Marketing Defined

As Adwords or pay per click advertising is one of the most immediate ways to increase traffic to your web site, how do you profit from pay-per-click advertising and increase traffic to your web site in the one hit, without declaring bankruptcy?

Easy! You simply need to know how much you can afford to spend. How?… By working out your Value per Visitor

How to Configure Value per Visitor

In order to figure out what each visitor to your website is worth, or the maximum you should pay to attract a visitor to your site… you compute your key statistics and figures via the following three simple steps:

STEP 1:

Figure out your visitor-to-sale “conversion” rate:

To find out the number of visitors you need to close one sale, divide the number of unique visitors to your web site by your total number of sales.

So, if you make one sale from every 100 unique visitors to your site, your conversion rate will be 1 in 100, or 1%.

STEP 2:

Determine your net profit on each sale:

This is the amount you pocket after all expenses are covered.

First, calculate your gross revenue. If you had 48 sales at $97 each during the month of September, your gross revenue for the month is $4,656 (48 x $97).

Then deduct expenses. Say it cost $3,183 to produce those 48 products:

$4,656 gross revenue - $3,138 expenses / 48 sales
= $31.62 net profit per sale

STEP 3:

Calculate your “value per visitor”:

Divide your net profit per sale by the number of visitors you need to get one sale:

$31.62 net profit per sale / 100 visitors = $0.3162 per visitor

That means each visitor to your web site is worth 31 cents. This is the amount you can afford to pay to attract one visitor to your web site — and should be your maximum bid for PPC advertising.

Now, you may be thinking that your 31-cent-per-keyword budget will automatically exclude you from bidding on competitive keywords… but that’s actually a good thing!

The keywords that tend to be expensive are often much too broad to be effective for small online businesses like yours. The more narrowly targeted your keywords are, the more targeted your visitors will be — and with credit card in hand, are more likely to buy your product.

Consider this: If you sell waterproof sport watches, and you bid on the keyword “watches,” it will cost you at least 90 cents to get a top-three ranking on Yahoo Search Marketing.

But if you bid on “waterproof sport watches” you’ll pay around 20 cents to get the same position.

Since there are many types of watches out there, you’re better off appealing ONLY to those people who are looking for exactly what you offer. They’re the people who will buy your product!

Above formula courtesy of Derek Gehl.

NOTE: Google Adwords or any pay per click advertising campaign does have a small learning curve. I can vouch for the fact that when I tried Adwords 3 years ago, my bank balance had a large and ugly gaping hole in it at the end of each month, which prematurely ended this lucrative traffic and income generation avenue for me, until …

… Noted under are the two books that are highly recommended for jumpstarting profitability with Adwords. Adwords was costly and demoralizing, but now with the correct knowledge and graphic examples outlined in the following books, it is the speediest way to get targeted traffic to any website.

• Google Adwords Cash
• Adwords - The Definitive Guide

Another often overlooked way, to lose money on affiliate sales is by not knowing how to correctly mask your affiliate links

Just remember: Never bid more on your keywords and key phrases than you can afford… and you will get a huge increase in targeted, affordable traffic to your website — guaranteed!