WebDiggin.com: An Adventure to Make Money Online

A week ago, the Random Forest asked us if we successful making money using Affiliate links straight into PPC campaigns. We had to do some number crunching to come up with the answer: yes… for now.

Search marketing was our first attempt at trying to make money online. (Search marketing is when you buy Pay Per Click PPC ads on the major search engines and send the traffic to your affiliate links to make commissions on the sales.)

We lost money in 2007 because our ads weren’t working, and we waited too long to turn the campaigns off, even though the commissions weren’t rolling in. (Kinda like waiting by the phone, hoping that someone will call to ask you out on a date.)

Finally around December 2007, after trying several different products, we managed to get one campaign for an online retailer to make money using PPC ads on Yahoo. But, Yahoo recently changed their keyword formula, so we thought our campaign would die. (To our surprise, our campaign is still going and we even managed to get our ad to a quality index score of 5 out of 5, which was a first for us.)

How much money have we made using PPC Affiliate Marketing?

All numbers reported are USD. We’re using the click date in all of these tables.

Table 1. Online Retailer - Tier 1 commissions (5%)

Looking at the amount of money we’re spending on advertising in each month (PPC Cost), and the commissions we’re making (CJ Earnings), you can see we’re losing money each month (negative return). In fact, our earnings per click (EPC) hover around the $0.20 per click, while our advertising cost per click (CPC) is slightly higher. It looks like we’re losing about $0.02 per click each month.

But, the online retailer we are with offers different commission rates based on how much merchandise you sell for them. If you move over $2000 of merchandise, your get a 20% bonus which is awarded about 1.5 months later when the sales get locked in. So if we look at the numbers including this bonus, we get a different picture.

Table 2. Online Retailer - Tier 2 commissions (6%)

When we add the bonuses to our CJ earnings, we see that we’re actually making money each month. (Around 4 cents per PPC ad click).

What does this all mean?

We’re making around $30 each month from our Search Marketing Campaign.

Why don’t our numbers match up with the numbers we show in our cashflow report? For example, the advertising costs and the CJ commision doesn’t match up with our Feb 2008 report.

• It’s because the cashflow report shows all of the commissions we make on the Commission Junction network. So it includes this PPC campaign, but also any sales we make on our domain names minisite, our SkypePro review, and other PPC search marketing campaigns that we are experimenting with.
• It’s also because we’re trying some other PPC search marketing campaigns - so those are adding some extra advertising costs to our cashflow report.

How do you make more money with PPC search marketing?

We have a few ideas to crank up the juice on our PPC search marketing campaign.

One idea is to lower the keyword bids that we have on our Yahoo ads. That way, we’re increasing our profit margin, so the clicks we get will have a greater return.

• The problem is that we’ll get fewer clicks, so the amount of merchandise we can move will be lower. We want to make sure we sell enough to get into the tier2 commission level.
• If we make a lower bid, we’ll probably loose our top position on the keyword. I imagine that the hardcore buyers will click on an ad on the first page, not the twenty-first page. (I’m being extreme here, but you get the point.) I wonder how ad position affects your commissions

Another idea is to try to make the next commission tier. If we move $10,000 of merchandise and make a commission of $1,000, we’ll get a 40% bonus instead of a 20% bonus.

• Right now we have a daily budget on our ad campaign as a safety-valve. We tried opening the taps all the way, but sometimes there isn’t any more traffic to be bought. Still, we remove the budget restriction now to see what comes trickling in.  
• We could try a calculated risk of increasing our bid to get more traffic and sales. If we tried this approach, it needs to happen at the start of the month to give us the best shot at clearing $10,000 of merchandise. Initially, we’d have a greater loss (table 1), but we could look at the numbers to make sure the extra bonus was worth it (table 2).
• Our campaign is only running on Yahoo. If we could get the campaign to work on Google and MSN AdCenter, that would help us to reach the next commission tier.

Bottom Line: The idea of search marketing really appeals to us. You don’t have to keep on writing sponsored posts to make money. When you stop writing the sponsored posts, your cashflow stops as well. But, search marketing has the potential to make money for you while you sleep. We didn’t do anything with our affiliate marketing campaign other than watch the numbers every day to make sure they looked reasonable. If only we could crank up the juice.

Question: Have you ever used a PPC ad campaign to try to make money with your affiliate links? Did it work?

What we learned: If you’re thinking about experimenting with PPC advertising, make sure you get a coupon before you sign-up with Google AdWords, Yahoo Search Marketing or MSN AdCenter. (Coupons are only valid with new accounts.)

• Google AdWords. The best coupon we found was a get $50 free credits with Google Adwords when you sign up for a BlueHost account.
• Yahoo Search Marketing. Get $50 free credits with Yahoo Search Marketing when you sign up for BlueHost. (Get $25 free credits if you don’t want to sign up for a webhosting account.)
• MSN AdCenter. Call their toll-free support number 1-800-518-5689. (Seven days a week, from 6:00 A.M. to 6:00 P.M. Pacific Time). They can give you a coupon code for $50 USD, $50 CAD, or 50 British pounds, depending on what country you are in. (If you’re calling long distance, use an internet phone service like Skype so that it’s a free call. 1-800 numbers are free with Skype)

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