PPC Marketing - Doing the Maths
By Rob Wood
Tue, 28 Feb 2006, 23:38:00
While many people use pay per click search engines as a way to promote clixGalore Merchant programs, there are quite a few things you will need to think about before you jump in and start paying for ads. While it is profitable for many people who use this method, it can also cause you to lose money. Let's go through a few of the things that you should be thinking about when you decide to use PPC search engines in your Affiliate Marketing strategy.
Firstly, lets go through how exactly this is done. There is a detailed tutorial on how to use Google Adwords here. By way of summary, you basically need to take the destination URL from within the clixGalore banner code and insert it as the "Destination URL" into the relevant form in your PPC account. This is generally the same for Google Adwords as it is for other PPC companies such as Overture and others.
Before you get to this stage, however, you need to plan how you are going to make a profit. That means doing the maths! Many people plunge into search engine marketing without bothering with this stage and end up actually losing money - don't let that be you!
Firstly, you will need to decide what you are going to promote via your PPC campaign. This can be a whole Merchant store or you could concentrate on a single product by using the linking capability of clixGalore. It is recommended that if you are using this strategy you concentrate on a single item and deep link to it, as you will generally get a higher conversion rate. You need to ascertain what YOUR commission will be if that particular item sells.
If the Merchant is offering a 10% commission and the item costs $100, then your profit will be $10 - that is 10% of $100.
Therefore if you spend less than $10 on promoting that item to make one sale, you will have made a profit.
Now, there are a few other facts and figures you will need to know. For example, a good website will USUALLY convert around 1% of TARGETED traffic into sales. Rates go higher and lower than that and nothing is guaranteed.
Based on that, if you can send 100 targeted visitors to the product you are promoting you should make one sale (again this is NOT a guarantee).
Now, usually PPC companies such as Google Adwords charge a minimum of 5 cents for a click - therefore 100 clicks will cost you $5 - this figure can increase if you elect to bid more than the minimum. If one of those 5 cent visitors makes the purchase then you will have made a $5 profit ĘC that is your $10 commission minus the $5 you spent on traffic.
Now, there are many varying factors that can make this difficult. For example, people will be bidding against you to appear higher up the list of advertisers for the keywords you are bidding on in most PPC search services. You will need to take the price of your clicks into account and establish the maximum you can afford to bid and still make a profit - remember in our example that if your commission will be $10 then you need to spend less than $10 on traffic to remain profitable.
Now, you would be well advised to also be careful of the text in the ads you use to drive people. Ideally it will be very specific with regards to the product you want the visitors to buy. For example, if you want the visitors to buy a $100 blue widget, then you should mention that it is a $100 blue widget in your ad. That way, people will only click on the add if they are interested in $100 blue widgets. By driving such targeted traffic you are aiming to increase the amount of people who will buy the product and decrease the amount of people clicking on the ad who really aren't interested (ie curiosity clickers).
Now that about covers the very basics of promoting Merchant via PPC marketing, but please be aware that there si still A LOT more to learn.
Now as for a formula you can use it is more or less like this:
Commission minus Your Costs = Profit
You can get a feel for what commission a Merchant generally pays out by checking their EPC (Estimated Payout Per 100 Visitors). That is the figure that other Affiliates combined have earned on average from sending 100 visitors to that Merchant. The EPC is available for ever Merchant just by using the search function from within your login area. It is only a guide, but it can be a very useful figure. If you can send 100 targeted visitors to that Merchant for less than their EPC then you will possibly make a profit promoting them via a PPC program. Remember you need to send targeted traffic and how targeted that traffic is will depend a lot on your skill in writing relevant ads.
As usual, the key is to sit down, do the maths and plan your PPC campaign properly.
You will get more of a feel for what you are doing with PPC marketing as time progresses, but hopefully now you know enough of the basics to get started!
Please note 'Google Adwords' is a registered trademark of Google Inc.
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