Hello all, I have two pretty basic questions that I hope someone in the know can help me with. I’m marketing a product that sells for 429.95 and after expenses (merch acct fees, autoresponder acct, etc) my profit is $27.70 I am about to start marketing using Adwords for the first time And my question is, how do I determine what bid amount to start with for my key words? Question #1- Considering that my average conversion rate for the site is at about 1% and the fact that if I get 100 clicks at least 1 person (1%) will buy, should I at least start out with a CPC of 0.27 and work my way DOWN from their depending on which keywords convert and at what % or is their a better way? Question #2 Should I bid higher like .99 CPC to get a good CTR and then go down? If so how liong should I continue to bid at the higher CPC?
As for question 1, it's hard to say where you should start. The Google keyword tool should give you an estimate CPC based on holding a 1-3 position. No matter where you start your CPC, watch your position so you can get a feel for how the ads move on that particular keyword with your CPC. Once you do that you can dial in the ad position that gives you the best ROI. As for question 2, if you have the budget to start high on the CPC it may not be a bad idea. I've done it before on campaigns I've need to jump start quickly but I don't always recommend it as it can get expensive quick and it can create a bidding war with other advertisers thus raising the CPC across the board for all the placements.
Your conversion rates are only estimates (since PPC will probably perform differently to other media), but I'd recommend trying bids of $0.20 - $0.40 at first (bounce it around a bit - it shouldn't make much difference to the conversion rate, and will give you a clearer picture of the clickthrough rates in different positions. Once you have these, given that you know your profit per conversion, you can calculate the most profitable position. With regards to maximising your Quality Score, Google is supposed to take into account the position that your advert appears in when looking at the clickthrough rate, so it shouldn't make any difference.
It depends on whether you can afford to spend a little bit of money to test the waters. Like a previous reply pointed out, PPC traffic may not convert the same as your current traffic (could be better or worse) so you'll need to run some ads for a little while to get a baseline conversion rate. If you want to get a higher CTR and more traffic so you can get faster test results, bid high enough to get a decent spot. 1-3 are usually the highest CTR, but it does vary by market. 4-6 often convert better because you'll get less click-happy visitors that aren't really interested in buying. If you can't afford to spend any money testing, I would go with your best guess for conversion - the numbers you have now - and bid based on a break-even. May take longer to get firm results, but you will still get them.
Bid high. Try and get in a good position .. if you bid too low then conversion rates may be crappy.. but if u bid high enough.. the cost might be high but also it will convert better
Payout: $429.95 Conversion Rate: 1% ROI: (27.70/(429.95-27.70))x100=6.886264...% Therefore you can bid $4.0225 and maintain your current profit level at a 1% conversion rate. To Verify: @ 1% conversion: $4.0225 / 1% = $402.25 $429.95 - $402.25 = $27.70 These are numbers you MUST calculate before starting anything and yet 99% of the ppc marketers don't even know the right way to do it.
from what i understand, $402.25 is his current cost per action, not including any advertising. doesn't advertising at $4.0225 / click double his CPA cost, then, if he's still converting at 1%? it seems it would be very difficult to add PPC to an affiliate program that currently provides only a 7% return after costs paid. if there were no costs to be paid, then the formulas above would apply for PPC only.
My thought is ... You Cost per conversion in Adwords must not be more than 27$ as this is needed to sell the product a zero profit.. Suppose you incurr 1$ a click and generate 27 clicks you need atleast 1 conversion, this is 3.7% conversion rate. So you need to calculate in this fashion... However above answers are equally relevant
it depends on how compeative a niche your product is. maybe you only need to start off bidding $0.50 to get a top spot? Also, maybe you can increase your CR. Try testing ads to prequalify your leads. maybe test a few with the price in the add. You will get less clicks, but those ads will have better conversions... Also, make sure you have a goof landing page... you can always PM me your landing page and i can try and give you some tips...
true, but sometimes it's worth starting off losing a bit of money to get a good Quality Score, and get you cheaper clicks at better positions in the long run...
You're right, I misread that. I assumed he was spending that on advertising and everything else included, but it looks like he wasn't.