The Formula you Need to Make Profitable Advertising Campaigns

The Formula you Need to Make Profitable Advertising Campaigns

In case you hadn’t heard, classifieds are on the decline and Online Advertising is in.

Depending on the market and your product, classified ads have the potential to work really. However, for the majority of markets and products, it’s time to utilize online advertising to drive traffic to your blog, to your sales pages and ultimately make money.

With such easy access to masses and masses of people across the globe with just the touch of a button, online advertising that has become essential to making money online.

The two main online advertising platforms are Google Adwords and Facebook advertising.

Google Ads come up every time you do a search in Google both on the top in the pale peach box and on the right-hand column.

google ad words

Facebook advertising comes up in two places as well; in the news feed as a sponsored post and on the right-hand column as an ad.

 

facebook ad

Now, for all of you that are thinking to yourselves that advertising is not your area of expertise, you’re not a creative person and you’re shying away from the computer and slinking into your chair as you read this, I want you to stop and take a deep breath.

Both Google Adwords and Facebook advertising were designed with simplicity in mind.  They were designed so everyone can use them. They are both extremely easy to use and both of them walk you through the process of creating targeted campaigns to reach your niche target audience.

With the three acronyms below, the formula for a successful and profitable online advertising strategy is simple.

ROI: Return on Investment. Simply put, how much are you getting (clicks, likes, website visits, etc.) from the money you put into your campaign.  If you’re selling a $20 e-book at an average rate of 5 per week and you’re spending $20 a day in advertising, you need to re-think your strategy. Dropping your advertising spend to increase you ROI and make it a profitable advertising campaign. Is the money you spend on the front end enough to generate money on the backend?

CPC: Cost per click. What is the average cost each time someone engages with one of your ads. You can easily calculate the average CPC by dividing the total cost of your clicks by the total number of clicks. Keep in mind that this number will vary depending on the type of product you are selling and who you are selling it to. Contrary to popular belief, there is no “magic number” for what you should be spending per click.

EPC: Earnings per click. What amount of money do you put in your pocket per click on each ad campaign you run for each product.  If you have multiple products or multiple profit centers(which we highly recommend for maximum income online), you will have an EPC for each offering. The EPC for each product can be found by taking the actual amount made on a particular product sale and dividing it by the CPC for the campaign associated with that product. Be sure to clearly identity that the sale came from the campaign you are looking at and take into account all returns, rebates or any other promotions you may have in place.

EPC is also the number your affiliate partners use to determine what they can expect to make on commissions if they promote your product. We’ll dive deeper into affiliate marketing next week.

While the above three things are similar, they each serve a different purpose in the advertising formula and should all be used together to determine the profitability of your advertising campaign. All the data for each of the above formulas is found in each of the two advertising platforms discussed.

So what should you do if you find out your advertising campaign isn’t profitable?

First off, it’s not the end of the world and you aren’t going to go broke from one bad ad campaign. The beauty of online ad campaigns is that unlike a print campaign that can take days or even weeks to change, online ads can easily be changed, adapted and amended on the fly.

You want to make sure you’re looking at the data right. With these online tools it can be easy to confuse one effective campaign for a product for another and misread the numbers. Once you’ve confirmed a campaign for a specific product is indeed not performing, you should look at two things.

1)      The cost spent on advertising

2)      The value proposition of the product

For example, if your CPC is high but your EPC is low, two things could be happening. When people are clicking your ad, they are getting to a page that is either not appealing or does not do a good job of selling your product to them in a way that makes them want to buy it. Take a look at the barriers of consumers when making a purchase online to fix this problem. Your product could also not be competitively priced or positioned. Make sure you do your homework on this to see what a fair and competitive price for your offering should be and what the most important problem your product should solve for your audience to make it worthwhile for them.

Another scenario is if your CPC is high. This could mean you haven’t done a good job crafting your ad to catch your target audience’s attention or your are reaching too narrow of an audience. In the limited space you have in your ad copy, only include the #1 selling point of your product in a simple, straightforward sentence. While it’s important to be specific in your targeting, reaching an audience big enough to have a diverse enough pool of potential buyers is also important.

potential reach

Both online advertising platforms we discussed will give you an estimate of the number of people you can reach with your ad based on the parameters you set.

A note on CPC. A high CPC doesn’t necessarily mean your campaign isn’t profitable. If your product is valued at $500 and you’re paying $10 per click, you are still making a large profit even though you’re paying quite a bit per click.

While it’s important to be monitoring your campaigns and adapting as needed, I want to give you a few words of caution on changing your campaign too soon. While most campaigns will publish within hours if not minutes of submitting them, you need to give them time to run their course to judge their effectiveness. You can’t expect instant results from a campaign. Running a campaign for a minimum of a week before making changes is necessary to accurately judge effectiveness.

Your Turn:

What platform for advertising have you had success with? Where do you see the greatest return for your investment? Please share your results in the comments below.

One comment

  1. As if you read my mind Ivan.
    I have found tackling these advertising platforms very intimidating and as a result have stayed away.

    I even went halfway through the process with google and stopped.
    Your article has really helped clear the cobwebs. I am definitely forging ahead now.

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