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Terry Howard Orlando, Florida |
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Some Advertising Fundamentals |
Posted by Terry Howard @ 11/16/2007 
CPC = Cost-Per-Click
CPA = Cost-Per-Acquisition (we call this CPL, Cost-Per-Lead, for our purposes, in any case it's the cost per "conversion", but CPC is already taken!)
CPC is just the average paid for traffic, or clicks on your ad, irregardless of what they do after that
CPA/CPL is a measure of how much you had to pay before you get a lead or sale (on the average)
The conversion rate of your CPC gives you a CPL. So like say you are bidding $1.00 for a term. That term got clicked 100 times and it just happened to be $1.00 everytime (for arguments sake). The average CPC was $1, but your overall spend was $100. Let’s say 5 out of those 100 clicks bought something. You had a conversion rate of 5%, and your CPA was $100 (your overall spend) divided by 5 (your total orders), which gives you a CPA of $20. You literally had to pay $20 (averaged) to gain 5 orders.
Your ROI now is something you can only really determine in short order for immediate sales type conversions. Leads could in theory be quantified as an ROI but we’d have to take our average revenue generated by a successfully cultivated lead, divide that by the conversion rate of our leads (how many leads become customers) and get an average value for each lead. We could then use that as our “conversion value” in an ROI equation, which is:
ROI = net revenue / costs x 100%
So in our above example you have 5 orders (or leads), let’s say they were for $400 a piece (or for every 5 leads 1 will become a customer that nets $2000, making your average lead value $400) . Those 5 orders/leads brought in $2000. Now we spent $100 to earn that $2000, so our net revenue from the campaign was $1900 (gross – costs). Now take that net, divide it by the cost again, which gives you 19, which means your campaign was effective by a factor of 19, or more commonly represented as a percentage (x100%) which gives you an ROI of 1900%.
You could then take that number and use it for projections. Given all factors the same we might could expect that plugging in $2000 at a ROI of 1900% would yield $38,000 ($2000 x 1900%.)
Labels: advertising, marketing, search engines
More Mahalo Musings |
Posted by Terry Howard @ 8/28/2007
With the Mahalo model a given result is created by an editor. It is up to that editor, or group of editors, to be the sole decision maker in what businesses get exposure. You have to wonder how they will make this decision or gather their pool of options to select from. My guess would be they'll search Google, which is just a big fat bit of sad irony. But regardless of that, with this small group of people crafting these results you are likely to get a page heavy with big name manufacturers and big box retailers, people everyone has heard of. In Scoble's HDTV example that is exactly what you have. So I guess if you are a new product entry into the market, or a comparatively small fry in the retail space, you are SOL. Maybe you could send an email or flyer to the editors: "Hey, please review my new business for consideration!" Or...
You could use an algorithmic based engine that allows the chance for everyone to gain momentum and climb in the rankings as their popularity driven by their marketing efforts dictate. The big guys with the big names and the big popularity will be found among the top. But mom and pop have the opportunity do some clever marketing and get a little time to shine and hopefully gain traction to build their business. SEO helps businesses compete and get exposure and anybody can do it, big or small.
Mahalo, this is what we call a "free market", which is different than the Oligarchy-like marketplace you envision as Utopia. I wouldn't expect you to understand, as a search of "free market" on Mahalo yields the familiar "We haven't written a result page for 'free market' yet. Why?" Ooo! Me! Me! Because you don't have a clue!
As a side note, people who think in terms of "utopia" usually end up committing genocide on their own people right before the free market practicers of the world push them back into a bunker where they put an end to their grand schemes with a lead bullet.
Labels: marketing, search engines, seo
Colbert Defuses Google Bombing? |
Posted by Terry Howard @ 4/19/2007
Labels: colbert, google, search engines