20% of the authors are selling 80%. Lets over estimate (to make up for our underestimates) then and say there is an average of 30% being payed out to the authors per sale. So that’s only $5,850 paid out to authors compared to their $19500 revenue.

Also can’t forget about another main cost which is to have reviewers review the templates. There are currently 490 templates at TF and taking lets say a cost of $5 to review each template, that comes out to $2,450 TO DATE cost of reviewing the templates. This is based on paying reviewers a high $25/hour to review and assuming they can only review 5 templates per hour.  So even if they reviewed 100 templates in November that’s only $500.

Calculating Profit:

That means based on our Fermi Problem, $19,500 (revenue) - $5,850 (authors) - $500 (template reviewing estimate) =  TF made $13150 in profits during the month of November. (Please note I tweaked a few numbers from the actual thread to make them a better estimate)

Analysis of other costs:

Other costs would include anything like advertising, development, reviewers. As far as advertising goes, my guess is envato uses most of their network sites to advertise TF for free. Even if they spend 3k advertising a month that’s still over 10k left over for other things like development work, blog posters, and what ever else you can think of.

Conclusion:

Here’s our final estimation involved: “There’s a very high chance that Theme Forest is making a ton of money and there’s no reason why they can’t offer the authors a higher commission.”

The goal of this post was not necessarily to complain about a random website that you don’t care about, but rather to share with you an example of how quickly you can pull apart a business using a Fermi Problem with a predictable amount of accuracy.  The idea is to make an equal amount of over estimations as underestimations.  The more accurate you do this the more accurate your outcome will be.  Fermi Problems are great for estimating things like this!

I hope you learned something new and  hope that you are able to apply Fermi Problem to something you are working on in the future.

Just read about this tip the other day.

Instead of setting your alarm for a certain time every day, you can use a kitchen timer and set it for a certain number of hours.

That way you are getting the same amount of sleep every day.  Once I get around to getting myself a timer I’m going to start doing this.  It seems like my sleep varies so much something like this is definitely what I’ve needed.

Give it a go!

Nick

P.S. how do you like my sweet clip art that I found?

I know a few people who are making BIG money with affiliate marketing, but working hours upon hours to get there.  Do you think it’s worth it?  Ask almost any of these big affiliate money makers how many hours they put in to their “business” and if they don’t tell you 24/7 it’s usually really not to far away from just that.  I think that’s why after awhile a lot of marketers end up moving on to bigger and better projects.  Like Uber with Ubercamp, and Amit Mehta with ppc classroom.

If you love affiliate marketing then it’s no problem.  However in mine and a lot of other people’s cases, we may like it a lot, but we just don’t LOVE IT.  I honestly hope I never have to put that much time in to my business and probably never will.  My goal in life isn’t to see how much money I can have, it’s to have a good life while trying to get money out of the entire equation.  If any of you have read books like “Four Hour Work Week” you’ll begin to understand exactly what I’m talking about.

It’s called the “New Rich”.  The New Rich, aren’t the people with the big bucks (however it can be if you play your cards right).  It’s the people who are able to make enough money to have an incredible life while working hardly any hours to get there.  The “incredible life” part comes mostly from the fact that you aren’t spending all your time working.  This gives you much more time to do the things you really want to do like traveling and hanging out with family/friends.

Of course I’m not saying working that many hours is bad if you really, truly love what you do.  Except if you’re like me, you’d rather be doing a whole list of other things before sitting on the computer for up to 12 hours a day like some people do.

Nick

P.S. not sure why my last couple posts have had so much to do with The Four Hour Work Week, but I guess that style of life is something I really believe in!

I just upgraded to Wordpress 2.7 RC1, and let me tell you, it’s amazing so far.

When Wordpress had changed their admin layout the first time I wasn’t really impressed, but this time WOW.  It’s incredible.  They made everything amazing.

Here are a few of the things I found that were the biggest improvements over earlier versions of Wordpress:

• The side menu added instead of the top menu, with everything at your fingertips
• You can install plugins automatically right through the admin.  Which means you don’t have to download the file first.
• Much better media manager.
• POSTS have their own category in the menu so they are separated from other things like links and pages
• Better comment administration with key shortcuts

And best of all the upgrade went flawlessly, just like I expect from Wordpress.

Check it out: http://www.wordpress.org

Now it’s off to find some cool plugins!

Nick

Well here’s an easy fix I found:

• Open up “wp-admin/includes/update.php“
• Remove/comment the line that says (Line 44 for me): echo “<div id=’update-nag’>$msg</div>”; 
• Save it and you’re done!

I’ve been pretty busy lately with school and life in general.  It seems even if I have an entire day off there are always things to be done.  I switched my major for the fifth or sixth time the other day to Computer Science so i’m pretty excited about that.  I also have been in an extracurricular Adobe Flex related club so it’s been fun to mess around with that and get better at programming in general.

After watching Tim Ferriss’ pilot “Trial by Fire” last night, I got pumped up about my life in general and I am ready to make many changes!  It had been awhile since I heard much about Tim Ferriss and it couldn’t have come any sooner. 

