Pay-Per-Click advertising is one of the very best ways to
quickly and (often) cheaply get the word out about your
business. A new campaign can be "live" in just a couple hours
and can bring in thousands of visitors and sales in its first
week.
It can also drain your bank account like a bandit.
The key to making your PPC campaign is simple: Only bid on keywords that will make you money. Here’s how you can do that:
Step One: Know the Value of a Customer
While some people use a longer time line, I use a 12 month average to figure the value of a customer. I calculate how many different customers I have received over the last 12 months and divide that by the total net profit I received from those customers’ purchases.
That gives me the average 12 month value of a customer.
If you are new and just starting out, the 12 month value of a customer will have to be an educated guess-take the net profit per sale and use that figure.
For newsletter publishers who only sell affiliate products, use a figure of $5 to $10 per year per "opened" email. If you don’t know what an "open rate" is or how to track it, I have placed a tutorial here:
All-In-One-Business.com Openrate
For this article, let’s pretend we are selling a monthly membership at $17 per month where the "average" sale results in $17 and the average person keeps the subscription for 8 months.
$ 17 x 8 months is $136 gross income per customer.
If out of that $17 our net profit is $10, then our one year profit per customer would be $80:
$10 x 8 months is $10 net profit per customer.
Once you know the net profit per customer for a year, then you are ready for step two.
Step Two: Know How Much You Are Willing to Pay Customer
We typically base our advertising on the 1 year value of a *new subscriber* rather than a customer, since we often use a two-step method of advertising our products-we first get people to a free report then advertise our products to them.
I am willing to pay up to 50% of my 1 year value per subscriber in order to get them on my list.
In most cases, 50% of net 1 year value of a customer is a good figure to use.
So, based on our "subscription" example above, I would be willing to spend 50% of $80 to get the customer: $40.
In my next article I will show you exactly how to use these figures to bid on the exact words that will give you the greatest return.
Step Three: Know How Much You Are Willing to Pay Per Click
If I am willing to pay $40 in advertising to get a new customer, then I need to determine how many visitors I will need to get that customer.
If you already have that figure, use your actual results. If not, here are some rules of thumb you can use:
If you have a single product sales site with a price-point below $50, use a figure of 1 sale per 100 visits.
In the case of a single product sales site with a price-point over $50, use a figure of 1 sale per 200 visits.
If you have a free trial site, use a figure of 1 sale in 30 visits.
If you have a free report lead generator, use 1 sale in 20 visits.
For our subscription site example, I will be offering a 10 day free trial, so I will go with 1 sale in 30 visits. So, I am willing to pay $40.00 divided by 30 clicks or $1.33 per click.
Step Four: Get Your Keyword List and Prices
Generating a list of keywords is crucial to getting affordable traffic to your offer.
Most people get the top 25 or 30 keywords according to traffic and end up paying top-dollar for all their traffic.
For example: My main market niche is people who are interested in working at home. In order for me to get a top 10 listing with Overture.com for "work at home" I would have to pay over $1.50 per click. Number 1 would cost me $2.67.
At 300,000 plus searches per month, that could run into some money pretty fast unless I can offset that with high volume sales.
But we want to take a different approach. We want to get a high volume of traffic from a much higher number of much less costly search terms.
"at home work" at Overture.com only costs 77 cents to break the top 10, though the search volume is 1/100th.
My "trick" to finding those keywords is to "pretend" to set up an account with Google Adwords here:
All-In-One-Business.com Adwords
(You will likely want to "really" set one up, but just going through this exercise will allow you to use the keyword suggestion tool...)
Using their keyword suggestion tool you can identify hundreds of related keywords and put them to work for you.
By choosing hundreds of lower priced but still targeted keywords rather than a few high-priced keywords, you can still get solid traffic but at a much lower cost.
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