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Competitors paying $3.00 per click
How?
kellyandsummer




msg:523836
 7:35 am on May 13, 2005 (gmt 0)

Having hosted dozens of websites with dozens of hosts, I figured I'd make a simple site that reviews web hosting companies, with affiliate links to all of them. I decided to advertise it strictly via PPC. I've been a successful PPC marketer for 4+ years now, so I know how to run a campaign, and figured I could make a few hundred dollars a day if I was willing to spend a few thousand a day.

I took a look at the current top hosting review sites that are paying between $1 and $3 per click on google and overture, and made sure my site was just as nice looking, easier to navigate, etc. I even updated it daily with new offers, while the competition has outdated reviews. I also joined the same affiliate programs directly with the hosting companies.

After one month of tweaking the bids, updating the site, etc., the result was a several thousand dollar loss. No matter what I did, my best day was $250 profit (on a rare day that there was actually a profit). I tried bidding $.05 all the way up to $3.00. Some days I'd be spending up to $5K (when at $3 bidding for popular term such as "hosting"). The cost just never justified the earnings. Even if I left my bids the same after a profitable day, the next day was not profitable.

Therefore, I'm stumped as to how these competitors can afford the $1-$3 bids they maintain. They have to be spending $5K-$10K per day, and no one in their right mind would be doing that if they weren't profitable.

So, how do they do it?

If you do a search for "hosting" in Overture and check the advertiser max bids, you will see the sites I'm talking about. They are nothing special.....or are they?

 

eyeinthesky




msg:523837
 8:06 am on May 13, 2005 (gmt 0)

I think these sites that bid sky high prices are taking a long term view of things. Web hosting affs do have recurring income and back end sales.

It is probably a short term loss, long term gain kind of thing.

Do they have Adsense on their sites? That could help defray some costs.

hdpt00




msg:523838
 8:35 am on May 13, 2005 (gmt 0)

webhosting pages using adsense don't fare well, at least in my experience.

metakomm




msg:523839
 10:50 am on May 13, 2005 (gmt 0)

Reduce your advertising costs and increase your relevancy and bid on trademarked terms -- the name of the host company...

gamb




msg:523840
 12:41 pm on May 13, 2005 (gmt 0)

Eye is correct - they are looking at this long term. I know that I have never switched hosting for an existing site of mine, so these companies look at the customers probably as 3 or 5 year customers. The costs are pretty much fixed, so what looks like losing money today ends up making a ton of money in year 3.

How else could a hosting company offer a $65 affiliate commission on a $60 annual fee....

fischermx




msg:523841
 4:06 am on May 14, 2005 (gmt 0)

Anyway this seems like a tough niche.
And I thought I had some perfect domain names waiting to develop web hosting review sites.

Now, I have some domains for sale :(

markus007




msg:523842
 5:06 am on May 14, 2005 (gmt 0)

Negative keywords....

kellyandsummer




msg:523843
 6:16 am on May 14, 2005 (gmt 0)

I didn't need negative keywords because I made a separate ad for each of my 900 keywords. If someone searched for "hosting a party", I doubt they would click on an ad for "Top 10 Website Hosting Companies Reviewed....."

Michael Anthony




msg:523844
 8:14 pm on May 14, 2005 (gmt 0)

Don't forget that some PPC ads will be merchants themselves, who have the whole margin to play with as they're not sharing it.

Gotta say that for every person I know who's made money from affiliating with hosting providers, I know ten who've tried and failed. And all of the successes have been SEO methods - perhaps the margin from PPC is just too thin these days, as it certainly one of the most mature online sales areas.

WebEqualizer




msg:523845
 9:06 pm on May 14, 2005 (gmt 0)

I think you should try playing with SEO
there are some awesome programs, shoulda used some of that lost money in some of these and you woulda gotten better results by now.

WE

kellyandsummer




msg:523846
 9:22 pm on May 14, 2005 (gmt 0)

I think you should try playing with SEO
there are some awesome programs, shoulda used some of that lost money in some of these and you woulda gotten better results by now.

Awesome SEO programs that get better results within one month? Please tell....I'm used to doing regular old SEO, never used a "program" before. But sometimes I do PPC instead when I'm feeling lazy.

But I'm very interested to hear about this "program" you mention. You can sticky me with it if you can't specify it here on the board.

limitup




msg:523847
 2:14 pm on May 15, 2005 (gmt 0)

If someone searched for "hosting a party", I doubt they would click on an ad for "Top 10 Website Hosting Companies Reviewed....."

