A Scientifical Approach to Adwords

This article is useful to explain the relations between the various variables involved in a PPC campaign and its main intent is to focus the crucial factors that will turn your strategy into a success, or not.

Requirements
It is assumed that you know what PPC is and how it can be used to generate a revenue. This model can be used with PPCs more than Adwords, of course, assumed they are using the same pricing logic.
Moreover, a knowledge of elementary algebra and linear systems is required to understand the mathematics I used in the problem.
A last note: I am not a math geek, so I may have incurred in mistakes. If so, let me know it and I will fix the various bugs.

The model
Okay, let's go inside the problem now.
In this model we focalize the attention to the balance between the money spent and the money earned. We will see what are the necessary conditions in order to have a positive net revenue, and we will use the model for particular cases, such as what is the minimum CTR we must reach in order to have a net revenue (and see if that aim is realistic or not).
Further applications of this model can be done to extend its purposes to a specific product selection or PPC campaign, for instance using statistical/stochastycal methods.

The variables are:

CTR
SALE_PRICE
SALE_COMMISSION
CPC
MAX_PER_DAY

The relations between them are:

SALE_EARNING = SALE_PRICE * SALE_COMMISSION
SUCCESSFUL_CLICKS = CLICKS * CTR
GROSS_REVENUE = SUCCESSFUL_CLICKS * SALE_EARNING
NET_REVENUE = GROSS_REVENUE * MAX_PER_DAY

Being CLICKS = MAX_PER_DAY / CPC



In this model we assume that the net revenue is referred to a time period of 1 day, and that the campaign performance is the same on everyday of the week.

Being more realistic, this is not that true because it is seen from the experience of thousands of marketers everyday that there is a substantial variation of the campaign performance in the days of the week. On a larger scale, there's a variation also in the months of the year and using historical records we can identify yearly trends.

For these reasons it would be more correct to define the above variables in function of the time also, but in this starting model we will limit the analysis to variables that are steady in time.

Using shorter variable names and playing with them a bit the result is:

a = b*c
d = e*f
g = b*c*e*f
h = e*(b*c*f - i)

where i = CPC and h is the net revenue.

Since we want the net revenue > 0, this means e*(b*c*f - i)>0 coming to the two conditions:

e > 0 (of course, we assume e i.e. clicks > 0 because we buy them)

and

i < b*c*f

Where i in this case is the [B]maximum CPC[/B] you can afford in order to have a net revenue.

To be more clear, the maximum CPC you can afford is smaller than the product of the sale price, the sale commission and the CTR.

For example, if you sell an article worth $20, where your commission is 5% and your estimated CTR is 5%, the maximum CPC you can bid is $0.05 . In order to be safer you can define a risk factor R greater than 1 of your choice, so the formula would become

i < b*c*f*R^(-1)

I have made a simple XLS file helping you to calculate your maximum CPC that you can find here: http://www.forumboosting.com/maxcpc.xls (will be active in a short time, got temporary problems with my FTP)

Further developments of the model will be published in the following days. Stay tuned :-)

Falco85

Use PPC Ads such as Google Adwords to build traffic

First of all I would like to excuse myself with my readers for the absence of those days. I have been busy with my studies so I wasn't able to post there. Will try to post again every day starting from now ;-)

Apart from this introduction, the main topic of today is PPC: Pay Per Click Advertising .

What is PPC About

Pay Per Click Advertisement is maybe the biggest business present in the Internet today. Millions of companies and websites relies on paid search engine rankings to promote their content and get traffic. This is for sure the most effective method to get targeted traffic to your page, but it has got a cost: in fact you pay for every visitor clicking your ad, and the most famous advertising places are expensive for this. You can pay from $0.05 to several dollars per visitor.. so this "game" is worth the price if you will have a return from it (the so called ROI, Return On Investment).

One way to make money from the Internet is to use PPC Engines, obtain targeted traffic and make it to buy products from your affiliates, from which you will get commissions.

In that way, the net revenue you will get will be the difference between of what you earned in commissions and what you spent in ads. The most difficult part of the game is to balance your daily budget, keyword bidding and several other factors. If you play with those factors without knownledge of what you are doing, you will simply lose money. And yes, you can lose serious money if you are not aware of what you are doing. If you want to conduct this way of marketing, you will have to constantly monitor your progresses and see what is winning and what is not. In that way you will be able to fastly recognise the sectors in which you are losing money consequently dropping a losing advertising campaign.

Let's go straight to a combo you can use. For example, you can join the Amazon Affiliate Program and promote their products over Google Adwords . I must warn you that Adwords is the most expensive PPC on the market, but it's also the most known and effective (its results go in the first page of Google search rankings ). You can also try cheaper PPC such as newly started ones (MSN AdCenter and Yahoo Publishing network I guess) to promote your products.

I would advice to be very synthetic on your advertisements, and always put the nominal price in order to avoid curiosity clicks (people who will click your ad just out of curiosity, but won't buy the product). Mention every bonus if any, such as free shipping or discount coupons. Conduct a search before publishing an ad and figure out if you have any competitor doing your same job.. and balance correctly the click price / daily budget in function of the ROI. Basically this is everything you need to know for this kind of marketing. I am currently doing this as an experiment, and will let you know my strategies and results once I have got the first resumes.