Profit Margins

What are your best Profit Margins -- PPC

[metakomm]

I was crunching some numbers tonight and I have found my best merchant has a profit margin of at least 72% (Waiting on Goclick to investigate what I believe are fradulent clicks.)

Anybody out there with a profit margin of like 600% out there on any merchants?

[David Bowley]

Is a profit margin similar to ROI? I once had a 500% ROI I think, not sure if that's the same as a profit margin mind.

[wrgvt]

Yes, but only for short periods of time, like 4-6 weeks. They are out there, and they usually don't last long. You have to know when to get in, when you can get in cheaply, went to raise your bid, and when to get out.

[metakomm]

I think ROI may be different...

profit margin = net profit / revenue

And let me make that clear...i meant NET profit margin, not just profit margin which is gross profit...

[WSQuant]

When your talking about margins, the value can never be greater than 100%. And then there are different types of margins to be calculated specifically Operating margins, Pre-tax profit Margins, and Profit Margins.

If you see someone talking about profit margins on an Adwords campaign they launched and they say they spend 10000 in adwords and generate 20000 dollars in revenues, claiming a 50% profit margin, this is actually a 50% Operating margin.

Operating margins can be thought of (at a specific project level, or throughout an entire company) as:

(Total Revenues - Cost of Goods Sold (Adwords and other advertising))/Total Revenues

Pre-Tax Profit Margins takes all costs into account. If you were to compute this for a specific project and not all of your websites then you would have to calculate a proportion of all your expenses that you feel result from this specific project.

So if for a project for the year you had
20000 in revenues
10000 in Adwords expenses
500 in server expenses
and 1500 in content outsourcing

your Pre-Tax profit margins would of course be

(20000 - (10000+500+1500))/20000 = 40%

Calculating True profit margins then comes from your pre-Tax margins*(1-TaxRate)

I hope this helps.

[metakomm]

WSQuant-

I was trying to keep it simple... *sigh*

lol

[ccam96]

Hello metakomm. Drop Goclick and I'm certain your profit margin will increase. Stay away from 2nd teir or lower PPC advertisers . They are definately a waste of money from my experience.

[WSQuant]

metakomm,

Sorry for the bloated response, it's just that the businessman in me felt the need to explain :)

[metakomm]

ccam96-

Actually...Goclick has been KICKING ass for me! This is what seems to work for me on Goclick...Bidding on Trademarked terms...My biggest money earner comes through goclick advertising...I just gotta get them to refund my balance for these few instances of fraud...

wsquant-

It's all good! LOL. I may need your business mind in the future though :)

[Michael Anthony]

In answer to your original question, most of my aff marketing students achieve an average of 300% ROI from PPC.

My own personal best is a 1,235% ROI, but this was in very small volumes for a niche product, nothing that makes thousands.

In volume markets, anything over 100% ROI from PPC means that you're doing OK, but most high earners that I know average 200-300%.

[brizad]

For about 6 weeks I was making 1600% (spend $1 make 16$--I guess that's 1600%?) Then big G started disabling my "money" KWs for low CTR even though some showed over 9%. (That's a whole other post.)

Eventually after my good KWs were disabled I was back down to about 400%, which still ain't bad. Now luckily I'm getting a lot of organic hits from Yahoo!, so it's kind of like infinity ROI.

If only I could get the volume from organic as from PPC, I'd be golden. :-)