When is a successful campaign actually a profitable failure?
In a month of affiliate marketing for Amazon.co.uk I have sold more than 500 units, totalling more than £11000 in sales. I made 26% return on my advertising costs, built a daily Click Through Rate (CTR) of 2-6% (1% is considered good news), and unearthed some mighty keywords that cost fewer pennies than I have fingers.
And today I pulled the plug.
My AdWords campaigns had been driving thousands of eager shoppers to Amazon, and 13% of them converted to buyers. So what went wrong?
Each morning I'd wake up earlier and earlier, excited to see how my AdWords clicks from the previous day had converted to orders. I'd run an Orders Report, check the price of each item, work out my earnings according to the Amazon PPC commission structure, subtract costs, and enter everything into Excel, all while drinking my coffee. It took some time, but it was the *only* way to connect the AdWords stats to Amazon.co.uk performance.
Briefly, Amazon waits to pay commission until their products are dispatched. The 'Earnings Report' for any one day is nearly useless for working out how you're converting, as it includes items ordered days ago and excludes items yet to be dispatched. It is possible to wait until everything is dispatched to calculate your ROI, but this introduces an intolerable delay going forward between adjusting your campaigns and seeing the results, leaving your advertising powerboat as slow and unresponsive as a tanker but with none of the volume.
Assuming you, like me, are happy to add up the orders every morning, there is still a fatal problem: Amazon only tells you which item has been ordered, not the price. Click the link and you'll be shown their product page, but up to 30% of my sales were from third party merchants. Who could be 50% cheaper or more expensive. Bang goes accurate reporting.
There's a second layer of confusion. Heard of conversion tracking? If you run the 'back end', ie an Amazon-style sales site, you can use cookies to track exactly which clicks converted and thus calculate the various strengths of your ads and keywords. Amazon has a decent substitute: tracking ids, which can be incorporated into your links and then used to produce individual orders and earnings reports. But aside from adding another 30 minutes of arithmetic to your routine, this means a) you are limited to 100 distinct ids and b) every time you want to change or reallocate an id you need to delete and rewrite your ad or keyword.
This cannot be as good as it gets.
Over the next few days and weeks I'll be reviewing the books and resources which allowed me to create successful AdWords campaigns, as well as going into detail about the advice which made the most difference to my bottom line.
I won't make the same mistakes again - and neither will you.
- Joe
Saturday, 2 January 2010
Monday, 7 December 2009
My first £
Today I made my first pound. The first sum of money I have ever earned entirely off my own back; not a wage, not a gift, not found down the back of the sofa. It's not much, but it's a start.
The short term plan is as follows: be an employee for at least 6 months to build capital, then branch out on my own. I've hit a major load of luck in getting a well paid job at an international organisation, but the downside is that the working day is at least 8am - 6.30pm. This doesn't leave much time to plan/run a coffee business - so where did the pound come from?
My father ran a price comparison website for a year or so in order to teach himself php and to learn more about affiliate marketing. It's a beguiling idea: review a product, post links to that product on the virtual shelf of an etailer, and earn commission whenever a reader decides to buy. Dad operated this system in the traditional way with a modern twist: he built a database system which served up the realtime prices and user ratings of the products he reviewed. With a little work he was earning around £200 monthly - not a living, but not bad either for what was essentially a side project.
Well, yesterday he handed me a book called 'Affiliate Millions' which teaches a more advanced strategy known as 'search marketing'. Essentially the principal is that you pay Google or a like search engine to display a small ad, including affiliate link. You pay per click, and for each click a cookie is placed on the user's system with your tracking code. If they make a purchase during the 'referral period', which for Amazon is 24 hours, you earn a commission - in Amazon's case initially 5%, rising as you make sales.
The name of the game, then, is to pay less for advertising than you make in comission, and this is what happened yesterday. Half of the users who clicked my ad made a purchase yesterday. The clicks cost me £1.50, the commission was £2.50: hello Poundland.
Stay tuned for more tips and tricks of search marketing, as well as some thoughts on the shiny world of work.
The short term plan is as follows: be an employee for at least 6 months to build capital, then branch out on my own. I've hit a major load of luck in getting a well paid job at an international organisation, but the downside is that the working day is at least 8am - 6.30pm. This doesn't leave much time to plan/run a coffee business - so where did the pound come from?
