I’m a big fan of making money, and I like buying shiny new things just like anyone else. I spent a good part of last week considering some new and some old Internet Marketing ideas that could make you money.
One of the techniques I considered was PPC Arbitrage, the idea of buying ads for keywords that are cheap and showing a site with keywords that are extremely expensive, making a profit from the difference in price. The issue with this is that Google and most search engines are working hard to remove these spammy sites. Also, this is an extremely inflated field, the only hope you have at this point is through long-tail keywords and in my opinion, you’re better off investing the money somewhere else.
But as I was doing the research for PPC Arbitrage I came across another technique of Affiliate Marketing through Google Adwords. It was explained to be an extremely simple, great money maker (already I’m worried, because nothing simple is a great money maker). “All you have to do is find a program from ClickBank that has a high payout and high gravity. Then use Google Adwords to create advertisements that point to your affiliate link. The only work you have to do is find the right keywords and advertisement price for your ad.”
It seemed deceptively easy, so I grabbed a calculator (I suck at math), a pen, some paper, and a cup of coffee (I’m addicted, I know). First, I found a program I’d try this out with. I figured the “Google Magic Formula - Unscramble the Google Code” would work perfectly. It has a high gravity (meaning people are actively buying this product through affiliate links), and has a decent pay-out of about $40 (it’s usually better to promote higher priced products).
So now we need a few more numbers to estimate the net profit we can make. Since we can’t know for sure without testing the splash page, we’ll have to assume what the Click Through Rate is for it, meaning how many people that visit the splash page actually make a purchase. For this we’ll estimate and say that the splash page only receives a 5% CTR.
The final number we need to calculate is the amount of traffic the site will receive from ads. Thankfully, Google Adwords has a Traffic Estimator tool. Usually, I wouldn’t trust this information, and I really think that Google gives you an inflated number, but it’s a good starting point and a great place to gain some information about the keywords, competition, and price for ads.
I ran a report on a set of keywords, and chose a Maximum CPC of .15 (I got this number after testing different amounts and deciding which maximized traffic). With a total daily budget of $40 (which is how much you earn from a single sale) Google estimated that the site would receive 119 to 185 clicks per day.
In the final step I take our estimated traffic of about 119 clicks, and multiply it by the CTR of 5% we assumed, we come to the conclusion that about 5 people each day will buy the “Magic Formula” netting us $200 in profits, daily. Subtract the $40 for ads, and our total profit is $160 a day.
Wow $160 a day? That’s a really good amount, especially for not having to do much. But that’s what got me thinking. How do you make $57k from one program, doing nothing but creating ads and watching the money come in. Obviously, if it truly was this simple, everyone would be doing it, and it wouldn’t be profitable anymore.
In theory and a perfect world the math above would work great. But the real world isn’t perfect, and your CTR and traffic will fluctuate while your ad costs will stay the same. Also, don’t forget that it takes a lot of money to get started, and you are definitely risking a lot during your learning curve.
My advice to those interested in Affiliate Marketing through ads, is to fully consider the repercussions to your bank account. What if this doesn’t work out, can you risk to lose thousands of dollars? Because that’s the amount of money you need to really be successful. Also, be prepared to work hard. It is not a truly passive income. Monitoring and tweaking ad language and ad pricing is a full day job. Finding new programs and researching everything you need to know is not easy and definitely involves a bit of luck.
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