Conversion rate?

So what is conversion rate in the affiliate world?

Conversion rate is in other words your sales rate. How many visitors you managed to Convert to buyers?. As many visitors are converting to buyers in your website, the higher conversion rate you will have. So what is considered to be a good conversion rate? In the affiliate world the average of the conversion rate is 1%. That means that most of the web sites converting one visitor out of hundred, into one sale. This fact is very important to affiliates when they want to calculate the profitability of an affiliate product.

For example: if you are trying to sell a weight loss product online, and let’s say you will get $40 every time you make a sale.(commission = $40) Now, you actually have no idea what is the conversion rate of this site, but let’s assume it looks very good. So you estimate that the conversion rate of this site is at least 1% if not more. (honestly if a site has a conversion rate, which is lower than 1%, don’t even bother with it). That means that for every 100 people you will refer to your site with your affiliate code, you will get $40.

That’s great! But how much it will
cost you to refer 100 people?.

Well you do not know yet! What you know is that if you were to pay $0.40 every time you refer a visit to your weight loss website, you will break even!. Because: 100(visits) x $0.40 = $40. And $40 my friend is exactly the commission you will get for every sale. You see the beauty of this? so now you know that your break even Cost Per Click is $0.40. if you will be able to get 100 people to this site with a lower CPC you will make a profit.

So what you should do now is go to Google Adwords, and start a new campaign. It does not have to be fancy or complicated. Make it simple with two different text ads, make the settings to target people from US , Canada and UK, make sure you make ad groups to the keywords you have picked and so on. But the golden piece of info that you need to implement is not paying Google more than $0.40 cents.

If you start out it is ok to spend a little more than that, just to see that the product has at least 1% conversions, but always remember that in order to profit from this campaign , you will have to find the key words that cost you less than $0.40 cents a click.

Notes: if you have no idea how to start an adwords campaing or want a little more tips, I promise I will write more about it.

FYI: There are 2 main ways driving traffic to a site. 1st called CPC – Cost Per Click,(Such as : adwords, Yahoo and msn also have PCP advertising). 2nd called SEO – Search Engine Optimization. The big advantage of SEO is once you get the traffic you don’t have to pay for it!, however doing SEO takes a little bit of skills and takes time, unlike paid advertising. I will write more about CPC and SEO in my other posts , but for now , take it easy