If you have not done so, it is recommended you read over Part 15 – Profiting After The Sale first.
Welcome to the sixteenth module in the ‘Journey Into Internet Marketing’ tutorial series. This unit will introduce the concept of joint ventures and demonstrate where they fit into the online marketing picture.
Most importantly, I will also expand upon the benefits of being involved in joint venture partnerships and how you can land partnerships of this type.
Let’s begin by considering the basics of online joint ventures.
A joint venture is an agreement between two or more parties to work together for the mutual benefit of all partners in the agreement.
As with so many aspects of online marketing, the basic joint venture concept is one that has been borrowed from off-line business where partnerships of this nature are extremely common throughout commerce and industry.
As examples, joint venture alliances are very common in the global motor vehicle manufacturing industry, with one very famous example being the Auto Alliance International partnership between Ford and Mazda.
Similarly, the Fujitsu Siemens Computer alliance is a joint venture operation between Fujitsu of Japan and Siemens A.G of Germany to manufacture computers.
These two examples illustrate a couple of different joint venture variations.
The first partnership brought the two companies together in a long-term relationship whereas the second is a single project on which the two companies have agreed to work together.
Similar arrangements happen in online marketing to.
You might for example decide to throw your lot in with another marketer as long-term business partners or you might set up a joint venture to work together on one single project.
No matter how it works however, the important concept that drives every joint venture arrangement is that every partner to the agreement must bring something of value to the deal that adds to the strength of the partnership.
In effect, a JV partnership should always be stronger as a team than the individual members would be if they were working on their own. A simple example will highlight exactly why this is so.
Imagine that you have created your first product and you are now ready to sell it. You found that writing an e-book was a breeze and creating videos to support your e-book product was relatively easy as well.
However, although you can write sales page copy, you have never created a full-blown HTML sales site before and as a graphic designer, you are nowhere.
In this scenario, you have to decide how to go forward.
One option would be to plough on regardless by attempting to design and create your own sales page, download page, banner advertising materials and so on.
Given enough time and effort, you will no doubt be able to produce some form of HTML site from which to sell your product.
Nevertheless, the chances are that the underlying coding is a shambles (restricting the potential for search engine traffic), your graphics look terrible and the sum total is a sales page that is unlikely to generate sales.
Add this to the fact that it has taken you three or four months to get the site to this point and you begin to see that whilst this approach might save money, it is not an efficient, professional way of dealing with this problem.
Another option would be to pay someone else to design and build the site for you. This works as long as you have a spare $500 or $1000 to spend on hiring someone to help you.
Assuming that you don’t have a lot of spare cash or that you don’t want to spend the money you do have, proposing a joint venture operation to someone who can build your site makes a great deal of sense.
If you then bring a graphic designer on board to make sure your sales page looks attractive, you have the whole project covered without spending money.
In this case, your new JV partners would probably expect a share of the project proceeds.
For instance, you might offer them 25% of net profits each whilst you retain 50%. The specific shares are irrelevant, it’s the principle that you need to understand.
What matters is that to deal with your own shortcomings, you find partners who bring the necessary skills to your project which ensures that it comes to fruition.
Setting up a JV partnership can work the other way around as well. If you have an abundance of skills or knowledge in an area of expertise that other marketers don’t and they need these skills for their project, they might approach you in the same way.
Whatever the specifics of the deal, the basic underlying concept is always the same. Every JV partnership is an agreement for people to work together to optimize their effectiveness and ultimately their profitability.
When you first launch yourself into Internet marketing, it’s a given that you are far more in need of help than you are in a position to offer help to others.
Being brutally honest, the only way you are likely to attract suitable joint venture partners at the beginning is by offering them a financial reason for partnering with you.
After all, you are still unknown in the business. You haven’t had a chance to develop your skills to a level where you have something of genuine value to offer marketers which they themselves don’t have, and no-one knows anything about you.
If therefore you are seeking a joint venture partner or partners, all you really have to offer is the ability to pay them a percentage of the profits generated from your product.
Unfortunately however, this theory is not without its problems when applied in practice.
