Back to the formula for the value of a visitor. Divide the site profit for December ($2,500) by the
number of visitors (15,000) and the value of your visitors is approximately $.17 per visitor. Note
that I’ve said approximately, because during any given month (or whatever time frame you choose)
the number of visitors and the amount of profit will vary. The way you slice the time can change
your average visitor value by a few cents to a few dollars, depending on your site traffic. (Also note
that the example is based on the value of all visitors, not of conversions, which might be a more valid
real-life way of calculating the value of individual visitors. But this example is simply to demonstrate
the principle.)
The number you got for visitor value is a sort of breakeven point. It means you can spend up to
$.17 per visitor on keywords or other promotions without losing money. But if you’re spending
more than that without increasing sales and profits, you’re going in the hole. It’s not good business
to spend everything you make (or more) to draw visitors to the site. But note the preceding italicized
words. If a $.25 keyword can raise your sales and profits dramatically, then it may be worth
buying that word. In this oversimplified example, you need to decide how much you can realistically
spend on keywords or other promotions. Maybe you feel a particular keyword is powerful
enough that you can spend $.12 per click for it, and raise your sales and visitor value substantially.
You have to decide what profit margin you want and what promotions are likely to provide it. As
you can see, there are a number of variables. Real life is dynamic, and eludes static examples. But
whatever you decide, you shouldn’t spend everything you make on PPC programs. There are far
too many other things that you need to invest in.
If you liked this article don't forget to subscribe and submit your website to our General Directory.
number of visitors (15,000) and the value of your visitors is approximately $.17 per visitor. Note
that I’ve said approximately, because during any given month (or whatever time frame you choose)
the number of visitors and the amount of profit will vary. The way you slice the time can change
your average visitor value by a few cents to a few dollars, depending on your site traffic. (Also note
that the example is based on the value of all visitors, not of conversions, which might be a more valid
real-life way of calculating the value of individual visitors. But this example is simply to demonstrate
the principle.)
The number you got for visitor value is a sort of breakeven point. It means you can spend up to
$.17 per visitor on keywords or other promotions without losing money. But if you’re spending
more than that without increasing sales and profits, you’re going in the hole. It’s not good business
to spend everything you make (or more) to draw visitors to the site. But note the preceding italicized
words. If a $.25 keyword can raise your sales and profits dramatically, then it may be worth
buying that word. In this oversimplified example, you need to decide how much you can realistically
spend on keywords or other promotions. Maybe you feel a particular keyword is powerful
enough that you can spend $.12 per click for it, and raise your sales and visitor value substantially.
You have to decide what profit margin you want and what promotions are likely to provide it. As
you can see, there are a number of variables. Real life is dynamic, and eludes static examples. But
whatever you decide, you shouldn’t spend everything you make on PPC programs. There are far
too many other things that you need to invest in.
If you liked this article don't forget to subscribe and submit your website to our General Directory.
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