An Internet Advertising Secret
November 2013 - By Steve Gillman
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
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
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."