How to calculate feasibility for a PPC campaign?

Discussion in 'Google AdWords' started by wwwmasters, Jul 29, 2007.

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  1. #1
    What calculations do you use BEFORE starting a PPC campaign and before spending any money?

    You can spend hours on keyword research before and during a PPC campaign, but can digitalpoint forum members give feedback what kind of "quick and dirty" calculation is best for figuring out whether PPC is even an option for a new site or new product?

    Thanks in advance for input!
     
    wwwmasters, Jul 29, 2007 IP
  2. cianuro

    cianuro Peon

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    #2
    If you generate more profit than you spend, then you're golden.
    If you spend more than you make, you are not.

    There is no real way to tell without testing. That is why there are not more loaded affiliates. They are too afraid to spend money.

    With most affiliate programs, if I am not making money after spending at LEAST 5k then I get out.
     
    cianuro, Jul 29, 2007 IP
  3. prosumer86

    prosumer86 Peon

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    #3
    Well, if you're promoting say, a Clickbank product. Usually, its a good thing if you have some general (and genuine!) info like, the overall conversion rate. Forget those CB products that state they are converting at 6-8% as usually it is a LIE, as it is 6-8% on a small 'test' market, and not the actual MASS market.

    So if possible, try to get real figures for conversion%, as that will usually be what you will expect to convert at. Say product is converting at 1%, and pays out $30. So when you start your PPC campaign, if you expect to make 50% of what you put in, you can afford to bid a maximum of $0.20 per click.

    So take that as a rough gauge. For CPA offers, usually your affiliate manager can tell you the network-wide conversion rates, so its much easier ;)

    Of course there are PPC strategies like purposely overbidding at the start to get a forced high CTR%, before lowering bids slowly.. but I shan't digress.
     
    prosumer86, Jul 29, 2007 IP
  4. cianuro

    cianuro Peon

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    #4
    CTR is normalized to position so this is not a valid strategy.
     
    cianuro, Jul 30, 2007 IP
  5. CustardMite

    CustardMite Peon

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    #5
    If you bid less than your conversion rate * your profit per conversion, then you'll make more profit than you spend.

    So, as long as you get conversions, and you bid the right amount, you should inevitably make money (unless your click value is less than your minimum bid).

    Of course, until you set up the campaign, you can't know your conversion rate through PPC, or your minimum bids, so I agree that testing is the only way to find out if it'll work.

    I've managed campaigns that I thought would work, but didn't, and I've managed campaigns that I thought would fail, but they worked very well...
     
    CustardMite, Jul 31, 2007 IP