Don’t you guys agree? I think PPC costs too much to make selling an information product profitable, unless you can come up with an EXPENSIVE information product that people are willing to buy. Even low cost keywords are too expensive in my opinion.
I mean lets do the math…
Example:
100 clicks at $1.40 each = $140
1 purchase(1% conversion) x $50 information product = $50
Total Profit/Loss = -$90
I just think those numbers prove that its bull. I dont see how anyone can make money selling information products online. The example above was very conservative too. Not many info products people will spend $50 on. Also, $1.40 is a moderate to low competition keyword.
I would like to hear some examples or comments, and hope someone can prove me wrong. Thanks!
You’ve made three assumptions in your model which are certainly worth challanging.
The first is the conversion rate. Industry averages put PPC at closer to 2.7% and a well optimized campaign can certainly be higher, much higher… this alone brings your campaign far closer to profitable. At 1% you have to question the effectiveness of your conversion funnel and the relevance of your product or marketing terms.
Second you have the cost per click. While $1.40 is by no means near the upper end of CPCs, it’s a fairly aggressive bid for a $50 product. Lowering this even by 20% through optimization or long-tail would be a significant campaign savings.
Last and perhaps most important is the value of the sale. A one time order is a horribly ineffective way to grow a business and seriously handicaps marketing efforts. By developing a product series, remarketing cycle and starting to measure on the long term [or lifetime] value of a customer you may discover that the $90 you lost is made up in the next 3 months through subsequent sales and referrals.
Of course this doesn’t mean PPC is right for you. Not every product type can viably engage in paid marketing… Depending on your market you may discover that while your competition thrives, your particular tolerance for loss, remarking abilities or just the nature of your product require a lower investment per sale. Still, when I’m talking with smaller accounts the most common issue I see is not the medium but their use and goals from it. If you’re playing for a single sale while everyone else is driving 5 turns per customer, you’ll lose in just about any place you go.
Very interesting points you make and I would like to address a few of them… thanks in advance for the responses!
After reading your post I would agree and disagree with what you say. I think that their is a theoretical sliding scale in which all three variables effect each other and move according to different inputs. For example, I think your 2.7% conversion rate would decrease the average product price, causing your Profit/Loss to remain the same.
And obviously we are both talking about hypotheticals with example assumptions, but my point is that it is EXTREMELY difficult and nearly impossible to profit from selling an information product via PPC. Everything has it’s rare exceptions, but this should be the general consensus.
It’s just frustrating to read so much crap out there about how easy it is… examples…“The Four Hour Work Week” and Internet marketing websites like johnchow.com. These guys basically make it sound like anyone with above average creativity and intelligence can do it, and it’s such a huge lie. I have sold websites and been involved in some form or another of Internet marketing for over 5 years now, and the people I’ve seen succeed are rare, lucky, or extremely hard working… and sometimes all 3.
And the guys that always make the most are the ones that are “teaching you how to make money.” It’s a classic modern day ponzi scheme. The people that end up making money generally teach others how to do it, but it’s all theoretical salesman crapola.
It’s impossible to say without real data but again, if you take averages from the IR Top 500 you get 2.7% PPC CVR on an order of $110 or so. Some people manage to find profit in $10 orders, others struggle at $1000 ones… it’s a function of the industry, the margins, talent and your margin tollerance and absolutely varries widely.
It’s just frustrating to read so much crap out there about how easy it is… examples…“The Four Hour Work Week” and Internet marketing websites like johnchow.com. These guys basically make it sound like anyone with above average creativity and intelligence can do it, and it’s such a huge lie. I have sold websites and been involved in some form or another of Internet marketing for over 5 years now, and the people I’ve seen succeed are rare, lucky, or extremely hard working… and sometimes all 3.
I’m not clear if your end goal is to vent or to seek ways to improve your campaigns… Certainly changes the type of responses you’ll get.
Either way you are right that this isn’t easy or guaranteed. People sell that message because others buy into it; we call them suckers and despite the basic common sense that it’s just not going to happen, they keep biting whether it’s a claim on the web, a late night infomercial or some mlm scheme they come across. Of course, we’re also responsible for creating our own competition… the easier something is to do, the more people do it. The more people do it, the harder it becomes to do. There was a time when PPC bids were a small fraction of what they are today… competition changes things.
When you’re talking about a product with no cost, no barrier to entry, it becomes very, very difficult to win. That’s why only a tiny part of the web market is about informational products and I would say the market is going to decline to become even smaller.
Testing your options is certainly the best way to approach marketing but PPC isn’t working, it may not be worth the investment to you to keep going down that road and see if you can bring it up, but if others stay at it chances are they’ve found something you did not…
Where do you find these stats like the 2.7% conversion? Also, do you happen to know of any where I can find some detailed success stories on selling information products online? One’s that arent a sales pitch? Thanks!
Venting is fine… Just need to be clear on the end goal so we can respond appropriately
The 2.7% stat is from a Marketing Sherpa book and is actually a few years out of date, but I’m fairly voracious in consuming web stats and have seen similar numbers in more recent reports. Clickz is usually a good aggregator of those sorts of data points, or just following the right people on Twitter.
Unfortunately I don’t have any suggested resources for your area. I’m sure there are some but as you’ve pointed out, it’s an industry filled with people trying to sell you into their own program and thus not included much in the “mainstream” web marketing world.
Thanks Ted… How about you? You seem to be pretty knowledgeable and opinionated on the subject. What are some of the projects you have worked on now and in the past?
Hate to disappoint twice but my knowledge of the space is limited to discussions and peripheral involvement… the great thing about marketing is that you have constants which tend to hold true across verticals with some change up or down depending. I’ve worked in lead gen and education markets but never in true information products.
PPC for selling information products is one of the most profitable ways to make money online. However, there are many who fail TERRIBLY in this area. Its sort of like stock markets, there are big investors, and people who THINK they can make money off PPC and people who can really analyze statistics. Which are you?
