Articles

Jason Akatiff. Great Affiliate Journey: From $35 e-book to $400 000 000 in revenue

September 12, 2019


Hi! I’m Roman, an editor-in-chief of ZorbasMedia
and I’m standing… I think it’s the most purest form of marketing. My top affiliate does anywhere from 10 to
13 million a year. The slogan of the company is, you know, for
affiliates by affiliates. Hey, Jason! Excited to have this conversation. Thanks for coming. Yeah, excited to be here. Do appreciate it. I would like to start by talking a little
bit about your personal background. Do you remember how you got involved into
affiliate marketing? I couldn’t forget, right. Back at that time I was, I was selling franchises
for a company called Blimpy. I was selling the franchise licenses to people
that wanted to get into business and they were gonna go into bankruptcy and I was like,
huh, what am I gonna do? Mmm, this internet thing looks interesting. And I bought ebook I think was like $35 or
$37 and it was, uh, it was an ebook like a hundred pages, it was some Perl scripts, which
back before PHP most stuff was written in Perl and it was a forum that you got to be
a part of, and it was called Search Engine Cloaker Secrets. And… So, then, you know, from, from that point,
you know, I stumbled around for quite a while and I just remember, you know, at that time
I wasn’t doing affiliate, I was doing, I was doing Google Ads. Mm-hmm. So, you… Basically, the strategy was you’d put content
together and rank it in the search engines and then put Google ads on the page and get
paid but in a black hat sort of way, reverse engineering the algorithms and figuring out
how to rank. I remember very clearly the first day I got
a check in the mail from Google. It was… I believe it was a dollar 68 and I, and I,
I never talked to anybody, I never did, and Google just sent me money. What was it like? An actual check? An actual check. All right. Again, there’s a long time ago, right. And I had this check and I’m just like, this
can’t be actually real. And I remember going to the bank and depositing
it into the bank and then, you know, I was expecting them to say, oh, this doesn’t,
this isn’t a real check. And then the money went in the bank and then
I hit refresh on my account for like the next five days to see if it bounced. And then after that five days, I was like,
okay, this is what I’m gonna do for the rest of my life. You mentioned once that CPA media buying affiliate
marketers are the best marketers in the world. Can you elaborate on that? Yeah, I… I think it’s the most purest form of marketing. You take something you have zero control of,
it… If we… You know, I’ve been in this business for a
long time but if you take a step back and you say to somebody, would you like to spend
your own money, take all the risk and if we, and send us free traffic and if we feel like
firing a pixel, we’ll fire a pixel. Like, who would get in this business? Like, you know, if you really look at it. Obviously, there’s many people who have done
very, very well and it works but just from a conceptual concept of a business, it’s
kind of crazy. So, you take these people that have no control,
they have, you know, they don’t own the data most of the time on the back end of the offerer,
they don’t own the customer, they can’t increase the value of the customer or they can’t do
anything. Right. They can literally just send traffic to a
link that… and hope that it, that it converts, right. So, they’re, they’re buying media, they’re
building landing pages, you know, affiliates are really special creatures because they
do so much stuff, right. Most manage servers, they typically write
some level of HTML, so they do some coding, they write copy a lot of times, they use Photoshop
because you’ve got to learn how to build creatives, they do business developments and bringing
in the offers and finding offers, they can do campaign management. Like, if you really break down everything
that an affiliate does, needs to do to be successful as a, as a single individual, it’s
really, it’s really amazing, right? And I say they’re the best marketers in the
world because, again, it’s, it’s super, it’s super pure. And anybody that’s going to do e-commerce
or want to build a product company or whatever, I would always engage them in being an affiliate
first because I think if you can understand how to buy media, send it to a page, that
page converts and do that profitably, you’re gonna have such a leg up on any business that
you want to create. So, like, I’m building an e-commerce business
now but I’m using all of my skills that I learned on the media buying side in order
to make that successful, so. Let me ask you this then. I just got this question. Sure. Do you consider yourself an affiliate marketer
