I see a lot of ads like that on google from amazon affiliates. But I really can't see how they can make a profit. If you manage to sell some expensive items with no cap, you can make good money. But I don't get how some people are listing DVDs, CDs, etc...
Just make the math. The conversion rate is usually 1% to 3%. Let's make it 2%. You need to get 50 people to click on your ad to make 2 sales.
If you are advertising a DVD that costs $20, you will make less than a dollar in comissions.
So, let's say you are bidding $0.10 cents for that ad. And many times you will have to bid more than that to get impressions.
So, you get 50 clicks, $5 in ads, and you make 1 sale, $0.75 .
How can this be profitable?
Do this people get a conversion rate of 10% or more?
I appreciate your feedback.
Thanks
Also, you may have seen more of these ads in the past because that program used to have a bonus incentive program where you could earn upwards of 30% on certain items while you were at a specific sales level. (This is not true anymore, however)
Another point, for people with very large accounts the ad may just have gone unnoticed for a while (possibly created during a bonus period described above) if the spend is small, it might have just slipped under the radar.
Under their current system, a break even ad may also be beneficial to an advertiser -- if it pushes them into a higher commission rate bracket, because then everything they sold for the current pay period will receive a slight increase in commissions.
I will say though, terms do exist that exceed 10% conversion, although it can be hard to find them - and might not last forever.
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Here's a better example of averages that might be going on for a specific DVD ad that you are seeing:
100 clicks @ 0.05 = $5
3 orders @ $20/ea @ 10% commission = $6
I still see a lot of those DVD, CD ads.
I was thinking that the best things to shoot for would be eletronics for instance, you can get good comissions. But depending on the product, Ipod, digital camera, you wil have to bid very high to get impressions.
One time that I tried some of the affiliate links on adwords, I spent $50, got 60 leads, and only one sale for a popular xbox game. I had a loss of $47.5.
It's hard to know what would work, you just can't keep loosing money.
The other idea is to sell products that are not very popular, almost obscure products, that way you will pay $0.05 only per click and be on top of results.
That way you can easily spend $5 to get 100 clicks and 1 sale of $6.. You just need to find the product.
Luckily only lost about $50 before I realized there's no way to make money from PPC for stuff such as CDs. If you could get a high conversion rate, sure - but people shop around for stuff like CDs and DVDs - like for hours. And Amazon rarely has the best price.
I have one or 2 very niche items from Amazon that I sell, but they all pay me more than $5 per sale.
-V
When they have established a high enough CTR and/or they have found the perfect ad, they will back off their bids to (normal) profitable levels. The combined effect is to keep their ads showing higher in the ad listings than if they just started out with the profitable bid level.
This is the theory. I can't (won't) say if it works. I will say it can be expensive :)
The right ad, promoting the right product can be very profitable, and it would probably work with media items (or any product) if you find the terms that are most likely to indicate the person knows exactly what they want to buy.
* 10% click-to-purchase ratio
* average commission per item: $1.50
* average CPC: $0.065
In other words, every sale costs me $0.65 and nets me $1.50.
Now I am at about 60 sales/day = $50/day in net profit, I still cannot leave my day job but every day I add 10-20 ads, so it's slowly creeping up.
Of course you need to spend loads of time writing the right ad, and to apply some secrets... anyway it can be done!