For instance, because most new marketers are in the same situation, they all look for the same kind of joint venture arrangements at the beginning. Almost without exception, their ‘big’ JV idea will be to find an ‘expert’ who has a list of subscribers to whom they are willing to promote their product in return for a commission share.
As an example, imagine that with your product ready, you plan to approach ‘Mr. X’ who is a major player in your niche. You know that he has a subscriber mailing list with tens of thousands of names on it, every one an individual for whom your product would be ideally suited.
From your perspective, putting information about your product in front of these subscribers would generate hundreds of sales and add lots of names to your own list in the process.
Hence, you plan to offer Mr. X a joint venture proposal.
If he agrees to mail his subscribers details of your product, you’ll give him 50% (or even 75%) of the initial sale proceeds. In terms of logic, this JV proposal makes lots of sense.
Unfortunately however, every other marketer in your niche knows this too.
This is why dozens of them are submitting JV proposals that are exactly the same to this poor guy each and every day.
Hence, when you e-mail your proposal, it is likely that it will get buried under the weight of a hundred other proposals. Even if it doesn’t get buried, your offer is far too similar to the rest to stand out.
Either way, you see the benefits of this arrangement but your intended target either can’t or won’t.
This is therefore a very ineffective way of playing the ‘JV game’. You need to adopt a different approach, but before you do so, there is work to do.
Preparing your approach
It is important to understand that when you approach Mr. X, he is not ignoring you because he is not interested in making money. On the contrary, he is extremely interested in generating as much cash as possible.
The real reason he ignores you is because he doesn’t believe that you have anything which will put cash in his pocket.
It is therefore your job to prove him wrong. You must demonstrate beyond all reasonable doubt that he will make money working with you.
Simply by doing this, you have taken a giant step in the right direction, a step that very few of your direct competitors are ever likely to take.
Before doing anything else, it is absolutely crucial to prepare things professionally and to do your homework because the first thing you have to do is prove the profitability of your project.
For instance, your expert is not interested in what might happen when you launch your product.
Instead, they want facts and figures about your sales, your sales system and your traffic data. If you can’t provide the details, you will not get past first base. They will want evidence that you have conducted a test marketing campaign and the results of the campaign. They will ask to see proof of earnings and traffic statistics so that they can assess how well your offer is converting.
For this reason, conducting a test marketing campaign by spending some money on paid advertising to send laser targeted visitors to your sales page makes a lot of sense.
It will cost money to do this but a JV arrangement with a top name in your niche could be worth many hundreds or thousands of times more.
They might also question whether you have tested different sales page variations (remember the importance of testing and Google Website Optimizer from tutorial 13?) to see whether your results can be improved.
The answer had better be ‘yes’ and you must have evidence of changes and results too.
They will question what marketing materials and support you can give them to maximize their sales.
For instance, it is all very well suggesting that they recommend your product to their list subscribers but writing e-mail messages is time-consuming work. They may not have the time or the inclination to sit down and start writing.
It will therefore be much more persuasive if you have written a series of unique outgoing e-mail messages for them already.
It should be obvious, but if you have incontrovertible proof of your professionalism and of the fact that they will make money from involvement in your project, the chances of them coming on board are far greater.
If however you have done no testing, have no statistics and little idea of what is likely to happen when you launch (as happens with most new marketers), you might as well pick up your coat now!
You need to have all of your key information in place well in advance. Only after doing this should you move to the next step.
With your preparation complete and homework done, the next thing is to find a suitable expert or experts to whom you can present your joint venture proposal. There are several ways of identifying these people.
To begin with, create a ‘throwaway’ free e-mail address (e.g. Hotmail, Yahoo! mail etc) and use it to subscribe to as many niche focused mailing lists as you can. Keep an eye on incoming mail because it should give you an idea about people who are recognized by others in your niche as experts.
Next, search Google for the leading forums in your niche using a search term like ‘topic + forums’. These for example are the most popular forums in the weight loss market:
Join the most popular forum sites to keep an eye on what’s going on.
When you see other members to whom the majority seem to defer, the members whose every post seemingly encourages everybody else to join in, then you have probably found the expert you’re looking for.