still or a businessman now, entrepreneur, in other words? I’m definitely a businessman… but I always
have the view of everything as an affiliate. Right. Like, how I, how I… my lens that I view
the world through is from, from an affiliate lens. Does it help you to run your business? I mean, of course, it does. Yes. Because you’re in the affiliate business. But if, let’s imagine, if you had to run a
different business would your skills… It would tremendously be helpful, right, because,
you know, to be a successful affiliate, you’ve got to, you’ve got to understand finances,
you’ve got to understand money in and money out, you’ve got to understand lifetime values
or you know how is that happening on this side and, and can I get that increase, do
I captured… There’s just so many facets to being an affiliate
but really the biggest thing is problem-solving, right. I think affiliates are some of the best problem
solvers that I know because they deal with so many problems all the time. Because problems do always pop up. Yeah, and it’s not, you know, you look at
like a steel company and they do the same thing for years on end, right. Our business, I… we’re doing a lot of volume
in one vertical this month, that could all go to zero next month and we’ve got to reinvent
and figure out a whole new business in the next month, and this happens all the time. I mean… you know, not for us now because
we have so much diversity and so many, we’re big enough that there’s, the ups and downs
swings, you know, balance each other out to a certain extent. But as a single affiliate, you find one offer,
you hit that offer as hard as you can and make as much money as you can and it’s gonna
go away for some reason, but that is never gonna last forever. Exactly. Changes in Facebook, changes in Google, changes
in, I mean, you come to these shows and you see year-over-year something’s big and then
two years from now that thing won’t even be here anymore. And for four years you made four hundred plus
million in US dollars. Yeah. And you lost 85% of your business? 95. 95. Every affiliate needs a tracker. Now I’m going to give you three reasons
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and usually answers within a minute. Join now and get your discount from ZorbasMedia. Details in the description. Yeah, let’s talk a little bit about A4D now. Sure. As far as I read it, you started it in 2008
and for four years you made four hundred plus million in US dollars. …revenue. Yeah, that was, I was going to ask you what
was that number, was it total sales or revenue? Commissions. Commissions. So, I mean, you know, that’s the commissions
that we got paid by the merchants. All right. The merchants that, that probably generated
maybe a billion, you know, two billion in sales in actual value, but that was just our,
our piece of the business. How did you grow so successful and big? Yeah, at that point in time… this is, so,
back in, you know, if we can go back for a second to the ebook era… Mm-hmm. Forums have been what has changed my life
in this business, right. I didn’t have success for a long time but
I was in a forum and other people were having success, then I was like, well, if they can
do it, I can definitely do it, right. These are real people, I talk to them every
day. So, you were active on the forums… Extraordinary active. So, that’s how you grow your affiliate network. I presume that you posted something and..? Yeah, yeah, yeah. So, I don’t know how it happened but somebody,
somebody basically said, hey, do you own a platform, and I was like, yeah, and then we
had like two thousand affiliates sign up from Wicked Fire the next day. Two thousand. Yeah, and it was just me. Most of the affiliate networks don’t have
it even today, two thousand, wow. Yeah, well, again, these are people that I
had given back to a community for years, and then all I did was, to grow the network from
there, all I did is in the little signature line at the bottom, I just said, I own A4D
or Ads 4 Dough at the time, if you’d like to be an affiliate with us, sign up here and
here’s my blog if you’d like to read, you know, information, you know, stuff that I
help people with. And then all I did is respond to posts and
just continually help… That’s the power of the community. Yeah. Just any question anybody ever had that I
knew the answer to I would respond to and people saw me as helpful and, you know, they,
they wanted to work with us. So, the next morning you woke up… Yeah. …having two thousand affiliates, running
a successful affiliate business. No, no, yeah, I didn’t know what anything,
it was just me, right, I didn’t have an affiliate manager, I didn’t have accounting people,
