Affiliate marketing, like any business is a numbers name. Ignore the most important numbers and your business is going straight down the hole.
When you promote information products or software at Clickbank.com, your payment is the commission minus Clickbank’s cut. It is not a wise idea to ignore PPC bids, click-through-rates (CTR), conversion rates, and the time put into promotion.
Everyone is interested in one number – the number that appears in the affiliate commission check. They ignore almost all other numbers. When they get a commission check of $1000, they are happy. They forget the fact they have spent $500 in PPC advertising. They also forget they have paid for domain, web host, web designer, web copywriter, etc. They hardly ever think about the amount of time and efforts they have put in. When everything is taken into consideration, the amount you earn as commission can be less than that you have put in.
Important Numbers to Watch Out for
CTR – This is the number of clicks you receive per 100 impressions of your PPC (Adwords) ad. A high CTR suggests your ad is performing well, capturing attention of potential customers.
Maximum CPC (Maximum Cost Per Click) – This is the amount you are willing to pay per click your ad receives. Bid high and your ad will move up. However, a top position doesn’t translate into quicker sales. It is because, the top ads are clicked by people who have no intention of buying. They are like hunters who first shoot before fixing their target.
Conversion Rate – This is more important than CTR. This number tells you how many visitors have converted to customers. It is usually between 1% and 3%, with some exceptions of up to 10%. If your conversions are lower than 1%, you are doing something horrible. With tweaking of your ads, maximum CPC and your landing pages, you can push the conversion rate to above 3%.
Cost Per Sale – This amount is the key. For convenience, we can assume the cost is only for PPC advertising. If the cost per sale is $10 and the commission you get is $20, it is good. However, if the cost per sale is $ 10 and your commission is $12, you may not be making a profit at all. To reach this amount, calculate the total amount you have spent on specific campaign. Divide that number of sales.
If you have spent $100 for driving 400 visitors to your landing page and 10 of them have bought the product, your cost per sale is $10. If you get a commission of $20 per sale, you have made a profit. If only two of the visitors have converted, the cost per sale is $50. However, you have no profits. You may also have lost your money to maintenance of your website, paying for designers and writers and your time and efforts to setting up the campaign.
Read the first two mistakes here:
Affiliate Marketing Mistake 1: Choosing a Bad Product
Affiliate Marketing Mistake 2: Using a Powerful Marketing Channel the Wrong Way
November 23rd, 2009 at 7:21 am
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