Posts Tagged ‘conversion rate’

AD Publishing, How Much Should You Pay?

To maximize the number of customers to your business, you need to spend regularly on ad publishing… This much is clear. What’s not so clear is how much to pay for ad publishing — an important question in the current economy where every marketing dollar must have a clear ROI.

Fortunately for businesses that make money online with their websites, there are a couple of key measurements for determining marketing ROI. Suppose you have a business selling t-shirts online. In order to make it known to the world that you are selling t-shirts on your website, you do some ad publishing. How much should you spend?

To answer this question, you must determine your visitor value. In other words, how much is each visitor to your website worth to you in monetary value? In order to calculate this visitor value (VV), follow these steps:

  1. Look in your web stats to see how many people visit your website per month. Let’s assume 1,000 people visit your website per month.
  2. Based on your sales history, of the 1,000 website visitors, how many of them bought your t-shirt? Let’s say 10 people bought.
  3. How much did you make per t-shirt sale? Let’s assume you make $9.00.
  4. Based on the sample numbers, your conversion rate is 10/1000 = 1%. Your visitor value is 1% x $9 = $0.09.

Now that you know your visitor value, you know that you can spend up to $0.09 on ad publishing and still break even. So if you spend $0.05 per visitor, you would make a profit of $0.04 or 80%. If you spend $0.10 to get each visitor, you would lose money.

There are two ways to increase your profitability according to VV, one is to increase your conversion rate, and the other is to increase your profit margin per t-shirt. Let’s look at what happens when you increase your conversion rate from 1% to 1.5%. Your VV jumps to 1.5% x $9 = $0.135. With the same amount of ad spend ($0.05), your profit per visitor increases to $0.09 or 180%.

Imagine that… If you increased your conversion rate by 0.5%, your profit per visitor jumps by 100%! What would happen if you further increased your conversion rate and/or decreased your production expense per t-shirt? I’ll let you do the math. The net effect is that you can spend more money to get even more visitors to your website, thus increasing your overall sales volume. This would blow away all your competitors.

This is the power of using AD Publishing .org to maximize your income potential online.