The absolutely fortunate thing about Internet is that you can guarantee yourself a certain level of traffic, and certain profitability. This is usually impossible with many other businesses – but not Internet. Here, we shall look at one sure-fire way of not only guaranteeing your profits, but pyramiding them, starting right now.
We shall proceed step-by-step.
1. Monthly unique users: Analyze your server log files using a good server log analysis software package that can tell you how many unique users come to your web site every month. Some web hosting service providers already give you log file analysis. Ask your web hosting provider whether they do. If your provider does not, download one from Download.com. For our example here, let us assume that you get 1,000 unique users a month.
2. Number of sales per month: Next, you need to find out how many sales you make per month on average. This is number of units that you sell, not sales value in dollar terms. For our example here, let us assume that you sell 50 units per month of whatever product or service it is that you sell.
3. Conversion ratio: Calculate your conversion ratio by dividing your monthly unique users by your monthly sales units and converting that into a percentage. In our example, that is 50 divide by 1000 multiplied by 100 which is equal to 5%.
4. Next, write down your gross profit on sales units. For example, if you sell downloadable software for $80 per unit, and your per unit costs are $15, then your gross profit per unit of sales is $65.
5. Now you know that for every 100 people that visit your web site, five percent of them by something on your web site that has an average value of $65 and that brings you a gross profit of $65 x 5 = $325. This means that you can afford to spend a maximum of $3.25 per visitor if you were to pay someone to bring you visitors to your web site ($325 divided by 100).
6. Find out what keywords people used to search for your web site. Again, analyze your server log files to find out what keywords were used to find you. That kind of information is there. Also, go to http://inventory.overture.com and see what keywords related to your web site are popular.
7. Go to Google.com and click on AdWords Select link. More than 150 million times a day, people use Google to find what they're looking for. You can buy adverts on Google that appear whenever your chosen keywords are searched for. You pay only when a customer clicks on your ad, regardless of how many times it's shown. And from our research above, you know maximum you can afford to pay and remain profitable. In our example, that was $3.25 per click (per visitor). Google’s system is very easy. Set up your ads, select keywords you wish to have them appear, and select maximum amount you are willing to pay per click. Often, you will discover that you need far less than your maximum amount – perhaps just $0.07 to $0.80 per click, meaning your profitability is high. To increase your ads effectiveness, make an ad for each keyword and place that keyword in title of your ad. For example, if you are buying an ad for keyword ‘wedding gowns’ make a specific ad for t! hat keyword and make sure that your ad title contains words ‘wedding gowns’ so that user mentally associates it with a good find.