Internet Marketing Tycoon

**Digmen1** · 07-06-2010, 10:25 PM

Hi Guys
I have a small e commerce website.
I want to drive traffic to it with pay per click ads.

I have tried a few, but they all suggest very high bid rates eg 50 cents per click !

That is just madness. To get a sale one probably needs quite few clicks say between 30 and 100. So who can afford to pay 50 cents per click?

I know it depends on the product you are selling.
But we are not all selling airfares to Hawaii or Asbestos Classs actions Law suits.

What do you think is a good rate to offer ?

**chrishirst** · 07-07-2010, 01:38 PM

the simple answer is:

"One that earns more in sales than it cost to get the sale".

BTW PPC ISN'T for "driving traffic". It is for driving sales. So I would suggest your are looking at generic terms (expensive) rather than specific terms which are cheaper and usually convert better.

**Digmen1** · 07-07-2010, 02:31 PM

Quote:

Originally Posted by chrishirst

"One that earns more in sales than it cost to get the sale".

Can anyone suggest an actual figure rather than a general comment.

**Digmen1** · 07-07-2010, 02:38 PM

Does any one have any comments on the actual rates that they think a click is worth ?

**chrishirst** · 02:56 PM

How can we do that?

We don't know what your conversion rate is.
We don't know what the CTR is.
We do not know what the CTS (Clicks to sales) rate is
We don't know what your product profit margin is.
We don't even know what the product is!

ONLY YOU can work out the right price to bid at by testing various words and phrases you find a balance between costs and profit.

It's just like running a real business, YOU have to make some decisions for your self!

Now IF you have absolutely no idea of how to manage an advertising campaign why not employ a professional to run it for you?

Learning how to manage PPC campaigns and budgets is a trial and error process at first. NOBODY can tell you a exact price to bid unless they know that particular marketplace or product.

So if your product makes you $5 per sale and it takes 10 clicks at 50c per click to get a sale your profit has gone, so in that scenario you need to be paying 10c a click at most.
But if you make $50 a sale with the same CTS 50c a click is not too bad.

NOW do you see that guessing at a "good rate" is simply NOT feasible!

**john546** · 07-08-2010, 01:29 AM

The only person that knows how much they can afford to pay is the one that actually owns the site and has all the stats at hand.

When I advertised with Adwords at over 10 cents a click, I worked out how much the site was making per unique visitor on average. If it was making around 50 cents on avg per unique then bidding 10 cents a click was fine for me, even 25 cents a click. But then you have to monitor the clicks conversion rates and all that as the customers coming from clicks could not be as targeted as general organic traffic.

**TWD** · 09:54 AM

How long is a piece of string?

Seriously though, its just math.

P = (EC x CR x GP)/EC

where

P = The break even price for PPC ads
EC = Expected number of clicks for any given period
CR = The conversion rate from clicks to sales
GP = Gross Profit from each sale

If the numbers are solid you should be incrementally better off for any
price at a level below P.

**Digmen1** · 07-10-2010, 08:43 PM

Thanks for the replies.

I don't know what my conversion rate is because I don't have enough data yet.
My product sells for from $5 to 20.
My profit margin will depend on how much it costs me to sell them !

What I was trying to get at in my OP was the fact that many advertising websites that arrange ppc marketing say it pay to bid about 50 cents per click.

What I was trying to say is that this is just crazy and that imho very few busineses would be able to really justify that figure.

What is an average click though rate ?
Some of you ad professionals should know this ?

What is an average conversion rate ?
Some of you ad professionals should know this ?

**TWD** · 03:17 AM

Click through rate is not relevant. If they don't click, you don't pay.
Conversion rate VERY GENERALLY speaking is anywhere from 0.5% to 5%

If you don't know your conversion rate you should assume the low end and adjust as you get current data.

You honestly don't know your average Gross Profit? How do you know you aren't selling at a loss with or without advertising?
If you are serious you should have all the numbers on these types of questions.
You can have different ads for different products, so the PPC calculation may be different
depending on your GP for each product.

If you read my post again you should have realized that 50 cents per click may or may not be a good price. It all depends on what you are selling.

Did you know that the going PPC rate for the keywords "mesotheliomatic cancer" is around $99 per click!!
Thats ninety dollars, not cents.
Reason it's viable is that lawyers get big payouts for these kinds of class action law suits.
http://www.mediapost.com/publication...art_aid=115431

So do the math again.

**chrishirst** · 07-11-2010, 05:14 AM

Quote:

My profit margin will depend on how much it costs me to sell them !