I didn’t have anything, it was… I was literally doing everything, setting
up the offers, talking to the affiliates, paying the bills, running QuickBooks, again,
everything. That’s the story. And in four years, you got… Yeah, and… 4 hundred million. And then you were sued, as far as I know,
by… Federal Trade Commission. Federal Trade Commission. For false claims, I believe, or something
like that. Yes, so… What did you feel back then? Were you scared or..? You know, one of my core beliefs is work on
yourself and your skill sets. So, you can lose your money at any time but
you can, you can never lose your growth and your skills. So, I wasn’t overly, I mean, it was crappy
to go through but I wasn’t overly, I knew I would figure out something or build something
new if the worst of the worst happened… But, when that happened, that was later in
2012, that, you know, 95% of our business was that stuff and our overhead at the time
was sixteen-seventeen thousand a day and… And you lost 85% of your business? 95. 95. So, I was, I was, you know, at the… So, with the FTC, they sent me a subpoena
basically it’s called CID in the US and they didn’t tell me why they were subpoenaing me. So, that went on for two years. Mm-hmm. And… So, it actually finally finalized, I was in
Santorini and that all went through and finalized. We wired them a million bucks and… That was a fine. Yeah, that was the settlement or whatever. You know, and I came back and… So, I wasn’t even in the office when this
happened. I was like, hey, guys, we got to shut down
all that stuff, all these things that we’ve been doing for so many years and all of you
know inside and out, we have to stop doing. And then I remember going back to work and,
you know, we were probably doing $4,000 a day and… in margin, and $17,000 a day in
overhead. And I just pictured myself coming into the
office every day setting $13,000 on the table and then going to work for 10 hours. That was not easy, wasn’t it? Yeah, it was not easy. Not an easy feeling, I guess. But, you know, whatever doesn’t kill you makes
you stronger, right. We had a couple of instances in A4D where,
you know, where we basically almost went bankrupt. In 2010 we had about 4 million in non-payments. Wow. So, merchants that stiffed us or, you know,
credit card processors, you know, froze all their accounts or whatever it was. And I remember that one point in time… You know, we, we were running around 150,000
a month in overhead and we had about 120,000 a month in the bank. Why didn’t you stop it? We did. You did. Yeah. I mean we stopped, we turned all those verticals
off, we turned all that stuff off and just reset. That’s one thing that, if everything is going
bad, just stop doing everything… And reset. And reset and say, what do I have, what are
the pieces that I have in play here that I… and then, what’s the wisest decision going
forward? If I knew… if nothing was going on right
now, what would I do, what path would I choose? And what path did you choose? We started doing auto insurance leads. So, at that point in time, there was a company… I can’t remember the name of it, but the offer
was called “To Insure for Less”. And, you know, we just started focusing on
auto insurance lead, and Phil, a friend of mine, started running 10 four, 10 to 14,000
leads a day in auto insurance for us. That, that basically saved the company, yeah. What is your secret sauce? I mean, 17,000 affiliates. And you’re tending to be like completely white
hat. My top affiliate does anywhere from 10 to
13 million a year. How would you estimate the financial value
of A4D now? And that is kind of what you are focusing
on right now, lead generation. Yeah, we do a lot in the lead generation space,
typically high-value leads, high-value, high-quality. Like what? Like insurance? Auto insurance, life insurance, Medicare. We do stuff in the law space, legal space,
refinance. You know, typically we, we’re focusing on
offers that, that Facebook will allow us to run and you’re not gonna lose accounts and
stuff like that. People call it white hat. You still lose accounts with Facebook, it’s
just, it is what it is, but much less, right. You don’t have to cloak or have any of those
type of things. So, that’s really where we focus, focus most
of our efforts. So, you know, we run a lot of native, Google
ads and… And you have like what 20,000 affiliates right
now? Probably I think 17,000 that are approved
on the network but… and those are all people we’ve talked to over the phone. I mean probably 200,000 have signed up and
those were the ones that, you know, we kind of had gone through, you know, in that, in
that mix, I’m sure some of those people aren’t in the business anymore. Around 17,000 and you’re tending to be like
