Playing Around With Affiliate Marketing Numbers

Over the last few days I’ve been playing around with some PPC Affiliate Marketing numbers to try to visualize how I can go about hitting some of my income goals for next year.

This is a fun little exercise.  Bear with me as I go through these really quickly and maybe once you see how believable this can be, it might even inspire you to try Affiliate Marketing yourself if you haven’t already.  I’m going to simplify some of this a bit, but largely it should be pretty accurate.  I’m going to use the PPC Affiliate Marketing model of generating income.  Follow along and you’ll see where I’m going with this.

Keywords

Well, every successful PPC campaign is going to require some successful keywords.  Now, there are literally dozens of tools out there dedicated to helping you find good quality keywords for your campaigns.  Some cost money, but the two that I have found to work best are free.  The first free one is the keyword tool right inside Google Adwords.  It gives you some really great keyword ideas.  The second free keyword tool is your brain.  The great thing about using your brain to think of keywords, instead of a tool, is that you’ll probably come up with some really great keywords that a lot of other affiliates won’t know about because the brain tool is something not a lot of people use out there.

So, let’s say that even if I’m not a genius at this, but I am able to come with just TWENTY good keywords.  There are tools out there that can generate thousands of keywords for you, and it’s not very hard to get reports from Google to tell you which keywords get impressions and clicks, but for the sake of this experiment, let’s just say that I really focus my brain power and come up with just TWENTY decent keywords for a campaign.

Impressions

Now, of course for this to work properly we’re going to need to get people seeing my ads.  Whenever someone on Google searches for one of those 20 keywords I created, and Google decides to show them one of my AdWords ads, that is called an IMPRESSION.  Let’s say that I am able to average about 1,000 impressions per day for each one of those 20 keywords I came up with.  Now, it’s not hard to find keywords in Google that get WAY more traffic than that.  There are keywords that get 10,000 or 100,000 impressions per day and more.  BUT because I want to be somewhat conservative, let’s just say that I am able to get 1,000 impressions per keyword.

Click Through Rate (CTR)

Now, every time someone on Google searches for one of my 20 keywords, Google will display one of the Ads for them.  Let’s say that I muster up all my brain power and through careful tweaking and testing I’m able to get a 2% click-through rate on those Ads.  I’ve written Ads that get 1% click-through rates and some that get up to 5% or higher, so I don’t think 2% is an unreasonable number.

Conversion Rate

Ok, so now we’re getting a few people clicking on those Ads.  Remember that even if 98% of the people who search for those keywords we picked completely ignore our ads, we still get a 2% click-through rate and that’s all I’m counting on here. 

So now they’ve clicked on one of our Ads and they’re curious.  What if we assume now that 97% of people who have clicked on the Ad and see our landing page or website decide it’s a piece of crap or aren’t interested at all and leave.  So we only get a 3% conversion rate on the offer from people who clicked on the Ad.

Offer Payout

Let’s assume we’re promoting an offer that pays out $25/sale.  There are a lot of offers that pay more than that, and there are some that pay less, but for this example I just want to use a simple number so I’ll use a $25 payout as an example. 

Profit

I know that profit margins are a key component to making things work in PPC Affiliate Marketing.  There are many ways to address this issue.  Some affiliates focus heavily on volume and just try for a small profit on each lead, while others go for higher profits with smaller volumes.  Let’s say that somehow I’m able to make a profit of 50% on each payout.  Meaning, let’s say that for every $25 sale I generate, my PPC costs on it were $12.50.  I’m not saying it’s easy to do this, but there are a lot of affiliates out there that are making margins like that and higher.  Let’s say I was able to get it to that point where my costs were half of my payout.

Number of Offers

Let’s say that after some testing and trial and error I was able to come up with just FIVE offers that behaved the way I described above.

Summary

To summarize, here are the stats.  Based on my research, I would say that none of these are out of line too much for someone who is focused on PPC Affiliate Marketing.  Imagine this:

• 20 Good Keywords Per Offer
• 1,000 Daily Impressions Average Per Keyword
• Click Through Rate (CTR) of Just 2%
• Conversion Rate on the Offer of Just 3%
• A Payout of $25/sale
• A Profit of $12.50/sale (Other 50% goes to pay for PPC Traffic)
• Do This Five Times Running Just 5 Offers

I hope nothing above seems impossible to any of you.  None of it seems impossible to me.  I wouldn’t say it’s easy to do the above, but definitely not impossible.  So if I was able to pull this off, what kind of money would I be able to make with this?

Well, let’s see:

20 Keywords x 1,000 Impressions Each = 20,000 Impressions / Day

20,000 Impressions x 2% CTR = 400 Clicks / Day

400 Clicks / Day x 3% Conversion Rate = 12 Sales / Day

12 Sales / Day x $25 / Sale Payout = $300 / Day in Revenue

$300 / Day in Revenue @ 50% Profit = $150 / Day in Profit

$150 / Day in Profit x 5 Offers = $750 / Day in Profit

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$750 / Day in Profit = $22,500 / Month

$22,500 / Month * 12 Months = $270,000 / Year

Now comes the fun part.  The first time I went through these kinds of numbers with someone (in a totally unrelated line of business incidentally), I thought they were going to be inspired, amazed and super excited.  Instead… they proceeded to tell me 20,000 reasons why the above is impossible.

You know how you spot a person with an abundance mentality that has the right kind of thinking going in their heads?

They don’t instantly think of 20,000 reasons why the above is impossible.  Instead their eyes get really big and they only say one thing….

“What if I come up with 100 keywords!?”

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