David Fiske A subtle blend of affiliate marketing and web development

I am very wary of Pay Per Click (PPC) and reluctant to take the jump.

However, I also know that there lies an awful lot of money.

So what is the problem?
 
Here's my logic, using the Nintendo Wii as an example.

The Wii retails for around £180 so assume 100 clicks and a 1% purchase rate.

5% commission on the Wii equates £9.

100 clicks at say £0.05 equals £5.

Therefore each sale costs £5 but nets £9.

A profit of £4 per sale.

Using the Wii example, what is the chance of getting clicks for £0.05? Google's AdWords tool says that to get the top 1-3 position for the keyword 'Wii', you would have to pay £0.21 per click.

100 clicks would cost £21 and therefore, the total profit per sale would be -£12 - i.e. it would lose you £12 for every Wii sold.

The rule with PPC here is that I will not know unless I run some tests using some keywords.

What I am going to do is run a few campaigns on Google Adwords and see what the response is like. I am going to run a few campaigns for Compare Sat Nav as that is the site with the most revenue potential so far.

I may look at running campaigns for loans, mortgages and the like in the future. The first stage is learning. The second stage is earning!

My budget to start with will be a weedy £20, using a cost per click of around £0.05. That would get around 400 clicks which means statistically, I should get at least one sale for my troubles (0.25% historical conversion rate).