Tutorial for beginners :
I'm going to show you how to determine the maximum bid for your PPC campaign. Most peoples makes mistakes at this point by either bidding too low or bidding too high. forget competition, forget traffic. all you need to care about is your profitability.
I'm going to make it super easy for you. After spending over $50,000 in ppc campaigns, i found that "max bid" is the most important thing to focus when starting a campaign. This is the place i've lost almost $10,000 in my PPC campaigns because there was nobody to share the results with me, and tell me the math of bidding.
Most marketers out there will tell you test + test + test again, BUT why when they already have tested all the results? it's because they want you to make mistakes. they don't want you to compete against them.
ok let's start... i'll take an example of a solar energy product.
Price = $97
profit margin = 50%
Gross Profit = $48.50
conversion rate = 0.75%
you can find this information in your affiliate program.
now the super easy formula to calculate maximum bid is :
Max Bid = G.P * CR, where G.P=gross profit, and CR= conversion
Max Bid (Breakeven)
now you're not going to pay 36 cents because doing so, you won't be making any profit.
here i recommend bidding 50% of the max bid = $0.18
remember CPC is not always the same, sometimes it can be as low as 5 cents, and as big as 18 cents. but it won't exceed 18 cents as we've set the maximum bid $0.18
Now how much will be the profit.
gross profit = 48.5*7.5 = $363.75
cpc = 1000*0.18= $180
Net Profit = 363.75 - 180 = $183.75 per day
10,000 clicks = $1837.5 per day
100,000 clicks = $18,375 per day.
There is no limit to how much you can make. Invest more money to make more money. But test your campaign with at least 500-1000 clicks to check if the offer is converting or not.
It cannot be simpler than that. Good luck!
- Ashish Patel
Indian Super Affiliate