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View Poll Results: Which option?
Option A 230 24.29%
Option B 404 42.66%
Option C 122 12.88%
Just tell me, I'm too stupid to figure it out. 191 20.17%
Voters: 947. You may not vote on this poll

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Old 09-28-2008, 04:07 PM   #1
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Wfexclusive Like math? You better learn to.

For the math retards out there and people that claim to hate math, you need to get on the ball. If you want to make money in this industry, math is the single most important skill available. Yes simple math. Not coding, not design work, not even content building but plain old math.

Here's why:

You have $500 to spend and you're considering different places to spend it. The offer you are promoting pays $20, and the CPA company claims that it converts at 4%

Option "A" - Banner that gets 5,000,000 impressions monthly, costs $500, and has an average CTR (according to the site owner) of 0.025%

Option "B" - PPC campaign where the clicks will cost $0.20 each

Option "C" - CPM banner on a popular site, costs $0.35 CPM. Over the course of one month, you can expect to get a maximum of 1,000,000 impressions

So, what are some of the numbers you need to know to make an informed decision?

Also, which option is the best?

I'll post the answer later today.
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Old 09-28-2008, 04:17 PM   #2
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Fuck, I clicked the wrong button on the vote, Option A, unless the Network is lying and it doesn't really convert @ 4%.

Also depends on how relevant the traffic is. Option B may actually be the best option despite being less overall traffic if your traffic is super targeted, versus the speculative nature of a banner ad.
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Old 09-28-2008, 04:24 PM   #3
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Assume all traffic is closely related and relevant, this exercise is just based on the numbers.

Also, whether or not a network is lying, you are rarely going to have the same conversion rate that the network shows. Remember, the network conversion rate could be high if only a few people are running it and they have the niche just nailed, or it could be low if there are a ton of "lesser" affiliates running shitty traffic through it.

I always figure conversion rate at about half of what the network claims if it's anything over 5%. If I can make money at my lower, estimated conversion rate, then I'll test it out.

/edit/ actually, thinking about it, most of the time I figure 1 - 2.5% when estimating potential revenue and profits. Until I have some historical conversion rates, I always start out guessing low.
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Old 09-28-2008, 04:43 PM   #4
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Should we assume that we can spend our whole budget on the PPC campaign ?
Could we get a CTR estimate on the option C cpm banner ?

Ill go with B for now ... unless the cpm banner has a very high ctr
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Old 09-28-2008, 04:52 PM   #5
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Option C has a claimed CTR of 0.1%
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Old 09-28-2008, 06:09 PM   #6
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B

btw-
<--- Mathematics major ftw
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Old 09-28-2008, 08:05 PM   #7
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B, obviously.. $0.20 CPC -> $0.80 EPC.
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Old 09-28-2008, 08:12 PM   #8
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Well, Option A, if the site owner is correct, will get you half the traffic of Option B.
Option C will only cost you $350 if you're putting the max at 1,000,000 views will get you less than traffic than Option A as well, but it'll get it cheaper per unit.

After all, Option C is converting at a rate that let's you basically say the CPM is the CPC cost according to this math...

So at 4%, and $20 a pop, my money's on Option B for a 400% ROI.

But why do I get the feeling I'm wrong here?
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Old 09-28-2008, 08:51 PM   #9
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Option C generates $8000 on $350 spend. So option C unless option B generates more than 10,000 clicks/mo.
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Old 09-28-2008, 09:14 PM   #10
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Option A: $1000 on $500 spend = 200% ROI

Option B: $80 on $20 spend = 400% ROI

Option C: $800 on $350 spend = 229% ROI

BTW, math is awesome, stats specifically
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Old 09-28-2008, 09:48 PM   #11
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Option B seems like the best choice based on the figures you provided, professor.
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Old 09-29-2008, 02:51 AM   #12
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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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Old 09-29-2008, 08:16 AM   #13
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Hah, i forgot to divide the 0.025 by 100 for Option A. Yes kiddies, this is exactly why you should always have a template spreadsheet when evaluating a campaign. Human error can really screw you

