Expensive Clicks Profitability: Can Clicks That Cost $10+ Ever Be Profitable?
Pay per click networks out there always have a reputation for being “expensive“.
This reputation is usually casted upon them by people who really don’t understand how PPC works.
In this article we’re going to look at how most clicks on PPC can be profitable – even those that cost $10 or more each.
Of course the main drawback to the type of clicks that we’re going to be discussing in this article is obviously the cost, the fact is that if you have a sum of money to spend on PPC marketing upfront, there’s little reason why your venture won’t turn a profit.
One of the most expensive keywords out there is “home insurance” – these days, it costs around $20 per click for those advertisers using the AdWords search network.
At $20 per click, it must be difficult for companies to turn a profit, right?
Well, not exactly.
Turning a profit isn’t impossible because the cost of the product being sold isn’t cheap anyway – the cost of home insurance can easily run into the thousands of dollars each year.
Brokers and comparison websites out there often receive large commissions when selling home insurance policies, and as such can afford to budget vast sums to market their services.
Let’s break down this example a little bit.
We’ll have to assume a few figures in order to make the example work.
For conversion rate let’s assume a paltry 5% – which basically means that of every 20 people who hit the site, only one will convert.
We’ll also have to assume the average cost of home insurance is around $1,000 per year.
This means that for each customer, companies will pay around $400 – but it also means that there’s still potential for profit.
With home insurance most people just pay their renewal on a yearly basis without giving it much thought.
When someone signs up with a company for home insurance the chances are that they will stay with that company for a long time to come.
All of a sudden the $400 that it cost to bring that customer in looks like a tiny amount – if they stay with that company for 10 years, the cost of bringing in the client is just $40 per year – which is a rather small percentage of the $1,000 or so per year they’ll pay in insurance premiums.
Some people are very short sighted when it comes to paid clicks – they refuse to look at the bigger picture and they refuse to accept that PPC can be extremely profitable.
The biggest drawback is the fact that you need a large sum of money upfront to cover those PPC fees.
If you spend a few thousand dollars on PPC campaigns and you receive no conversions your campaign will make a significant loss.
That’s just the risk you take with PPC and marketing in general though.
Give PPC a try today – when you think about how highly targeted the traffic is, it’s a bit of a bargain.
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