Optimization is one of the most common problems beginners have when using Pay Per Click (PPC) advertising, like Google Adwords. Simply selecting a few good keywords and paying a high Cost Per Click (CPC) rate isn't going to keep you in business very long. There's actually some simple mathematics behind it that can significantly help you find your way to profitable PPC campaigns.

Before you start a PPC ad campaign to sell your products, you need to know the following 2 things:

1. How much profit you make from each sale
2. How many unique visitors you get to your website (on average) before a sale is made

(Note: you should be able to get statistics from your web host that list the number of unique visitors to your website on a given day)

Let's say you sell a dog training course for $47.00 and you calculate your profit to be $40.00 per sale. You find that your website gets 100 unique visitors before you generate 1 sale.

So, taking the information above… for each unique visitor, you can pay $40.00 / 100 = 0.40 cents to break even, make no money and lose no money. However, since your goal is to make money, you obviously need to pay less for each unique visitor.

Now when you research the keywords and keyphrases to use in your PPC campaign, you now know that you cannot spend more than .40 cents on any click in order to stay out of the negative. A good strategy may be to find the keywords and keyprases that will get you a decent Adrank (which is the position of your ad) with a cost of .25 cents or less.

Let's say you target to pay .25 cents (on average) for each click to your website. That should leave you with .15 cents profit for each customer. Granted, not all customers make a purchase, but eventually if your conversion rates stay the same you should average .15 cents profit on each click.

If you make .15 cents on each unique visitor, and you drive 1000 unique visitors to your website each day via your PPC ads, then you will make (on average) 1000 x .15 = $150.00 per day.

There's the simple math behind PPC advertising...

Sincerely,

Michael Ellis