You have gone through the grueling process of deciding whether or not to participate in affiliate marketing, choosing the products you will be promoting, and setting up affiliate marketing websites. Your first few dollars have come in, and you think that’s enough now. In order for you to succeed more, you must make more decisions: that is what businesses are all about. I know you’d rather just wait for the money to flow, but in order to succeed much more, you must make more decisions.
In order to make the most informed decisions about affiliate programs, you will need to use the hit per sale ratio. What is the hit per sale ratio? Every day, a number of unique individuals visit your site. Each unique individual is called a “click.” However, only a small percentage of those individuals will purchase your product among the hundreds, nay, thousands who visit your site. In order to get one sale, you need to get a hit per sale ratio of at least one hundred. Your affiliate marketing sites’ hit per sale ratio is calculated by dividing your daily hits by your daily sales.
In the end, you ask, how can you get anything meaningful from a simple number? If you want to elevate your affiliate marketing enterprise, you need to know your hit per sale ratio and make informed affiliate program decisions based on it. It might seem as if you wish you had a higher hit per sale ratio by either having more hits every day, or by making more sales from your current hits. A million affiliate programs exist, but in this article, we have chosen to discuss two of the most logical affiliate program decisions you can make and to which a lot of other affiliate marketers can attest to.
ADVERTISEMENTS
When you want more hits, which can lead to more sales, ads are great. It is important to note, however, that since you are looking to improve your profits, you shouldn’t bet more than you can afford (especially when you discover that the ads you pay for are significantly increasing your profits, you might be tempted to bet more or all of your earnings). Based on these calculations, you can decide how much you can spend on these advertisements.
If, for example, you receive 300 hits per day, but only five of those result in sales, then it takes 60 hits to establish sales (this is your hit per sale ratio). The maximum amount of money you can spend on advertising is $225 per day if each sale gives you a profit of $25. If your ads prove worthless, you still have something to take home when you pay something that is significantly lower than your current profit.
In this case, let’s say you spent $100 on advertisements. This leaves you with $125 assured take-home money, which isn’t half as bad as taking home nothing. If your $100 ad doubles your total hits per day, then doubling your sales (from five to ten). In this case, your total sales would be $450, subtracting the cost of the advertisement, leaving you with $350 in profit. Not bad, isn’t it?
PAY PER CLICK PROGRAMS
In order to get your products to appear at the top of searches, you could set up pay-per-click programs with search engines. As you are bidding per click (for your keywords), you are at the top of the food chain. This is a fairly tricky business, so don’t get too excited.
To determine how much you can risk on bidding, divide your profit per sale by your hit per sale ratio. For example, if you have a hit-to-sell ratio of 60 and a profit per sale of $25. This leaves you with a $0.40 figure. Do not risk the entire amount into bidding. Even if the program does not work out, you would do well to bid half of your safe value just to be assured of making some profit. The bid per click should be no more than $0.20.
There are affiliate marketing companies that bid dollars for each click. DO NOT FOLLOW THEIR STEPS. Instead, find a way around them by bidding on different keywords. Always keep your profits in mind.
When it comes to affiliate marketing, however, increasing your profits isn’t as easy as simple arithmetic. You have to evaluate your options carefully, and experience is the only thing that can teach you that. If you work hard enough, you might find yourself singing happily all the way to the bank if you try as many options as you can, make smart and informed decisions, and try as many as you can.