R = (5,000,000 * (0.025 / 100)) * 0.04
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Old 09-29-2008, 09:49 AM   #14
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Thanks for the spread sheet, I've been trying to make my own decent one for awhile. Up until now, all of my math has been by hand. +rep
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Old 09-29-2008, 05:36 PM   #15
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Thanks for the spread sheet, I've been trying to make my own decent one for awhile. Up until now, all of my math has been by hand. +rep
I have a friend that has literally worn out buttons on his calculator in a matter of months. Amazingly, the calculator still works.
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Old 09-29-2008, 05:44 PM   #16
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Thanks for the spreadsheet!
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Old 09-29-2008, 08:01 PM   #17
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I hear you on the spreadsheeting, Mike.
Excel and OpenOfficeCalc are in my run-on-start folders, depending whether I'm booting Linux or Windows.
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Old 09-29-2008, 10:56 PM   #18
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Thanks for the spreadsheet i'm sure it's better than the one i've been using!
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Old 09-30-2008, 02:04 AM   #19
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Originally Posted by glew77 View Post
Thanks for the spreadsheet i'm sure it's better than the one i've been using!
Maybe, maybe not. It's tailored to what I want to see. Sorry guys, I didn't change it to anything special for Wickedfire, but at least it's a starting point. Actually, this is probably the 12th edit of it since I started using a spreadsheet vs. a calculator.
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Old 09-30-2008, 02:09 AM   #20
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Major in computer science, dual minor in mathematics and business law.

I rarely pull out a calculator though, I just have a good feel for marketing and the response I'll get to different ads.

Made $28,400 so far on the stupid WordPress plugin I wrote last month with free posts like the Buy Sell Trade forum here. What's the calculation for that?
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Old 09-30-2008, 03:52 AM   #21
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Quote:
Originally Posted by Dan Grossman View Post
Made $28,400 so far on the stupid WordPress plugin I wrote last month with free posts like the Buy Sell Trade forum here. What's the calculation for that?
(demand+dead simple solution+low to no competition)/bum marketing==less than you should be making.

with those numbers you should be hitting up the big dicks with massive, throbbing IM/MMO lists.
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Old 10-03-2008, 02:43 AM   #22
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I say get some Credit and buy them all. Spend as much money as you humanly can. What ask an invest what stock you use to get a 200% return People use leverage to buy stocks all the time use some leverage to buy traffic aka CC's
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Old 10-04-2008, 10:09 PM   #23
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That spreadsheet is really helpful. Thanks.
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Old 10-04-2008, 10:11 PM   #24
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I say get some Credit and buy them all. Spend as much money as you humanly can. What ask an invest what stock you use to get a 200% return People use leverage to buy stocks all the time use some leverage to buy traffic aka CC's
At the same time, snag yourself some reward points and get free swag. Amex FTW!
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Old 10-04-2008, 10:29 PM   #25
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keeper33: love the avatar. Half Life + House = Epic!
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Old 10-04-2008, 10:49 PM   #26
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Quote:
Originally Posted by Dan Grossman View Post
Major in computer science, dual minor in mathematics and business law.

I rarely pull out a calculator though, I just have a good feel for marketing and the response I'll get to different ads.

Made $28,400 so far on the stupid WordPress plugin I wrote last month with free posts like the Buy Sell Trade forum here. What's the calculation for that?
All that despite being an annoying dick in every thread I see you posting on... here and elsewhere? ... Sheesh.
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Old 10-04-2008, 11:17 PM   #27
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keeper33: love the avatar. Half Life + House = Epic!
Thanks Mike! BTW, thanks for the random vent post, it inspired me
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Old 10-04-2008, 11:44 PM   #28
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All that despite being an annoying dick in every thread I see you posting on... here and elsewhere? ... Sheesh.
Who knew I had a multi-site fan base. Stop stalking?
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Old 10-05-2008, 12:58 AM   #29
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Thanks Mike for the post. I am gonna start on with PPC this month.
I really hated maths in college, But I guess that there is no option now.
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Old 10-09-2008, 06:47 AM   #30
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Great thread. Thanks for the spreadsheet. + rep.
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Old 10-21-2008, 08:25 PM   #31
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Old 10-24-2008, 11:45 AM   #32
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ha i got it right....although im not surprised....

