Diorex

Cannot tell you how often I get a PM or email or AIM message from someone who says they just cannot figure out how to scale or make any money, that all the campaigns seem so saturated, <insert excuse here>.

First thing I always ask is what kinds of things they are they testing - not the offer, but rather A/B type tests? Invariably the answer is a variation of “I plan to start once I find something with a really good conversion rate.”

I am here to say that Conversion rate is not born, it is grown - very slowly over time, with hard work.

Lets take an example of how someone can make a difference by testing.

• Start with a 3% CR which is considered about the industry average…
• Assume $.60 CPC which seems absurdly low to me, but lots of you guys are paying a lot less…
• Assume a payout of $20 per sale - seems fairly generic, lots of products pay more, lots less…
• If these numbers seem totally wrong to you, just set something up at breakeven for what you are seeing and build a spreadsheet…

After 100 clicks, you would expect to have 3 sales with $60 in revenue and $60 in cost - a total waste of time, right? Just move on to the next thing is what almost all people would do.

But the affiliate who likes to test might try a new headline, maybe some new ad copy, different hero shot or calls to action or any of 100 other things…

Say that this affiliate was able to increase conversion through testing by just 5% each month.

So the 2nd month, you would earn $3 more than you spend for each 100 clicks - a 3% ROI. Not going to quit the day job, but positive progress. At the end of the year, just finding one 5% increase each month the ROI on this “breakeven” campaign works out to be 42% which is almost certainly worth keeping.

This assumes that you do not manage to increase your CTR or quality score or otherwise lower your CPC which is very doable through testing.

Now say, we have a very clever affiliate who manages to find 10% conversion rate increases each month rather than 5%. At the end of the year, this guy has a 185% ROI from the campaign most of you would have walked away from.

Now if you are getting that kind of ROI, you have probably passed up the affiliate network and gone direct, which will be a free 10% lift, plus increased their payout above where they started, potentially significantly, which allows you to pay more, thus increasing your position, your test bandwidth and frequently your conversion rate in a beautiful cycle.

When you are starting out it is not ridiculous to think you might get 20% or more lifts from some tests, and trust me when I say that front loading the conversion increases significantly improves the end results.

All of the above being said, I am not trying to say that any campaign can be a winner. Nor am I saying that you should stick with a loser. I am merely saying that most people fail because they do not test their way into being a winner ad discard lots of things that would have worked with a proper test plan.

This entry was posted on Friday, May 30th, 2008 at 7:41 pm and is filed under PPC, Testing, affiliate, paid search. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.