If you pitch in every time you see someone who you think might be an expert starting a new forum thread (and as quickly as possible), this helps to raise your profile and they begin to notice you.
If this happens, you might be able to contact them through the forum rather than via e-mail. As this is a far less common channel of JV approach, it might be a more effective way of presenting your proposal than e-mail is.
Sending and selling your JV proposal
Assuming that you don’t have a chance to attend a seminar or meeting where you might encounter suitable JV partners (which is the best way), you need to prepare a written proposal that you can send to potential partners.
In this document, you need to set out the exact terms of the proposal you would like to establish so that there is no confusion should the partnership get off the ground.
It also makes sense (although it is not always practicable) to get both parties to the agreement to sign the agreement. This ensures that there is no subsequent misunderstanding.
After you have prepared your written proposal, the next step is to get it into the hands of your intended joint venture partner.
Every regular Internet user understands that e-mail is an incredibly efficient system for delivering information most of the time. As a consequence, most of us do not think very much beyond the confines of e-mail when considering sending information to another Internet user.
This is why using a forum to approach an expert instead of e-mail can be very effective. They don’t expect it and they probably don’t have a ‘PA’ monitoring their forum conversations as happens with their e-mail inbox.
The bottom line is that whilst e-mail is normally extremely efficient, it is also unfortunately the information delivery system that is least likely to get your joint venture request noticed.
For this reason, try calling before sending it. You probably won’t get through the first time, but be persistent and you could very well end up talking to ‘the man’ eventually.
Tell them that you are going to e-mail your JV proposal and give an exact time when the document will be sent. Make sure that you stick to this schedule.
After the initial approach, follow it up with a call to confirm that the information arrived. Even if it has, they probably haven’t read it yet, so this serves as a reminder.
Mention that you will call them back at a specific time on a specific day to discuss the proposal in more detail and answer any questions they might have. Again, make sure that you stick to this planned schedule.
In my experience, most successful online marketers are determined, persistent and often stubborn individuals.
If therefore they can see that you are also determined and persistent, that you do not take no for an answer easily, it is far more likely that they will at least hear you out. If however you are like most online beginners who give up at the first sign of resistance, you can guarantee you will get nowhere.
If you do get through, you have approximately 20 seconds to ‘hook’ them.
You should not therefore start the conversation with a long drawn out, over-effusive thank you. This is probably what they expect you to do (which means they put you back into your ‘beginner’ box mentally) and it wastes the precious seconds when you have most chance of persuading them.
The key to making this work is hooking them with a clear benefit of working with you that really appeals to them within the first 20 seconds.
In order to do this, homework is necessary. You need to discover as much as you can about Mr. X, his likes and dislikes, passions, hobbies, basically anything you can find that helps you know them a little better.
If you can find out what turns them on, you can then tailor your approach accordingly. For example, if this guy is already a major success story in your market, money is probably not the ultimate driving factor and more. If however you discovered through your research that he is a major supporter of charity XYZ, your pitch could be something like ‘Blah, blah, blah…and for every successful sale to your list subscribers, I’ll give you 50% and 25% to XYZ’.
In effect, all you are doing is giving him 75% of the sales revenue as a commission.
However, you are doing so in a way that directly connects with an element of his character that is extremely important to him, effectively pushing his ‘hot buttons’. You have also proved that you have done your homework which very few other marketers will ever do.
In effect, by presenting your case in this way, you have ensured that you stand out from the crowd in an extremely positive way.
This cannot fail to impress anyone with whom you want to partner, and once they are impressed, you are well on your way to achieving success.
Working with joint-venture partners is a way of multiplying profitability of your business without multiplying the amount of work you need to do.
Another advantage of joint-venture arrangements is that if you can persuade someone who is more experienced or has more knowledge about your business than you do, you can learn a huge amount from them as well.
Of course, you want to JV with the top people in your business, but this may not always be practicable, particularly in the early days. In this case, try to find potential JV partners who are at a similar level as you who have complementary skills or abilities that you do not.
The most important thing is, always be on the lookout for potential JV partners and never be afraid of trying, no matter how prominent someone is. If you don’t try, you can never win, right?
It is now recommended you proceed on to Part 17 – Effective SEO Link Building.