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---- How much do you spend on PPC advertising?

ByronM - 2:49 pm on Apr 10, 2008 (gmt 0)

 I think what most of the people are trying to say is the following... Scenario: Out of 100 Clicks (a.k.a visitors) you get 150\$ in sales, which means that your EPC (earnings per click) is 1.5\$ (EPC=Sales/Clicks) So far so good? If you spend 1.4\$ per customer (click) and your EPC is 1.5\$ then congratulations, because now you can spend as much as you can beg, borrow or steal because you're making more then you're spending! :))

Forgive me if i'm wrong, shouldn't EPC for merchants be based upon profit/Clicks? Sales/clicks would put you out of business at those numbers (spend \$140 to sell a \$150 item unless you have a 94% margin)

So for a merchant it would be something more basic such as

sales * margin / 100 = EPC and as long as that is greater than your CPC you will have positive growth.

For example:

1500 in sales at 5% margin = 75.00 profit / 100 - .75 EPC so if you spend 74 cents CPC you will have at least a positive growth (albeit a dangerous growth if PPC if a large margin of your profits because your expenses of managing the program are probably more expensive than your margin of EPC vs CPC)

I use goals in google analytics to calculate the profit from each sale and then compare that to the cpc/ctr/epc to generate that profit (and hopefully its positive)

[edited by: ByronM at 3:05 pm (utc) on April 10, 2008]