In part I we looked at three things you need to decide before you can calculate how much to spend on advertising. In part II we will look at how to take that information and put it to use.
Using the numbers we came up with in part I, let’s see how much we can afford to spend on advertising:
ON TARGETED CUSTOMERS (pay per click, etc.)
100 visitors/sale, $4 per sale advertising means 40 cents per visitor.
ON TARGETED NEWSLETTER SUBSCRIBERS
10,000 subscribers/4 sales, $4 per sale advertising means $16 per 10,000 subscribers.
ON NON-TARGETED NEWSLETTER SUBSCRIBERS
10,000 subscribers/1 sale, $4 per sale advertising means $4 per 10,000 subscribers.
ON NON-TARGETED VISITORS (Start-page rotators, etc.)
1,000 visitors/1 sale, $4 per sale advertising means 4 cents per visitor.
POP-BEHIND ADS
This one requires an additional calculation…
1 sale comes from 100 visitors, 100 visitors are generated by 25,000 pop-behind ads.
25,000 pop-behind ads are worth $4 in advertising or $.16 per 1000 ads (often referred to as CPM or Cost Per Thousand).
BANNER ADS:
This works much like pop-behinds…
1 sale comes from 100 visitors, 100 visitors come from 500,000 banner impressions.
500,000 banner impressions are worth $4 in advertising or .8 cents per 1000.
I hope this helps make sense of your advertising dollars. Keep in mind that we are talking about a product with a very small profit margin. If you are selling something where you make $50 and can spend $25 on advertising, the numbers will all increase.
Just don’t get suckered into thinking that 100,000 banner ads for $500 is a great deal…it may be, but you need to know exactly what you are getting.
Kevin Bidwell is owner of
http://www.All-In-One-Business.com/cg-bin/at.cgi?a=274293
Kevin just finished a complete report on building a passive
income. Grab your copy here:
http://www.All-In-One-Business.com/cg-bin/at.cgi?a=274293&e=/pi
