Sun Jan 06 02:02:42 PST 2019

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Doing the Math
There are many factors that go into click price. It is somewhat hard to measure
branding, but ad distribution can help build brand awareness. Most other things
are tangible.
If you know your average order size, profit per order, and estimated conversion
rate, you can get a good idea what clicks are worth. Some people also factor in
lifetime value of a customer, but that is harder to measure, and there is still enough
opportunity in many markets to do your math primarily based on direct return.
Before You Start
It is a good idea to look at the various ads that are displayed and in which order
over time. The top guy might be an idiot losing tons of money or a person who is
paying a premium for branding.
If ads from affiliate marketers or smaller sites are ranking around the same ad
position over the course of a few weeks to a month, then they are probably doing
something right (generating profits
. It is worth it to take a couple weeks to do
deep keyword research and market analysis before jumping into pay-per-click
search engine marketing.
You Will Lose Money
Most clicks end up being failures. Even if you have a 30% conversion rate, it
means that seven out of ten clicks did nothing for you. When you dip your toes
into the pay-per-click market, there stands a good chance you will lose money
before you start making money. There are several reasons for this:
1
You need to learn how the systems work.
? Learn what terms are important and what ones are not
? Learn how to target the ads
? Learn how to write the ad copy
? Learn how to bid, where to rank, and what terms are overpriced
2
You are competing against the best accounts.
? Some competing advertisers may have other intangible assets that give
them an unfair advantage.
? If you are brand new, your competitors have more experience than you
do.
? Some ad campaigns have been fine tuned for months.
? Search engines are building trust factors into ad accounts. Some
advertisers may get quality boosts and cheaper ads just for being long-
term advertisers, or for advertising trusted websites.