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An Internet Advertising Secret

November 2013 - By

I want to preface the following by saying that I cannot claim to be an expert on internet advertising. Over the years I have relied on organic search results for almost all of the traffic to my websites, and that was more than enough for a long time. And, I should add, the tens of thousands of dollars I've made from my e-books was always a secondary income, and that was spread out over the years, never providing a livable income by itself.

On the other hand, I did experiment with pay-per-click advertising for my e-books a few times. I also researched what others were doing. I also know people who rely on paid traffic for their online businesses. So I will report here on what I have learned.

If you sell something online from a website, you might be using pay-per-click advertising to bring in the traffic and sales. Although the Google Adwords system and others can be confusing to use to bets effect, they do make it relatively easy to see if you are getting the results you need, by tracking your conversion rates and converting that into a cost-per-sale figure. As long as that cost is less than your gross profit, you're probably doing okay. On the other hand, you may often find that you spend far more for those clicks than they generate in profits. Let's consider an example and a solution to this problem.

For our example we'll suppose you're selling an e-book on how to build an underground bunker (I've seen stranger things sold online). The price is $27, and because it is an e-book, you actually get to keep $24 of each sale after paying fees to a processor like ClickBank. You've tweaked your sales page until one of every 100 visitors buy your e-book, meaning you make $24 for each 100 visitors, or 24 cents per visitor.

The problem is that you are paying 30 cents per click for visitors from an ad that reads "How do you build a survival bunker? Find out here." That means it costs you $30 for each sale, since it takes an average of 100 clicks to make a sale. You're losing money, because $24 gross profit minus the $30 cost equals a loss of $6 for every 100 clicks you buy. Now, this might still work for you if you have a "product funnel" and you can make enough additional sales (at a profit) to these customers over the months or years, but we'll assume your business and marketing plan is not that advanced yet.

Perhaps the most common solution suggested is to improve your conversion rate with a better sales page. But suppose you've tried it eighteen different ways, and a 1% conversion (one visitor per hundred buys) is the best you can get. Your sales pitch is not the solution then. You might just have an offer that attracts a lot of "interested" people who are not buyers.

Another suggestion that is common is to raise the price of the product. Playing with the price can be a great way to see which price-point generates the maximum profit per visitor. You just test prices and for each one multiply the resulting conversion rate by the gross profit per sale. In other words, if at $47, you get a profit of $42, and your conversion rate is .5% (also expressed as .05 or 1-in-200), you are making just 21 cents per visitor on average. We'll assume that you have the right price at $27.

There is one more thing (at least) to look at, which is the quality of the traffic (visitors to your site) that you're getting. This factor may not be thought of as often or as creatively as it should be. Many internet marketers understand that those searching the keyword "book on how to build a bunker" are more likely to buy the book than those searching for "underground bunkers." In fact, the conversion rate for the former may be several times better than for the latter. But let's assume that you have already been pretty selective with the keyword phrases that trigger your ads.

There is still one more thing to try, and this is one that people probably overlook most often. It is to include the price of the book in the advertising. Marketers who are new to pay-per-click sometimes think they want as many clicks on those ads as possible. Those selling the advertising love to encourage this idea. But really you only want the clicks that make a profit for you, right? Hence, it's better to scare away those who are merely curious.

Suppose you reword the ad to say "Build a survival bunker? $27 e-book shows you how." Generally, fewer people will click on the ad if you remind them that they are being asked to buy something. That's a good thing, though, because the ones who still click are far more likely to purchase the e-book. In fact, in a case like this, visitors from the new ad might even convert at a 3% rate. With an ad like that you might get far less traffic, but with a 3% conversion rate you make $72 gross profit for every 100 clicks. At that rate if you were paying 50 or 60 cents per click you would still be making money.

This strategy is overlooked because it is natural to assume that you always want to get the maximum visitor count from a given ad. Of course that's true if the advertising is free, or even if it is at a set price for a newspaper or a set price per month on a website banner. But when you are paying according to the number of visitors you get, you don't want too much unprofitable traffic.

By the way, I just did some research about pay-per-click advertising and I discovered the story of one website owner who tried this strategy. He was selling an e-book on how to get better gas mileage with your car. Once he added the price to his ad, the CTR or click-through-rate (the number of people who saw the ad and clicked on it) went down. But he says that the conversion rate for that traffic was suddenly eight times as high. He had scared off the merely curious and got to buy traffic from more serious buyers, making his offer much more profitable.

The lesson here is simple: If you use pay-per-click advertising you might want to consider trying to scare people away from clicking on your ads, in order to get the serious "clickers."



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