Question:

What I want to know is:  What do you think about Tim Ferriss and his way of life (the four hour work week)?  If you haven’t heard of him check him out on http://www.fourhourworkweek.com/blog

Make sure to check out his Pilot if you haven’t yet!  I’m not sure of the future showing times but he should have them on his site.  It was a great show!!

Here’s a preview:

There are many things a person needs to know to become successful in internet marketing, but without this one you’ll never make more than just a little bit of money here and there.  Even if you have everything down to a science and know what you are doing. 

So are you ready?  The secret is to not get LAZY.  So many times have I started up some campaigns and gotten to a point where I’m making decent money only to stop a few days later because I’m happy with the money I’m making.  The only problem with that is eventually those campaigns die down and I’m left making no money at all!

What I should have been doing is working hard even when I was making plenty of money so I could get new things set up, and make sure the old things were still making me money.

I think this is one of the big things that a lot of people need to grasp.  I don’t think affiliate marketing is one of those things where you can just say “I’ll be happy making this much money, and once I’m there i’ll stop.”  You either have to go big or go home.  The second you stop working your profits are going to slide and you’ll be right where you left off.  Except this time around you’ll be more discouraged then the last.

To be honest, this is where I am sitting right now.  I know how to make a lot of money but for some reason I just get lazy whenever I get a few successful campaigns running.  I guess it’s just because I am almost 21 years old and in college.  Either way, you have to find a balance between your online business and your life!  I think the main point I’m trying to make here is to set a schedule of work hours and stick to them, even if you already are making loads of money.  That way you can make sure you’ll keep your income flow steady for years to come.

Well that’s about all for this one, sorry for not posting for almost two months.  I’ve been getting myself settled back up at college and trying to have some fun!  I’d love to  tell you guys all about it though, so I think I might start doing that a little more often in the future.  In between the money related posts and stuff.  At least that way I’m not just going dormant for months on end and I can make this blog a little more personal and enjoyable for myself.

Later,
Nick

P.S. if you like what you read subscribe!

It’s about time that I posted something worth reading… or just something in general!

I know facebook ads totally changed their policies with the new re-design, but I thought this would still give some people insight as to how to set up a profitable campaign on facebook.

Anyway, I’m about to go step by step and show you how I set up a campaign that was making me around $100 a day in profit with around 30 minutes of work.

I think the hardest part for me is looking around and finding an offer that I think will do well on Facebook. Not only do you have to choose a good offer, but you have to have an idea of how you are going to promote it. These days you have to be really clever and come up with some cool ideas to get a decent campaign running on Facebook.

There are really two variables on Facebook the way I see it. Your conversion rate, and your click through rate. Both of them have to work well together for your campaign to be profitable. The idea is to laser target your campaigns using Facebook’s targeting options so that you can maintain a really high CTR. A really high CTR means you pay less for clicks and have a better chance at turning a profit. Later on I hope to make a post going into more detail about this.

Moving On…

For my offer I chose “True.com - Christian Singles” from CX Digital (Offer #3361). I knew this was a high converting offer and that it did well on Facebook after talking to my affiliate manager Mike.

I’m going to run through the creation of my ad using the new Facebook look, hopefully it doesn’t confuse you.

1. Getting Started - Just fill in your affiliate url that you got from the offer on CX Digital. I suggest using a subid with a title like “christian_ad1″ that way you can tell all of your ads apart later. Using subids you can tell which ads are converting and which ads aren’t.

2. Create Your Ad - Nothing special here. Just make sure you have a picture of a cute girl and a relevant ad copy. The main thing that determines your ctr in the end is the picture. Chances are you’ll have to try out a ton of different pictures to find the one that’s works the best.

3. Reach the exact audience you want - This is the most important step, you need to make sure to target the audience you are trying to go after. You can use age, relationship status, sex, but the most powerful part in my opinion is the keyword targeting. I could go into more detail here, but I think you get the idea.

4. Price your Ad - I usually start with around .30-.35 just to get things rolling. If your ctr ends up being really high you can start lowering it later on. It’s just something to experiment with. Once you have ran a few ads you’ll start to get the hang of it and figure things out.

Well that’s pretty much it for now! I tried to be very detailed, but at the same time leave room for your own exploration.

The most important part is that you just try it! In one of my previous posts I have coupons for $200 facebook advertising so now you have no excuse! Get a few things running and see what works! Don’t give up, so many people are making money with Facebook so you know there is a way.

That’s all for now, this actually ended up being pretty long. Hope it helped some.

Later,
Nick

P.S. If you need help or have questions check out the Contact page!

It basically just makes the point that the only way you are going to make money is by doing. Until you get your ass to work and start trying you’ll never make any money online what so ever.

A few months back I took Marketing seriously and decided to start DOING. That’s when everything took off and now I’m at the point where i’ll be registering my first business within the next couple of weeks so I’m very excited. All it takes is motivation. So stop reading blogs like mine, or ebooks, or anything else and just go out and start your first campaign!!!!!

I’ll even throw myself out on the line so if you have any questions or just need someone to bust your ass just let me know.

Later,
Nick