But in order to show that HIS product was good, he had to trash Adwords.
(After all, EVERYONE is making easy money with Adwords, right?)
And although the product is rather pricey, I found his numbers very interesting – and a cautionary tale for anyone getting into Adwords.
Take an example: a rate of 3% converting or purchasing (which is good), and clicks of $1 (which is typical for some categories).
So for every 100 clicks, you get 3 sales, and spend $100, or $100/3=$33.33 per sale.
Or to write it more directly another way:
COST PER CLICK / PERCENTAGE BUY = AD COST PER ITEM
In our case, $1 divided by 3% is (1.00)/(0.03) or $33.33 advertising with Adwords cost PER SALE.
This is the kind of formula you must understand intimately – after all, if that’s what you’re spending with Adwords, it WILL cost you – and if you’re selling a product less than $33.33, then you’re losing money.
And that’s just advertising. What about product costs? If you are selling an item for $50, but advertising is $33.33, then you have only $16.67 left. If shipping is $10.00 each, then you’re getting close to the wire.
And of course there’s:
- Product expenses (actually making the product costs you).
- Labor (someone has to package, product, and ship it).
- Equipment and office costs (fixed expenses, whether you sell or not).
And so on.
So this emailer makes the case that with the costs here, NOT using Adwords, and going in another direction can be more profitable – and of course HIS product is that solution!
For others, the answer is to move to affiliate income – in this case, you sell other’s items, so you have not costs, inventory, etc. Then the magical $33.33 we’re talking about is only offset by what you earn as a commission. The rest is pure profit.
THAT is why ClickBank and affiliate programs are so popular right now. And THAT is why he targets Adwords in his sales letter.
But whether you go that route or not, math is vital – because if you don’t do the math early on, you could find yourself accumulating a lot of losses later…
Of course, the product that prompted this post was one that had nothing to do with Adwords, and the emailer only talked about it to contrast his own system. The irony is, the product is so pricey that Adwords would be a great way to market it – exactly what he was saying would be a problem…