You know what they say about assuming. I can tell you for a fact that if you are not using negative keywords you are throwing away a lot of money - enough that it could make the difference between a profitable campaign and one that isn't. It has been shown time and time again that people click on all sorts of ads just out of curiosity, etc.

kellyandsummer




msg:523848
 10:24 pm on May 15, 2005 (gmt 0)


I can tell you for a fact that if you are not using negative keywords you are throwing away a lot of money

I disagree. I don't many believe people interested in hosting a party would click on an ad about the top ten website hosting companies for php, bandwidth, etc.

If someone clicked on "Top 10 Website Hosting Companies Reviewed" out of curiosity, they are obviously curious about hosting a website. And that is who I am targeting, people who are interested in hosting a website.

By the way, what is your definition of "a lot of money"? And, how do you know this to be fact?

fischermx




msg:523849
 10:47 pm on May 15, 2005 (gmt 0)


I disagree. I don't many believe people interested in hosting a party would click on an ad about the top ten website hosting companies for php, bandwidth, etc.

Not one like you or me, or anyone else here.
But certainly the internet is full of persons who will click ads, even for products they'd never buy.
I know people who has parking pages in their bookmarks, because "they list very good sites and changes the list often" ... :(

limitup




msg:523850
 6:53 am on May 16, 2005 (gmt 0)

By the way, what is your definition of "a lot of money"? And, how do you know this to be fact?

I can't tell you how much money you're losing because I don't know anything about your industry, your keywords, etc. I do know this is a fact though, based on my 8 years of advertising online, managing 100s of different PPC ad campaigns, and spending 5k+ a day on Google AdWords. Do your own testing and you'll see that I'm right.

markus007




msg:523851
 4:04 pm on May 16, 2005 (gmt 0)

I didn't need negative keywords because I made a separate ad for each of my 900 keywords. If someone searched for "hosting a party", I doubt they would click on an ad for "Top 10 Website Hosting Companies Reviewed....."

Assuming you are right and no one clicks on your ad, you are now paying more per keyword then anyone else bidding on the same thing, because your CTR is lower.

Richard Overvold




msg:523852
 5:45 pm on May 16, 2005 (gmt 0)



Assuming you are right and no one clicks on your ad, you are now paying more per keyword then anyone else bidding on the same thing, because your CTR is lower.

The 900 different ads for 900 different keywords, was this in Google, or Overture? The description seemed a bit long for Adwords. Plus, ctr has nothing to do with ranking in Overture. As far as I know, or have seen. The one with the most money wins over there. So the CTR would have no bearing on cost.

kellyandsummer




msg:523853
 7:58 pm on May 16, 2005 (gmt 0)

you are now paying more per keyword then anyone else bidding on the same thing, because your CTR is lower.

Since when does having a lower CTR increase your cost per click? I know it has no bearing on Overture. To my knowledge, having a lower CTR on Google moves you lower down the right hand side of the page, but it doesn't mean I'm paying $.50 per click at position #8 when the guy at #1 is paying $.05 per click. Does it?

You are also assuming myself and my competitors all have the same exact max bid on Google?

Can you copy me something from Adwords TOS/Rules that says a lower CTR makes you pay more per click than someone with a higher CTR, while still keeping your ad below the higher CTR ad?

If you are correct, I will be the first to thank you for enlightening me, as a 4 yr PPCer spending $100K+ per month on Google!

GuitarZan




msg:523854
 10:41 pm on May 16, 2005 (gmt 0)

Hey,

This has always seemed a little complicated to me on exactly how it works, but AFAIK a person with a 3.0% CTR would pay 50 cents to be where you are with a 1.5% CTR and paying $1.00.

Thoughts?

C.K.

fischermx




msg:523855
 10:48 pm on May 16, 2005 (gmt 0)

I also don't know how exactly works either, but I have experimented it myself.
I had a campain with $0.05 bids, with a high CTR and my ad was getting higher position that companies I knew (because I also had adsense and those where showing in my site) were bidding $0.20 to $0.50, but the higher CTR was making my ad appears higher.

kellyandsummer




msg:523856
 3:55 am on May 17, 2005 (gmt 0)

Well, what the heck. Instead of arguing, I guess I might as well add some negative keywords. Can't hurt.

