How to use 5 Fundamental Components to Increase Profits

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Many people who see the potential in affiliate marketing give up after a few months because they’re either losing money or they weren’t making enough to cover their time and effort. In most cases this is a shame because by doing a few simple tweaks they could have turned a no- or low-profit business into a good source of income.

There are five fundamental things that work together to bring in profit:

  1. The amount of traffic you get
  2. How much each visitor is costing you
  3. How qualified the visitor is
  4. How many people purchase (conversion rate)
  5. The value of visitors who don’t buy immediately

All these factors work in tandem and just some small adjustments can improve your income significantly. We’re using pay-per-click advertising as an example here and it’s essential that you know what’s going on if you use PPC or you could end up losing a lot of money.

If your site isn’t getting a significant number of visitors each day concentrate on building traffic before using PPC advertising.

A Typical PPC/Affiliate Scenario

Let’s say for argument you’ve found an excellent affiliate offer that pays $50 per sale as an example. You set your budget to $100 a day and one click will cost you $.50. You expect to get around 200 clicks a day at a 1% conversion rate.

  • 200 clicks will cost you $100
  • 2 sales earn $100 at 1% conversion

With the merchants conversion rate of only 1% you only break even, those two clicks will earn $100 in commission. If the merchant does not convert consistently at that 1% level, you’ll soon be in the hole.

But don’t give up yet. By making a few adjustments relating to the list of five fundamental points above you can turn this pointless exercise into a very profitable one.

Traffic & Costs

The more you pay for pay-per-click advertising the higher page position you will get, but by paying more than 50 cents a click you’re going to be losing money. The position of your ad is calculated by how much you’re willing to pay for each click multiplied by the click-through-rate (CTR).

Now I’ll let you in on a secret…

By using an excellent program such as SpeedPPC you can improve your campaign structure and improve your CTR. All you have to do is improve your click-through-rate – one more conversion at $50 a day will bring you in a profit of $18,250 a year! Improve that CTR even more and you can see where we’re going here.

All you have to do is write more targeted ads to improve that click-through rate. You’ll pay the same amount for each click but you will get far more than that original unprofitable 200 clicks because your ad will appear higher on the page and be more visible.

Qualified Visitors

If only one out of every hundred clicks converts, what were those other 99 people doing? You have to assume that they were not qualified, i.e. they weren’t really interested in the product. Work on replacing those 99 with people who are definitely interested in the product and you can see the potential.

Get your ad in front of people who are going to be really interested!

The Conversion Rate

We’ve already been told that the merchant converts this offer at a rate of 1% and being a third-party per se you don’t have much control over how well that merchant closes the sale.

The solution is for you to become a kind of “middleman” between your site and the merchant’s site which will give you much better control.

How the heck do I do that? It’s simple; you build what is known as a “bridge” page which acts as a squeeze or landing page. This page is constructed to pre-sell the visitor. One simple way of pre-selling is to offer a bonus or freebie as an incentive and this can increase conversion rates enormously. Only serious, warm, pre-sold visitors will click-through to the merchant site.

But wait, there’s more!

The Value of Visitors who don’t Buy Immediately

The bridge page offers a very valuable bonus for you. This is where you can easily capture visitors’ e-mail addresses.

By offering a bonus, especially a valuable freebie, the visitor will give you something valuable in return – their email address. Get them on your list and use your autoresponder service to continue educating them about the value of the product and any other related products you may be offering. The larger your list grows the more sales you will get.

Is there anything else you can offer in the way of minor adjustments that can bring major improvements in sales?

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