Mastering the Art of Online Marketing

 

We then went to Google Adwords to do a quick check on traffic and costs:

google - Full palette 1

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When looking at the clicks per day generated, we see that, as a group, motorcycle rentals don’t have a lot of traffic, quickly leveling off at around 10 to 12 clicks per day maximum.

Armed with our previous model, we would like to pay around $0.26 per click until we know more about conversions from the site.

At that level, we wouldn’t get a lot of clicks:

Clicks per day

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Indeed, we can create a larger model that would show several assumptions and Google estimates at the same time.

1. Google click estimates and conversion ratio assumptions:

Google 1

 

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Google estimates that one would get from 3.8 to 8.5 clicks per day paying anywhere from $0.52 to $2 per click. However, to do that, we need to add our own conversion ratio to estimate the number of sales we would get per day. So, for example, if we were to bid $1, and got 5.78 clicks per day, a 1 percent conversion ratio would only give us 0.06 sales per day.

2. How many clicks for one rental?

google 2

 

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If we get, for example, 5.78 clicks per day and we estimate a 1 percent conversion ratio, we would need about 17.3 clicks to achieve one rental (1/.06).

3. And the cost/sale is…

Google 3

 

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If we pay $1 per click, the cost/sale will be around $17.30, which is well under the $26 we estimated we could spend.

So now we have a model that would do three things:

 

 

  1. Give us a guide as to what information we need to collect: clicks, sales, costs, average sales
  2. Give us a negotiating tool that allows us to sit down with someone and negotiate costs/click (CPC) by revealing some of the conversion assumptions
  3. Give us an objective closing ratio (CR). If we see a CR of 0.7 percent

We can also run similar models to test assumptions for websites that we might need to buy on a CPM basis:

Impresions buy

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So, for example, if I’m going to get only a 0.1 percent (or 1/10th of 1 percent) and I only convert 0.5 percent (or a half of 1 percent), I’m really converting a half of 1/10th of 1 percent, which isn’t much.

This is where the creative execution earns its keep: If you can increase your conversion ratio AND your click-through rate, your cost/sale falls dramatically:

CTR

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Next page: Online Marketing is multi-dimensional

Marcelo Salup
Marcelo Salup
Marcelo Salup's 30+ years career in advertising covers a wide range of everything. A wide range of roles -he began his career on the creative side, won 2 Addies, changed to media, included strategic planning and consumer insight and has been an agency owner several times. A wide range of venues: Spain, Latin America, International and the U.S.  A wide range of clients that go from automotive through banking, electronics, fast food, soft drinks and much more. His professional philosophy can be summed up in four words: “Only performance is real”. Today, he runs a successful strategic planning consulting,  Website

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