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Old 09-29-2008, 02:51 AM   #12 (permalink)
Mike
 
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B should be the correct choice based on the limited information.

My point in posting this was just to get people thinking more about the numbers. If you're not wearing out calculators and / or have a spreadsheet open at all times, then you're going to leave money on the table. Everything we do here revolves around numbers.

Affiliate companies want you to send xxxx amount of traffic to get paid $xx.xx. You may only have a limited ad spend. Etc, ad infinitum.

Another thing to consider and keep in front of you is ROI vs. Scalability.

You'll find some places that give you a wicked return, but you can only throw so much money at it before it's maxed. Then there are other places that you can throw a shitload of money at but give you a lower ROI.

So, if your budget is $10,000 and you can advertise on Site A and get a return of 3:1, BUT the most you can spend there is $500 OR advertise on Site B, which requires a minimum ad spend of $10,000 (minimum, the maximum is unlimited) and will likely only give you a return of 50%. Which do you do?

Well, if you decide to go with A, you'll make $1500 on the initial $500 investment. You'll still have $9500 to play with. If you go with B, you'll spend $10,000 and make $15,000. Then you take that $15k and reinvest, making $22,500, etc, etc.

Back to site A, you still have $9500 you want to spend, so what to do with it? Start looking for places that have an unlimited ceiling and a lower initial investment? Find 19 other places that can give you a 3:1 return?

The choice is yours, and both choices have their pros and cons. Point is, keep scalability in mind whenever you choose to advertise somewhere. I'm not saying that you should avoid the places with a low ceiling, just be aware of it so you're already working on your next deal.

Even more math...

Pay attention to your CTR versus Conversion Rate. I've personally had ads (recently in fact) that absolutely killed it CTR-wise. Literally 10x more CTR than any of my other ads, but it didn't convert. Found some ads that converted like crazy, but the CTR was horrible. Didn't matter though, the low CTR / high conversion ads gave me the best days I've seen on that network. Don't get too caught up in the CTR game. Sure you need to pull people off the page, but more importantly you need to convert them.

Fuck, it's late and I'm starting to ramble.

Oh, before I go, here's the spreadsheet I have open 24/7 for quick calculations. If you're not using something like this, take mine, or build your own. If you don't understand it at first, just look at the calculations I'm using. The colored cells are the only ones you need to change.

cpc-calculator.zip
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