Loss Leader PPC Strategy and Cash Flow Management

Zos0r

Zos0r

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Oct 15, 2009
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I have 2 questions for anyone willing to answer them...

1. Do big PPC players utilize a loss leader sort of strategy in PPC, whereby they loss a shit ton of money on expensive clicks before they taper down bids? I've read about strategies where you bid on a ton of keywords and then optimize from there, but do guys throw out thousands of dollars at a time in order to make thousands more? I'm trying to wrap my mind around the economics of ppc...

2. I've been looking for PPC cash flow management articles but haven't found anything decent yet. Does anyone have any suggestions?

Thanks for reading...
 
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Reactions: erect


I appreciate you posting this in the noob section, most aren't that bright. +rep

A loss leader is typically a product that you're losing money on in hopes of someone buying another one where you make a killing. It doesn't exactly apply to PPC but I see what you're saying and the analogy is a decent one.

You will almost always lose money when starting out. If you bid high enough to get a top placement for your ad, and your ad copy is good enough to get a solid CTR, the engines will drop your bid prices daily.

This means that you might start off day 1 @ 75% ROI but by day 4-5 you might be at 125% without changing a thing.

Another reason spending the loot helps is because you can broad match. This will cast a wide net of keywords and, with enough volume, you'll be able to spot some losers and block them ... each block increases your ROI. You'll also find some golden keywords doing that that deserve to be exploited.

If you could waste $5k to get a well oiled campaign that makes you $800-$1k daily you would most certainly take advantage. That's a smart investment. It's also one of the few barriers of entry for PPC .. most noobs don't have the stomach for that.
 
Thanks, Erect! Exactly what I was looking for :smilie_weihn_winki:

erect said:
I appreciate you posting this in the noob section, most aren't that bright. +rep

A loss leader is typically a product that you're losing money on in hopes of someone buying another one where you make a killing. It doesn't exactly apply to PPC but I see what you're saying and the analogy is a decent one.

You will almost always lose money when starting out. If you bid high enough to get a top placement for your ad, and your ad copy is good enough to get a solid CTR, the engines will drop your bid prices daily.

This means that you might start off day 1 @ 75% ROI but by day 4-5 you might be at 125% without changing a thing.

Another reason spending the loot helps is because you can broad match. This will cast a wide net of keywords and, with enough volume, you'll be able to spot some losers and block them ... each block increases your ROI. You'll also find some golden keywords doing that that deserve to be exploited.

If you could waste $5k to get a well oiled campaign that makes you $800-$1k daily you would most certainly take advantage. That's a smart investment. It's also one of the few barriers of entry for PPC .. most noobs don't have the stomach for that.
Click to expand...
 
cool post .. i'm not really a newb but still havent really popped my PPC cherry...

erect .. i was thinking of promoting a CPS product .. u think google will be fine with that?
 
erect said:
Everything is CPS in the end ... sometimes advertisers pay on "leads" but those are based on sales. Hell, even email/zip submits are if you follow the breadcrumbs far enough.
Click to expand...

well i meant more like .. the product im selling is $60 bux and i get commission .... like a re bill ... except no free trial + rebill
 
leadsupplier said:
well i meant more like .. the product im selling is $60 bux and i get commission .... like a re bill ... except no free trial + rebill
Click to expand...

Yep, I'm aware what a CPS is.

Whether or not it will work depends on how much commission you get, how well it converts and what the demand is like. Your question really can't be answered without knowing specifics but yes, many CPS products work fine.
 
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