completely white hat. What is, what is your secret sauce? I mean, 17,000 affiliates. Just being around a long time, right. Being around a long time and, you know, just
keeping the brand relevant and keeping a lot of effort into the brand, the quality of the
A4D brand and… You know, I, I… we put a lot of effort into
making sure we take care of affiliates, right, because the slogan of the company is, you
know, for affiliates by affiliates because I was an affiliate for five years and there
was a bunch of stuff that I didn’t like about affiliate networks. Do you see more and more affiliates are kind
of getting interested in transitioning to white hat side? Quite a bit, yeah. I mean… You know, it’s really, really vertical focused… You know, to do the blackhat stuff, you don’t
really have to be that great of a marketer. Do you know what I mean by that? Like, mostly, most guys are just copying somebody
else’s ads and somebody else’s pages… And trying to figure out how to squeeze it… Yeah. Get accounts. And it’s not really a marketing game per se. With, you know, with white hat stuff, everybody’s
not running the same thing. I mean we probably have 750 offers that are
getting traffic every day on the network. So, in order to do it, you have to typically
be a better marketer, right, you’ve got to be better at copywriting, you’ve got to be
better at testing your ads and split testing your landing pages and stuff like that. And I think a lot of times I watch people
come from a black hat world where, you know, they’re just copying somebody else’s news-based,
celebrity-based landing page, you know, that’s all fake and whatever and, you know, you bring
them over and you’re like, okay, well, here’s a life insurance offer and here’s kind of
how it’s brought, and, you know, we… you almost have to reset. Yeah. You know, because… it’s like, well, I’ve
got this thing over here making me money but I really don’t want to do it anymore cause
it’s a pain in the ass because I am constantly losing Facebook accounts, I can’t scale, like,
whatever the problems are, I’m just tired of it, I want to come over here. And then they come over here and they expect
to be successful on day one. Which is not really possible. It’s not possible, right, you’ve got to, you’ve
got to kind of change your mindset, you probably have to brush up on your marketing skills,
some… read a couple of copywriting books like… That also probably takes more investments
in the very beginning. It does, it does. But it’s just much more sustainable, right. Like, our e-commerce stuff, I don’t ever lose
accounts, ever. I haven’t lost an account in two years on
an e-commerce side of the business. So, it’s like, yeah, it can be harder, it
can be more work to make it work up front, but it’ll typically stay there and be profitable
and make money for longer periods of time. What are your biggest traffic sources if we
speak about that practically? Facebook’s definitely number one, we’re probably
60-70% Facebook. Google’s probably 20%, native is probably
15% and then push and pop and stuff like that is like probably three blended three to five
percent. So, do you think that white hat leadgen, leadgen
stuff is doable by a single person? Super, super doable. As I was saying, you know, my top affiliate,
you know, does anywhere from 10 to 13 million a year, you know, a single guy out of his
house. You know, it’s still doable. I do think it’s getting harder, you know,
back five years ago, you know, as media continually gets more expensive and compliance gets tighter
and tighter, it does get more difficult for the single affiliate to have that level of
success, but it’s still very, very much possible. You mentioned once that at a certain point
you wanted to sell A4D but you realized that it’s not really sellable. And what, what is that that you have built
now that is sellable? Yeah, so, right after the FTC lawsuit, you
know, you do some soul searching, right. Like, well, what am I gonna do now, right? And it’s like, well, maybe I could sell A4D
and, yeah, I realized that I literally had invested all this time into building something
that was worth nothing. And I told myself I will never, never do that
again, right. So, that was, you know, part of our strategy
and, and… looking at white hat offers and, you know, sustainable stuff, right. If you’re talking to a private equity firm
and you are like, yeah, we cloak Facebook and we make fake accounts and do all this
stuff that has to happen in order for all that black hat world to exist. And they are like, “We’re not interested
in this.” You want to pass due diligence. Right. So, it’s just part of the, part of the strategy
and offer selection and the, in the areas of business that we’re, we’re in and growing
