Affiliate Classroom Blog

Lower Your PPC Costs

Tuesday, May 2nd, 2006 at 12:58 pm by Jeffrey Perren, AC Magazine

PPC ain’t cheap… but it doesn’t have to be ruinous either.

Google and Yahoo! provide about 90% of the search queries, but 10% of several billion per month is still a very large number. There are other engines out there.

Let’s run a sample calculation. Say MSN gets 10% of the traffic and suppose the click rate is 10%, both conservative estimates. Finally, suppose the total number of clicks from all sources is only 1 billion. (It’s actually around five times that.) 10% of 10% of 1 billion is 10 million ad clicks.

Spread those 10 million ad clicks over the top three dozen ads (90% of users will search through no more than three pages of results before trying a new query). That’s still a large number of clicks on your ad. (How big depends on which ads get what percentage of the total.)

How much money you make from that traffic depends on factors we can’t know at this point. We don’t know how often you convert a click to a sale — those numbers vary all over the place. We don’t know how much commission you make on each sale. Those numbers, too, vary quite a bit.

But to calculate your ROI (Return on Investment), you can fill in the numbers and finish the example… after you know one more thing. What does it cost you for a click?

That’s something you have a lot more control over than you may realize. True, most affiliates won’t be bidding against Bizrate or Shopping.com for ‘Plasma TV’ on Yahoo! or Google. The price of admission into that arena is high and, like gasoline prices, there’s little you can do.

Unlike gasoline prices, you have alternatives. Marketers are consumers too and, like many people, they sometimes focus too much on the offers from the famous. (See, advertising does work.) Coke may be the most famous cola in the world, but there are several alternatives besides Pepsi.

MSN or Ask are just two of the most obvious ones. But there are dozens of (admittedly smaller) engines out there. And they often get a healthy amount of traffic and good conversion rates by focusing on narrower niches.

Miva, for example, is used by between 11% and 22% of marketers and their cost-per-click tends to be much lower than the majors.

So, before you decide PPC advertising isn’t profitable, check out the ‘cost’ part of the ROI equation. Use our links compilation to find some of those lesser knowns out there that can offer you a good deal.

If the quality of traffic is high enough to keep your mileage up, you may find some stations are cheaper.

Even with a 10% conversion rate, PPC can still be very profitable if you remember every COO’s golden rule: Keep your operating overhead low.

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