Sam Eaton Orenthal




msg:523857
 3:37 pm on May 20, 2005 (gmt 0)

I think the one thing that hasn't been mentioned is the reason they are willing to take a loss on PPC. If their SEO leads are "Free" then a loss on PPC can be justified in order to keep volume up and inflate customer numbers.

PPC and SEO go hand in hand, each being a necessary side of the business. Yes, if I were spending that money on PPC without SEO I would be living on the street in no time.

eyeinthesky




msg:523858
 11:22 pm on May 20, 2005 (gmt 0)

Well, what the heck. Instead of arguing, I guess I might as well add some negative keywords. Can't hurt.

Not to add to the argument but adding negative keywords CAN hurt if you add the wrong ones!

TinkyWinky




msg:523859
 12:48 pm on Jun 14, 2005 (gmt 0)

but it doesn't mean I'm paying $.50 per click at position #8 when the guy at #1 is paying $.05 per click.

From what I know about adwords and from checking everything from casinos through to loans that's exactly what can happen in certain areas on Google.

Think of it as a reward scheme for those in first.... with few advertisers in the early days Company A built up great CTR and therefore when more and more bidders finally came to pay, they had to pay vastly more to maintain a position above A, whereas A had to only raise marginally to jump back to the top again. This therefore creates a gulf in values between CPC from Company A and a.n.other....

The only way round it - to do a loss leading campaign for a few months to build up CTR then experiment with lower bids whilst maintaining the desired position.

In the days when there was tons of casino stuff I had to bid more than 5 per click for about 2 months to even get on the second page of the results....

However, the difference between say first and fifth may not be as extreme as $0.80 CPC and $0.05 ....

I hope my understanding is correct - othrwise I have wasted a whole heap of cash in the past ;) money schmoney....

BigAl




msg:523860
 2:17 am on Jun 15, 2005 (gmt 0)

Yes, I agree that is how Adwords works. A site on the top first page could be paying less per click than you. When a site has a high CTR for thier keywords and is listed on the top. Then if another competitor comes along they find it very difficult to bump the top guy down due to his high CTR. Even though you are bidding higher. Google figures that
thier users will determine the balance of popluar/relevant sites to vs. someone who bids on keywords not related.

The equation to calculate this is

Highest Bid Per Click + Highest CTR= #1 Spot

and so on down the ladder...

archie goodwin




msg:523861
 6:42 pm on Jun 16, 2005 (gmt 0)

I've done a bit of research in the past into some of the 'top 10' sites, and I know that one of them is owned by the hosting company that ranks #1 on their site. Pretty questionable tactics if you ask me. They are willing to spend the money because their profit margin is surely higher than a normal affiliate. There is another aff. site up there that seems more reputable, but I wouldn't imagine they are really paying that much for their clicks (since they are in premium position and probably have an excellent CTR with good neg. kw's etc.).

I really like review sites when they are well done, but I think there's a better opportunity (for an affiliate) if you can find a niche where the customer isn't limited to choosing only 1 company/offer from your list.

AG

FromRocky




msg:523862
 7:55 pm on Jun 16, 2005 (gmt 0)

Highest Bid Per Click + Highest CTR= #1 Spot

Not neccessary so. The #1 position ad is the ad which has the highest ranking number. The ranking number for a keyword is based on the maximum posible fee willing to pay for 100 querries for the keyword at the current CTR.

$ per 100 querries = Max CPC x CTR

That is a reason why a # 1 ad can be paid less than the ad in lower position.

# 1 ad; Max. CPC =$5, CTR=10%->ranking # = 50 (or $50 is the maximum posible cost per 100 querries)
# 2 ad; Max. CPC= $10, CTR=3%->Ranking # = 30
# 3 ad; Max CPC=$7, CTR=4% -> Ranking # = 28

If # 3 paid $7/clicks, # 2 would be 28.01/3=$9.37/click and # 1 is about $3.01/click

Thus, #1 might not have to be the highest bid per click nor the highest actual CPC.

LeoXIV




msg:523863
 12:46 am on Jun 17, 2005 (gmt 0)

Don't forget that some PPC ads will be merchants themselves, who have the whole margin to play with as they're not sharing it.

as an eMerchant [in a previous life] , i can confirm that.

I have to confess that it still surpizes me to hear that people make money by Affiliate/Adwords when the margin is too narrow, even for merchants themselves! Maybe its a volume/ROI game ....

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