PPC - how to bid

Calculate how much each visitor is worth

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HOW to bid

I've talked about the fact that you need to bid in order to get placed on these search engines. Let's talk now about HOW to bid. You already know the importance of having a large number of keywords. Once you have your list of terms to bid on, you'll need to decide how much to pay for each click. To ensure that your advertising on a pay per click search engine is cost effective, you'll need to calculate how much each visitor is worth, so that the price you are paying is less than the money generated by the visit. This is commonly known as making a profit and is naturally highly recommended :)
To do this, analyze the number of visits to your site over a month, look at the profit from all your sales (ie. how many DSL subscriptions did your sell, or Long Distance, or how many Affiliates signed up), and divide one by the other. This will show you how much profit you make from each visitor to your site.
For example:
- Let's say you are selling the IAHBE membership (the /iahbe Gateway), which earns you a commission of $8 (disregarding the other income streams), giving you a profit of $8 a sale. Last month you made 5 sales, which is an income of $40.
- Your server logs show that you had 1000 visitors to your website last month. As your profit for the month was $40, then each visitor to your site is worth 4 cents ($40/1000)
- So if you were to bid 4 cents for the term “home business” for instance, and you continued to receive 1,000 visitors per month, and continued to sell 5 SFI Magazine subscriptions per month, you would break even on your advertising, conversely if you paid 5 cents for that keyword you would be taking a loss of 1 cent on every click, while a bid of 3 cents would earn you a profit of 1 cent for each click.
Armed with the knowledge of what your maximum bid should be (in other words your break even point) you can decide how much to bid for your listings and how high in the search results you are going to be. Ideally you want to be in the top ten or twenty results, and at the very least on the first page of results.
Using our example, if the top bid for “home business” is currently 10 cents it would clearly not be sensible to bid 11 cents to be number one and you would have to settle for a lower position. If position 10 would cost you 3 cents that would be a much better option because you would be making a profit. Sure, the top position would get you more traffic, but that would be at a loss.
It's also important that you monitor your bids regularly to make sure that you are getting the maximum value from your listings. Quite often advertisers will, for whatever reason, either reduce or even remove their bid which results in large gaps between bids. For example there are many instances where advertiser one is paying 50 cents, advertiser two 48 cents and advertiser three 26 cents. If advertiser two reduced his bid to 27 cents he would still be in second position but would be making an instant extra 21 cents profit per click!


Main menu

  1 - MIQ - and now what's next?
  2 - So, what have we learned so far?
  3 - To buy or not to buy?
  4 - Generated leads.
  5 - Experience with Eagles
  6 - Avoid buying leads but if you must..
  7 - Writing ad copy
  8 - Leaders are Readers.
  9 - Effective Netwriting is something that A-N-Y-O-N-E can accomplish.
10 - Words sell, not glitter and whirl.
11 - What is my MOST WANTED RESPONSE when a visitor comes to my site?
12 - Advertising through the use of free classifieds.
13 - Where to place your ads and keycodes.
14 - Enough resources to keep you busy for weeks.
15 - Free classifieds - my version.
16 - The worst thread I could possibly find.
17 - Finding sites to submit your ads to
18 - Avoid using submitters
19 - The Adwizard and instructions manual.
20 - Johan's post on the D-board.
21 - Do SFIers need a private website?
22 - Ezines
23 - How to find great ezines and negotiate price.
24 - Motivational triggers that make people buy.
25 - You cannot add a banner to your gateway.
26 - Get a banner on a website.
27 - How to post impressions of a banner.
28 - What are PPC search engines and how do they stack up against the paid search engines?
29 - Types of paid placements.
30 - Select good PPC, pick good keywords.
31 - How to bid.
32 - Adwords - Maximizing Your Clickthroughs
33 - Links & Resources
34 - More on PPC
35 - Recommendations in using PPC

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Intermediate B31
PPC search engines
by Billy Martin

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