Nope, your profit margin is the difference between what it costs to buy the product and what it normally sells at.

What it takes to generate a sale are "costs", and you have to decide what costs your profit margin can stand before it becomes uneconomical. Certainly you can increase the selling price to encompass a higher cost factor, but then of course you are then reducing your sales prospects if your marketplace is at all competitive.

**showbuiz** · 07-11-2010, 02:56 PM

depends on keywords. your website. products. competitors.

you can't just set a fixed price.

**Digmen1** · 07-11-2010, 03:12 PM

Thanks for that.

But getting back to my original post as an advertiser paying 50 cents just to get a click is not viable.

What are good conversion rates ? No one is saying.

But I would hazard a guess that you may need say 50 clicks to get a sale. So to my mind 5 cents a click would be about right.

Are there any professionals on here that can give a few real life sample figures. (no names of course)

**chrishirst** · 07-11-2010, 03:46 PM

It's the piece of string question again.

A good conversion rate is one that makes more in sales than it costs in clicks to make the sale.

PPC and CPC analysis is subjective. Only you can decide what works for your site and products.

Even somebody selling exactly the same products may not have the same figures as you would come up with.

Now you have already ascertained that a 50c CPC is not viable for your product or is it that you would require a 100% conversion?

You cannot base your calculations on guesses, you HAVE to do some test marketing with REAL adverts and a real budget.

You need to "test drive" the keywords and phrases to find out what actually drives buyers and what drives conversions.

If you have any keyword/conversion data from natural search this too can be starting place for words and phrases to bid on.

You have to work out a budget, run the campaigns and see what flies. Without actually testing you cannot hope to pin down what is going to be profitable.

**showbuiz** · 12:08 PM

Quote:

Originally Posted by Digmen1

Thanks for that.

But getting back to my original post as an advertiser paying 50 cents just to get a click is not viable.

What are good conversion rates ? No one is saying.

But I would hazard a guess that you may need say 50 clicks to get a sale. So to my mind 5 cents a click would be about right.

Are there any professionals on here that can give a few real life sample figures. (no names of course)

you should really think about your question.

it depends on each person. product. keywords. landing page. the ad itself etc. you can not have same conversion rate as someone else. you can not pay same price on different keywords. it is all relative to what u selling, your ad etc.

you should always run your campaigns with a ROI tracking software. never run ads without it or it is like giving away your money.
I use prosper 202. the best one.

**TWD** · 07-12-2010, 08:24 PM

Quote:

Originally Posted by showbuiz

you should always run your campaigns with a ROI tracking software. never run ads without it or it is like giving away your money.
I use prosper 202. the best one.

Whats wrong with Google Analytics?

**showbuiz** · 07-13-2010, 11:28 AM

i like prosper better.

**MakeFreeCashMan** · 07-13-2010, 03:10 PM

For my BridgingOptions site, we had a Google Adwords campaign running to launch it for a few weeks. We were paying anywhere from £0.79 to £2.09 per click for a huge list of mortgage/loan related keywords. That was costing us aprox £35-£40 per week (but we were 'turning down' the rates out of hours). You can set how much you want to spend per day and Google will spread out your ads throughout the day so as to not go too much over budget. Just over £200 got us 11 very good leads off the back of adwords alone, and for the ROI, that is really good for us. It really does depend on what products/services you are offering and how much you make per sale as to how much you should spend on advertising. You do get a feel for it after a few days, and google are helpful enough to give you hints and tips (and even suggest more relevant keywords) throughout. If it is your first time with adwords, you should probably be able to find a promotional code to get you started from somewhere too.

**WSMCoop** · 07-24-2010, 12:23 PM

Like everyone else said you can't possible give out average conversion rates, or average cost per clicks because there is such a wide variety.

There are plenty of companies and products that can profitably pay a LOT more then 50 cents per click.

It depends on your niche - some clicks can cost over $10 for companies and still be worth it to them.

The only way to figure out what works for you is to test. Yes - you'll likely have to spend money to test and a lot of it. Running your own business isn't as easy as just turning on PPC and collecting money. You have to test what keywords are working for you - and make sure to track using something like Prosper202 so you know what keywords are winners and which are losers.

**Digmen1** · 07-24-2010, 02:26 PM

@MakeFreecashman and WSMCoop

Thanks very much for the detailed info.
You have both confirmed my gut feelings, that is that Adwords is only OK for websites selling high priced goods or services that can justify the costs per click needed to be seen.