My father ran a price comparison website for a year or so in order to teach himself php and to learn more about affiliate marketing. It's a beguiling idea: review a product, post links to that product on the virtual shelf of an etailer, and earn commission whenever a reader decides to buy. Dad operated this system in the traditional way with a modern twist: he built a database system which served up the realtime prices and user ratings of the products he reviewed. With a little work he was earning around £200 monthly - not a living, but not bad either for what was essentially a side project.
Well, yesterday he handed me a book called 'Affiliate Millions' which teaches a more advanced strategy known as 'search marketing'. Essentially the principal is that you pay Google or a like search engine to display a small ad, including affiliate link. You pay per click, and for each click a cookie is placed on the user's system with your tracking code. If they make a purchase during the 'referral period', which for Amazon is 24 hours, you earn a commission - in Amazon's case initially 5%, rising as you make sales.
The name of the game, then, is to pay less for advertising than you make in comission, and this is what happened yesterday. Half of the users who clicked my ad made a purchase yesterday. The clicks cost me £1.50, the commission was £2.50: hello Poundland.
Stay tuned for more tips and tricks of search marketing, as well as some thoughts on the shiny world of work.
Tuesday, 1 December 2009
coming up...
A preview of what's to come:
- The business snapshot. My idea is essentially a mobile coffee business - not original, but unique in certain aspects. This is not a corporate site, indeed I hope to remain as anonymous as possible. Ten points if you guessed that 'Joe', American slang for coffee, is not my name. As previously stated the goal is to become as profitable and hands off as possible, so I will be exploring the different means to expansion, including franchising.
- How to use spreadsheets to model your business. Whether convincing yourself that it could work or convincing a bank to finance you, it is imperative to simulate as far as possible every detail. By changing one cell you can instantly see the knock on effects of lowering prices or rising costs. How many employees can you pay for, and (crucially) can it operate without you?
- The fundamentals of Technical Analysis and how to backtest a financial strategy.
- The business snapshot. My idea is essentially a mobile coffee business - not original, but unique in certain aspects. This is not a corporate site, indeed I hope to remain as anonymous as possible. Ten points if you guessed that 'Joe', American slang for coffee, is not my name. As previously stated the goal is to become as profitable and hands off as possible, so I will be exploring the different means to expansion, including franchising.
- How to use spreadsheets to model your business. Whether convincing yourself that it could work or convincing a bank to finance you, it is imperative to simulate as far as possible every detail. By changing one cell you can instantly see the knock on effects of lowering prices or rising costs. How many employees can you pay for, and (crucially) can it operate without you?
- The fundamentals of Technical Analysis and how to backtest a financial strategy.
the beginning
I have a common dream which is infamously difficult to realise: to achieve what Robert T. Kiyosaki terms 'financial freedom' in his bestselling guide, Rich Dad Poor Dad. More than being wealthy, I take this to mean that money no longer has a bearing over how you chose to live your life. While I don't aspire to fame, or necessarily even to fortune, my goal is to design a system whereby I can work little or not at all.
This blog is intended for anyone who aims to seed and grow a profitable company, while also considering how to invest the proceeds. It will refer to the writings of industry leading entrepreneurs and financial experts, covering subjects as diverse such as forming and running a limited company, franchising, marketing and evidence-based Technical Analysis.
Right now I'm a graduate, unemployed and unexperienced, and living with my parents in a UK city. Like a newly floated company, there is no guarantee of my success - worse, the odds are against it. But it is clear from here that in order for anyone to succeed as business owner and investor there are certain lessons to be learnt and routes to be explored, and so I hope my story will be relevant and, if nothing else, entertaining.
- Joe
Note: The majority of small businesses fail, and the majority of investors lose money on the stock market. In writing this personal account I will refer wherever possible to the advice of experts but even they are not infallible, and as such I cannot guarantee the efficacy of anything given below. Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.
This blog is intended for anyone who aims to seed and grow a profitable company, while also considering how to invest the proceeds. It will refer to the writings of industry leading entrepreneurs and financial experts, covering subjects as diverse such as forming and running a limited company, franchising, marketing and evidence-based Technical Analysis.
Right now I'm a graduate, unemployed and unexperienced, and living with my parents in a UK city. Like a newly floated company, there is no guarantee of my success - worse, the odds are against it. But it is clear from here that in order for anyone to succeed as business owner and investor there are certain lessons to be learnt and routes to be explored, and so I hope my story will be relevant and, if nothing else, entertaining.
- Joe
Note: The majority of small businesses fail, and the majority of investors lose money on the stock market. In writing this personal account I will refer wherever possible to the advice of experts but even they are not infallible, and as such I cannot guarantee the efficacy of anything given below. Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.
Subscribe to:
Comments (Atom)