My names Alex Cornford, I have been working in online for roughly two and a half years at the time of writing, first for a Pay Per Click Affiliate network and then for company specialising in Onsite Marketing solutions who's aim was to increase visitor to customer conversion rates for websites.
By no means do I consider myself an Internet expert, but I am fascinated by the opportunities the web gives to everyone and how anyone with an idea and a bit of know how (or at least the willingness to learn) can communicate with the world, often making a great deal of money along the way.
The main focus of my blog is going to be on how websites can make a lot more money by improving their visitor to customer conversion rates - by which I mean getting more of the people who have arrived at the site to end up making a purchase.
A lot of my advice and comments are second hand, borrowed from books and promotional information I have read as well as conversations and opinions of colleagues I have worked with. I make no apologies for this, the best ideas and I guess advice is often borrowed and if I can help communicate these ideas with others then that should be of benefit to everyone. My intention is for all comments to be completely impartial to particular service providers and vendors in the market.
The language of the blog is very basic and uncomplicated and often the explanations are geared towards readers who have no background experience whatsoever. Opinion and constructive criticism is welcome and again by no means am I the expert so if you disagree with anything you read please do let me know as it is great to learn from others.
I believe strongly in the messages I am communicating and if I can help anyone further their business then I will be very happy indeed. Finally, thanks for taking the time to read my blog.
Saturday, 10 January 2009
What's happening in the market and how can I make more money out of my website?
How do you solve a problem like...reduced advertising spend?
If you are either a marketer or are responsible in any way for increasing revenue from a website you will be familiar with one of the following two scenarios:
1. Your marketing budget remains consistent with spend in 2008 or has been reduced, (possibly due to the current economic climate that is affecting so many of us) and yet you are still being tasked with increasing revenue from a website.
2. Your marketing budget has been increased but you have reached a limit on how much you can bid or spend on Google Pay Per Click (PPC) keywords, Affiliate marketing, banner advertising etc and still see a return on that investment.
Speaking broadly there are three things that you need to do well to run a successful online business:
1. Getting people to your visit your website, commonly done through Search Engine Optimisation (SEO - having your website listed highly in search engines like Google, Yahoo!, Microsoft Live Search, Lycos etc), Affiliate marketing, PPC advertising, CPM (cost per thousand impression) banner advertising and more generic viral marketing, PR and word of mouth promotion. This is just common sense, as there is no point having a fantastic offering if no one knows about it.
2. Getting the right people to your site, often called the quality of the traffic coming to your site. There is no point in getting lots of visitors coming to your site if they are not the right kind of visitors. For example having strong positions in search engines or bidding on PPC keywords for 'premium car insurance' is on the whole worthless if you only sell 'budget car insurance'. Some sources of traffic are also of a higher quality than others. This could be because a particular companies providing advertising opportunities are not as effective at cutting out unscrupulous practices such as click fraud, or do not cut out traffic from foreign countries who may not be able to buy your product (often the case for financial services).
3. If you are getting these first two right and your website is still not making much money (or not as much money as you think you should be making), the reason may be that there is limited need in the market for your product or service, or that you are asking for far too much money in comparison to competitors rates. Hopefully this is not the case, leaving just one other thing that is letting you down - your website. If your product/service offering is strong and you are getting high numbers of the right people to your site, then you are either not positioning your offering in the right way to the right people, or the user experience on your website is so flawed that it is extremely difficult for the user to find what they want and understand how to complete a transaction.
If you are either a marketer or are responsible in any way for increasing revenue from a website you will be familiar with one of the following two scenarios:
1. Your marketing budget remains consistent with spend in 2008 or has been reduced, (possibly due to the current economic climate that is affecting so many of us) and yet you are still being tasked with increasing revenue from a website.
2. Your marketing budget has been increased but you have reached a limit on how much you can bid or spend on Google Pay Per Click (PPC) keywords, Affiliate marketing, banner advertising etc and still see a return on that investment.