Good point your making with this thread though.
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Old 10-27-2008, 03:49 PM   #33
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nearly 42% of the people on this forum got it wrong... wow.
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Old 11-04-2008, 12:14 AM   #34
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I'm a math genius, love the thread.
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Old 11-30-2008, 10:17 AM   #35
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Thank you for showing me the impotents of figuring things out before starting and not just throwing $hit at the wall and seeing what sticks.
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Old 11-30-2008, 10:50 AM   #36
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I hated pure mathematics at school, Calculus finished me. But I have always loved pure business math. The kind we practice here and what my dad would call what if math. What if I spent xxx and it earned at y% ...
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Old 12-02-2008, 03:42 AM   #37
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Thanks for the spreadsheet. Now i could bid and tweak my CPM campaign with ease. I don't have to bid based on my instinct anymore.
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Old 12-06-2008, 01:19 PM   #38
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Thanks for the doc!
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Old 12-19-2008, 11:38 PM   #39
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I'm amazed at how many wrong answers there are.
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Old 12-19-2008, 11:41 PM   #40
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I dunno about everyone else but I found that spreadsheets made math a lot more appealing. You can play around with shit, calculate useful information and most importantly, not even really have to do the actual math at all if you don't want to.
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Old 12-22-2008, 12:19 AM   #41
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Thanks for the spreadsheet, very much needed
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Old 12-26-2008, 12:18 AM   #42
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Quote:
Originally Posted by Crackajg View Post
I dunno about everyone else but I found that spreadsheets made math a lot more appealing. You can play around with shit, calculate useful information and most importantly, not even really have to do the actual math at all if you don't want to.
Ditto, I hated math when I was a kid, but I really don't mind it now.
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Old 01-01-2009, 05:47 AM   #43
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Thanks, I gonna create such calculator, dont mind using yours. thanks again. appreciate your hard work
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Old 01-01-2009, 06:17 AM   #44
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+ rep, good post
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Old 01-02-2009, 03:40 PM   #45
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nice spreadsheet. i added it to the current arsenal...
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Old 01-04-2009, 04:39 AM   #46
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Thank you for the spreadsheet and the question. I haven't done a math problem in ages, forgot how fun they could be.

I'm still learning the terminology, and this post helped a lot.
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Old 01-12-2009, 06:34 PM   #47
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funny topic and true! when i young and was thinking about a field to go into I passed on everything relating any way to math. I chose to go into web dev, and affiliate marketing, right away i was doing math all day long. Than i started a CPA network yeah i thought way less math there - nope math all the time. So the thing i tried to avoid became the thing i do most of my days. I guess i don't hate it as much as i thought and BTW nothing it better than counting your earnings and that is Math!
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Old 01-18-2009, 03:15 PM   #48
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WOW - excellent post. Glad I looked around. Thanks Mike. I hope I understand how to come to your conclusion after I look at the spreadsheet. I am not sure what "conversion rate" means here. Maybe the % of viewers who not only click through but also buy?
After all y0u have the click through before you buy.
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Old 01-19-2009, 09:14 AM   #49
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Originally Posted by SEO_Mike View Post
Assume all traffic is closely related and relevant, this exercise is just based on the numbers.
But real life isn't just based on the numbers, is it? Although math is useful I don't think it is more important then coding, LP design and simple initiative.
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Old 01-19-2009, 11:47 AM   #50
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Nice. Thanks for the spread sheet. I was just about to start a search for something like this.
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