Loss Leader in Affiliate Marketing

[GoogleSearchSux]

Just wanted to share an idea with some of you guys that has seemed to work pretty good for me. The idea is stolen from retail and is based on the loss leader. I will use a grocery store to paint the picture and explain how to use it for Affiliate Marketing.

In retail many times staples like milk and eggs are actually sold below cost. The reason for this most people that end up walking through the store grab something with good markups on the way out. So you basically lose money one one item to get people into the store, but make up for it during check out.

So how does this relate to affiliate marketing. Well lets look at search marketing specifically. We all know that CTR is vitally important in both getting volume and getting those CPC down (especially on Google). Many times the highest CTR ad is not necessarily the most profitable. What is a savvy marketer to do?

Use the loss leader rule. Keep that insane high CTR ad, but also add 2 other high ROI ads into the mix. You will keep the Goog happy with an overall high CTR for the keyword keeping your QS high and CPC low, but at the same time show ads that will bring in the most qualified traffic. (NOTE: assumed you have ads on rotate evenly NOT optimized).

Conclusion: If you find a keyword that you can't seem to get to profitability, try the loss leader technique and ad a high CTR ad with a couple of high ROI ads.

Obviously this doesn't ALWAYS work so TEST TEST TEST!!!!

 

[gerMAN]

+rep coming your way.

'small' ideas sometimes can make a huge difference. I'm sure this one can.

 

[bullet-ride]

In retail many times staples like milk and eggs are actually sold below cost. The reason for this most people that end up walking through the store grab something with good markups on the way out. So you basically lose money one one item to get people into the store, but make up for it during check out.

Didn't know this. Thanks. +rep

 

[vladb2]

Just wanted to share an idea with some of you guys that has seemed to work pretty good for me. The idea is stolen from retail and is based on the loss leader. I will use a grocery store to paint the picture and explain how to use it for Affiliate Marketing.

In retail many times staples like milk and eggs are actually sold below cost. The reason for this most people that end up walking through the store grab something with good markups on the way out. So you basically lose money one one item to get people into the store, but make up for it during check out.

So how does this relate to affiliate marketing. Well lets look at search marketing specifically. We all know that CTR is vitally important in both getting volume and getting those CPC down (especially on Google). Many times the highest CTR ad is not necessarily the most profitable. What is a savvy marketer to do?

Use the loss leader rule. Keep that insane high CTR ad, but also add 2 other high ROI ads into the mix. You will keep the Goog happy with an overall high CTR for the keyword keeping your QS high and CPC low, but at the same time show ads that will bring in the most qualified traffic. (NOTE: assumed you have ads on rotate evenly NOT optimized).

Conclusion: If you find a keyword that you can't seem to get to profitability, try the loss leader technique and ad a high CTR ad with a couple of high ROI ads.

Obviously this doesn't ALWAYS work so TEST TEST TEST!!!!

Google will not give your 2nd ad the same position if it gets a low CTR i think.

 

[GoogleSearchSux]

Google will not give your 2nd ad the same position if it gets a low CTR i think.

Right the high ROI ads won't see the same kind of volume. That is why you may want to add two or three of them. The whole point is your keyword will have a high quality score compared to if you just had high ROI ads without any high CTR ads in your ad group.

And I just used Google search as an example there are plenty of display CPC networks out there that reward your high CTR ads with either more impressions or lowers CPCs.

 

[coolguy20]

Use the loss leader rule. Keep that insane high CTR ad, but also add 2 other high ROI ads into the mix. You will keep the Goog happy with an overall high CTR for the keyword keeping your QS high and CPC low, but at the same time show ads that will bring in the most qualified traffic. (NOTE: assumed you have ads on rotate evenly NOT optimized).

Google calculates quality score for each ad independently, this is why a new ad will rank so much lower even when introduced into a campaign that has been running successful for some time.

While its a nice idea to think that Google will see a a great ad & some bad ones, and average out to a solid position its wrong.

What you'll see instead is that one A+ ad performing well and the bad ones merely dragging down your campaign rather then somehow nabbing some higher quality conversions.

 

[tvmatt]

Google tends to calculate per-ad rather than per ad-group. However, I've found that with Yahoo, having a higher performing ad will gain more traction for the entire group.

You really have to look at it from an overall perspective - one ad that I'm currently running has a higher CTR than other ads, but a lower CR. However, I'm able to pull more money daily from that ad than the others (the ad gets me lots of clicks that i otherwise wouldn't have been able to get, so though ROI is lower, overall profit is increased).

 

[zmxn73]

When I read the title I thought he was going to talk about advertising and selling a cheap product at the back end. :s