in, you know, operational, operational excellence is a big part of that as well. How would you estimate the financial value
of A4D now? I don’t know, it’s a, it’s a hard question,
right. Probably somewhere between 30 and 50 million
dollars, I would guess something like that. Would you sell it? That’s, that’s another hard question, right. If somebody came and gave you the offer you
couldn’t refuse, everything’s for sale, right. But, you know, I see a fairly clear path to
a hundred million, you know, over the next two to three years. Is that possible to go public with a CPA-based
kind of business? Matomy is public. Matomy is public. Yeah. So, Excel Marketing in the US is, I know they
have a plan to go public. I don’t see why not, you know. Where would you love to be in five years from
now? The space is growing crazy. Every year it just gets bigger, right. The opportunity is still there. So, we’re in the right place at the right
time still? 100%. I know that you encourage people to ask themselves
where they would love to be in five years from now? Yeah. So, I want you now to answer that question. Where would you love to be in five years from
now? You know, I’d like, I’d like, on the A4D side,
I would like the, you know, ideally acquire some companies and roll up those companies,
maybe one in Europe, maybe one in New York, maybe one in Asia and one in South America,
so we can really take all of our systems and our great operations and our tech and really
start to grow, grow in those other markets. You know, I’d like to see if we can get 150
million, 200 million a year in revenue, which I think is fully doable. So, that’s on the A4D side of the business,
and then on my e-commerce product side of the business, you know, I’ve built a ton of
technology there and that’s where a lot of my day-to-day focus goes. So, you know, my goal ultimately is to take
that e-commerce product business and see if I can build it to a billion or multiple billions
of dollars a year in revenue under our own brands and our own product lines. Do you think that the performance marketing
industry is good for new businesses to be made up? Oh yeah, as the space is growing crazy, like,
every year it just gets bigger, right. It gets a little bit harder and it gets bigger. It’s like, it’s a weird thing that’s happening
but I remember, like, the first Affiliate Summit I went to, you know, in America was
really the first affiliate focused tradeshow and it was in Las Vegas, right. I went in and there was probably 20 booths. 20? Yeah. I was an affiliate at that time, you know,
and I didn’t know anybody, I just talked to people in forums and that was another thing
where I went to the trade show, there was 20 booths, which for me as an affiliate, I
went to this thing and I was like, oh my gosh, there’s all these businesses here, like, the
people are actually building real businesses and this, like, this thing is actually real. I remember that and I was like, I’m gonna
build a big business in this space, right. But, you know, that show probably had 300
attendees, right, and here we are, you know, I think they said 3,600 attendees at a just
the European version. 200 companies around. Yeah. And then that’s happening in Asia and you
still got all the trade shows happening in the US and I mean this stuff is just growing
and growing and growing and I, you know, I think… there’s something appealing to being
an affiliate, right. Like… Like what? If you have a corporate job and you’re like,
hey, I can work from anywhere, I could work from my laptop and I don’t have to have employees,
I don’t have to do all that stuff. And, you know, I have a lot of friends that,
you know, they’re very much a lifestyle business and they love it that way, right, they travel
for half of the year and they make decent money, you know, they’re not making millions
or anything like that but they make plenty of money to live, and I think as a business
it’s very, very doable to make a really good living and not work that hard. In the beginning, you have to work very hard
because you have to learn. Yeah, and build the foundation. Build the foundation, yeah. But once you cut the skill sets and you really
know how it all works, like, I could probably as a single affiliate in this world I could
probably make, I don’t know, quarter-million dollars a year working two days a week for
four hours I guess, I would guess. So, you still can do it? Still, yeah, the opportunity is still there. So, we’re in the right place at the right
time still? 100%, 100%. I… yeah, I think the opportunity is definitely
still there. Thank you very much, Jason. Yeah, thanks for having me. I had a great time talking to you. Yeah, that’s awesome, man, appreciate it. Cool.

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