let math help you!! Keyword Budget is an important part of pay per click marketing. Bid too much and you’ll go broke, possibly even without sales to show for it. Bid too low and you’ll never get clicks which mean you won’t get visitors. No visitors mean no sales. The best way to set a keyword budget is to take sales figures and costs and do some calculations.However, if you’ve never sold anything before, there are no sales figures to plug into the formulas. For the rest of the keyword and ad exercises, we’re going to use a Clickbank tattoo provider who pays $33.5per sale and states that the product has a conversion rate of 100. This means that it takes 100 visitors to sell one item. Let’s find out what a visitor is worth. visitor Value Here’s what we know: The Clickbank Merchant we signed with pays $33.5 per sale. It takes 100 visitors to get one sale. Visitor Value = commission amount divided by the number of visitors. $33.5 ÷ 100 = $.33 So each visitor is worth 33 cents. This is important to know because you don’t want to pay more for a click than that click (visitor) is worth. Our click cost limit is 33 cents, preferably less. Many people lose money on pay per click affiliate marketing because they do not keep up with how much they’re spending on ad campaigns and because they fail to check the return on investment for ads. In our case, we know that spending more than 33 cents per visitor will means losing money instead of making money. It’s very important, especially for the first few days of a new ad campaign, to pay close attention to the clicks and results. Many marketers agree that after an ad has received 200 page views, you have enough information to do something. If there have been no sales, either the ad isn’t focused and well written or there just isn’t any market for the product. If you aren’t monitoring the ad information regularly, you won’t know when you’ve reached 200 views.
I have already gone over this formula in a previous post you can figure out avg CPC by ROI using this formula ####the following is copy pasted from a previous post of mine #### Here is how you determine average CPC Gross Income / ROI * Conversion rate Example Program pay $14 per sale. Assume you want a 1:1 ROI. This means you are willing to spend $14 to get that 1st $14 sale. Then assume you have a 2% conversion rate since you have not made a sale yet. 14 / 1 * 0.02 = $0.28 28 cents should be your target CPC The problem is that you have not established a convertion ratio yet. What I like to do is enter the market bidding a little high and willing to overspend on a couple sales so I can establish a baseline. Lets say I decide to promote product X. I set my bid high, lets assume $1 is over bidding, and keep the budget open enough to possible get a sale, but not loose to much money. Lets assume if the product sells I will make $30. I will set the budget to $100. I am willing to loose $70 max to test out a product for sales. Now lets run the campaign till I get maybe 100 - 200 clicks or my max expense is met. Assume I get 200 clicks averaging 0.50 for a total of $100 spend. I have a total of 3 sales. making me $90 and still losing $10. I made 3 sales in 200 clicks which is a 1.5% conversion ratio. (3 / 200 = 0.015) Now I plug in the math so I can reassess my target CPC so I can turn a profit. $30 average sale income, I want a 2:1 ROI, meaning I want to spend max of $15 to make $30, and conv ratio is 1.5%... SO... 30 / 2 * 0.015 = $0.23 My new target CPC is 23 cents. So I need to adjust my current 0.50 average to hit 23 cents. Final Note: When readjusting your bids to the new CPC you will notice a couple things. 1st position drop, 2 impression drop, 3 volume of conversion drop, 4 increased conversion ratio. So again reestablish your baseline and then adjust CPC once again in the future once you have collected some more data and some more conversions.