Speaking broadly there are three things that you need to do well to run a successful online business:
1. Getting people to your visit your website, commonly done through Search Engine Optimisation (SEO - having your website listed highly in search engines like Google, Yahoo!, Microsoft Live Search, Lycos etc), Affiliate marketing, PPC advertising, CPM (cost per thousand impression) banner advertising and more generic viral marketing, PR and word of mouth promotion. This is just common sense, as there is no point having a fantastic offering if no one knows about it.
2. Getting the right people to your site, often called the quality of the traffic coming to your site. There is no point in getting lots of visitors coming to your site if they are not the right kind of visitors. For example having strong positions in search engines or bidding on PPC keywords for 'premium car insurance' is on the whole worthless if you only sell 'budget car insurance'. Some sources of traffic are also of a higher quality than others. This could be because a particular companies providing advertising opportunities are not as effective at cutting out unscrupulous practices such as click fraud, or do not cut out traffic from foreign countries who may not be able to buy your product (often the case for financial services).
3. If you are getting these first two right and your website is still not making much money (or not as much money as you think you should be making), the reason may be that there is limited need in the market for your product or service, or that you are asking for far too much money in comparison to competitors rates. Hopefully this is not the case, leaving just one other thing that is letting you down - your website. If your product/service offering is strong and you are getting high numbers of the right people to your site, then you are either not positioning your offering in the right way to the right people, or the user experience on your website is so flawed that it is extremely difficult for the user to find what they want and understand how to complete a transaction.
It is this third part that will be the main focus of my blog as I believe strongly that it provides a solution to both of the scenarios highlighted at the start of this blog post. Let's say that you were tasked with doubling the revenue being generated from your website. I bet your first thought would be, 'To do this I would need to double my advertising spend'. This is a perfectly reasonable thought and for some companies with a history of investing little in SEO or advertising I am sure it would work. What you probably wouldn't consider is that another way to to achieve exactly the same thing would be to double how well your site performs in converting visitors into customers (for example increasing your sites conversion rate from 2% to 4%).
Although doubling website conversion might be a bit ambitious, it is possible to significantly improve a sites conversion rates for a fraction of the cost of achieving equivalent results through increased advertising spend. Why spend £50,000 on a temporary burst of traffic, when the same amount invested in conversion could give you a sustained 20%+ increase in traffic flow through a checkout process.
Times are tough and if your budget is tight, it is definitely worth considering taking a small percentage of your acquisition spend and allocating it to improving the conversion performance of your website. Companies that do this successfully, will continue to see growth even with a diminished advertising spend.
If you are lucky enough to be in a position where you have plentiful money to invest in advertising, conversion will still be key. This is particularly true when it comes to PPC advertising, as the amount you can bid for each click will be completely determined by how well your website converts those visitors into customers. Let's do a mathmatical example using some nice round figures to keep it simple.
Example
You sell car insurance and are bidding in Google on the keyword 'car insurance'. You make £200 net profit on every sale and 1 in every 100 visitors arriving to your site on the Google PPC keyword 'car insurance' make a transaction with you (a conversion rate of 1%). On these metrics you may be able to spend as much as £1.80 per click with Google, as at this rate every sale would cost you £180 leaving you with a £20 profit.
If you did this with large scale investment, you could make thousands of sales and all being at £2o you would make a lot of money. So far so good, Google PPC advertising is working well, but inevitably it is natural to want to increase sales via this medium further still. The problem with Google is that to receive more traffic to generate more sales, you need to bid higher so that you appear more prominently in their search listings. It might be possible in this example to bid £1.90 per click and reduce your profit margins to just £10 a sale, but your will reach a point where you cannot bid any higher because the margins are so small you are not making a profit on the sale.
At this stage the only other variable you can look to impact is how well your site is converting this traffic. If you could raise your conversion rate to 2% (so that 2 visitors in every 100 went on to make a purchase) then you could either continue to bid at £1.80 per click and retain a much higher profit per sale of £110, or you could double how much pay per click to £3.60 a click and still have a £20 profit per sale, but potentially be generating twice as many sales from Google.
This is a very simplistic example, but hopefully it hammers home just how much extra money can be made from improving a sites conversion rate and just why it should be a focus for your company.
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