why would affiliates bid 2 x the EPC

Tis CJ affiliate I refer to

[centime]

Hi

Here is my conumdrum, finally gave ppc a go for a product i market as an affiliate on one of my sites

I quickly realised that the only way to get to page one or two was to bid an more than 3 x the published EPC for the product.

So, i got a couple of sales, but lost money on each sale, yet my conversion rate was virtually identical to the EPC published.

I must be misssing something here, I know that increased volumes do not offer me an increased percentage, so theoretically, all the guys bidding at the level i was must have been loosing bucket loads of money.

Seeing as this also included PPC direct to merchant, diferent conversion rates don't seem to be an issue because we where bidding on the same keywords , i.e. "yellow widgets for winter"

Yet this cannot be

Anyone care to comment :-)

[crobb305]

Could be a novice bidding those amounts? If so, they will eventually run out of room on their credit card and give up. I see newbies doing this all the time. They hear that they can make money on the internet and start bidding big bucks trying to find a pot of gold. I guess maybe I did that, once upon a time.

[LifeinAsia]

Any number of reasons:
- They have better converting copy on their landing pages
- Their landing pages are better, giving them lower costs (on Google)
- Due to higher sales volume, they've negotiated a better commission rate with the vendor

[centime]

Hmmmm,

>>- They have better converting copy on their landing pages <<

well not possible, cos all where using PPC direct to merchants landing page.

>>- Their landing pages are better, giving them lower costs (on Google)<<

well not possible, cos all where using PPC direct to merchants landing page.

>>- Due to higher sales volume, they've negotiated a better commission rate with the vendor <<

I suppose nothing in their agreement with CJ prevents merchants from doing deals with 3rd parties, yet seeing the above, it would seem curious to pay that kinda money for leads which they would get cheaper anyway from the standard program.

The factor by which the bids exceed the conversion value is 3:1

I struggle to see how it can be beneficial to the merchant to bear that cost by subsidizing such uneconomic selling practise.

[LifeinAsia]

How do you know all linked directly to the landing page? Did you click on them?

Also, PPC is not the only game in town. Other affiliates may (and probably do) use other methods to drive traffic to the program.

I guess the whole issue is that if you (and others) are spending 3X your revenue on keywords to drive traffic directly to an affiliate program, then perhaps you should think about some other way of promoting the program.

Sorry if it sounds old school, but the main purpose of affiliate programs is for people to use their sites to promote affiliate programs.

[edited by: LifeinAsia at 11:02 pm (utc) on Mar. 5, 2007]

[centime]

Hi There

No, I wouldn't click on anothers advert.

I know because as you view the status of each keyword for the advert in adwords, it tells you that your advert is not showing cos its been beaten by a competitve ad for the same url.

Ok, thats just 1 form of affiliate marketing,

However, using adwords to drive traffic to ones landing pages is similarly expensive, to show up on page 1, i required to bid 2 x EPC

Anyway, I am hoping that I just chose the wrong category filled with folk with bottomless CC's an no interest in profit :-)

Sigh!

I guess i'll try another niche, or stick to SEO for now,

[LifeinAsia]

One obvious solution is to make your own landing page instead of sending the clicks directly to the affiliate program's landing page. Then you don't need to worry about competing against any other affiliates that way. Plus SEO the page and you may get some organic traffic to the page.

Another solution is to settle for not showing on page 1- then you should have lower costs. Fewer sales as well, but as long as your costs are low enough you'll still make a profit. Do you want to have lots of sales for a loss, or a few sales for a profit?

Of course yet another solution is to pick less common, yet related, keywords that few/no people are targeting. Again, probably less traffic, but potentially higher ROI.

[davewray]

You say you are getting the same CPM as CJ publishes...Well, to get that number some must be getting higher CPM and others must be getting less.

And yes, from someone who actually knows what they are talking about, the CPC that one person gets charged in their Google account can vary hugely to the CPC that another person is getting charged....even when all are pointing direct to merchant's landing page. Established accounts with good history can/will typically pay lesser CPC than a newer account.

It could also be that the advertisers who are bidding three times more than you for that keyword may also have bids on tens of thousands of other keywords which may bring their overall cost of conversion down. Therefore making it worth their money, time and effort to bid higher on "your" terms just to get more volume and conversions...

Dave.

[skibum]

It could be part of a big bucket of keywords such that the affiliate is not watching over each and every one.

Little tweaks in the setup of a PPC campaign can vary the click-through rate from 2% lower down on the page anywhere up to 30% in the top-3 rankings and the CPC up to may be significantly lower than ad an in position 5-8.

[centime]

Thanks all, especially D Wray & Skibum, i guess you must be correct

Well, I now have 4 separate campaigns going in 4 separate niches an in each case, I am bidding on around say 150 keywords, okay I have heard of people with 100,000 keyword campaigns, perhaps my campaigns are too small

However, the SE metrics are quite clear, the most popular keyword phrase can generate more impressions than all the other s put together, an those that generate 1 or 2 impressions seldom get a click thru

To get to page 1 of the top keyword , i'm having to bid up to 3 x what each click is worth according to CJ metrics,which I have confirmed via an experiment with unrestricted bidding, so the metrics don't lie.

At a factor of 3 x profitable price, I really think that expenditure at this levels simply drives up the losses,, seeing as volume sales with on merchant doesn't give any benefit with unassociated merchants.

50 sales of yellow widgets made by exampleCompanyA will not increase commissions on sales of green widgets made by examplecompanyB, but it certainly will hide losses made selling green widgets.

Okay, without giving away any big secrets, are massive keyword lists the key,, circa 1000, 5000, 10000,,, :-)

[davewray]

Yes, massive keyword lists are the key. 50,000 "fat belly" and Long tail keywords will get you far more volume of clicks than the top 5 volume keywords in that niche put together...Just ask anyone who has SEO'd their site and gets more than 50% of their traffic from the long-tail, weird phrases...and only 10% from their "main" big keyword....tis true :) And, as many could attest to, long phrases generally convert better than one or two keyword phrases (the big volume ones...)

Dave.

[centime]

Oh Dear, This means many Long nights

But many thanks

[davewray]

Put in the hard effort and work now, and reap the rewards for many months/years to come :) It's really worth it, even if keyword research is brain numbing ;)

Dave.