[tags]Google Adwords, adwords, google, payperclick, internet marketing asia[/tags]
Cheryl mentioned something she calls “Fat Trimming” for Adwords. This is a useful strategy to basically increase your profits even though you may end up compromising some sales.
I guess at the end of the day, Adwords is about making profits, not sales. That’s why understanding conversion rates and cost per click is extremely important.
Before you even start promoting a product using Adwords here’s what you can do.
- First, what’s the profit margin or commissions you get from each sale? Lets say you get $10 per sale.
- Get the industry standard conversion rate, which is 1.0% if you’re selling Clickbank stuff. If you’re selling physical products without a proper sales page the figure is much lower.
- Multiply the selling price / commissions with your conversion rate to get the maximum Cost Per Click
Here’s the calculation:
$10.00 X 0.01 = $0.10
This means that in order to make a profit, your cost per click for each keyword must be below $0.10.
You can see immediately that if you cannot get clicks like that, this will probably be an unprofitable Adwords campaign. The only way to make money from this example is if the actual conversion rate is much higher, or you manage to optimize your ads to reduce your cost-per-click.
That’s why it’s important to promote products with a higher profit margin / commissions. You should also ask the owner for advice on what his conversion rate is.
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{ 2 comments… read them below or add one }
“Adwords is about making profits, not sales..”
It hit me hard!
in fact knowledge is to be used to be a better person … therefore would u say ..u do a degree (which cost u a bomb) to be a better person and not to gain a decent job which fat pay check at the end of the day?….now tell me if bala is wrong now?:P