Arbitrage, A New Source Of Income
March 10th, 2008I generally focus on organic listings and anything to do with organic rankings, but lately I have looked at SEM ( PPC ) as a way to drive traffic to sites more and more. Don’t get me wrong, I have always done SEM… but I have decided to up the ante so to speak when it comes to sending PPC traffic directly to an affiliate offer for arbitrage.
It is a pretty hard game. I’ve tried my hand at the less competitive and longer tail terms in the past with no luck when it comes to arbitrage ( generally I break even or make a very small profit, not enough to continue with ). That all changed when I decided to take a couple thousand dollars and put it all in one basket ( platform ) for one niche ( payday loans/cash advance ).
See, most of the times I would spread my spend against the major 3 ( MSN, YAHOO, GOOGLE ) and then handle 3-4 smaller niches in each platform at one time. I was trying to do this too quickly and not really giving all my attention to just one campaign. I decided that maybe it wasn’t the offer or the platform that was the problem in the past, maybe the problem was me.
So, I decided to take a couple grand and put it all on the line with one niche. I picked a very competitive one on purpose because those tend to have the highest payout. I did my keyword research and added in over 2k worth of keywords into separate ad groups and made 3 ads per ad grouping. I also made sure tracking was set up correctly so I could see what ads performed best with what keywords.
I set an ad budget of $100 a day and each keyword to .50 CPC. The first day I got no clicks at all, so I bumped this to $2.50 CPC and the next day I was getting some traffic, though it maxed out around lunch time because my daily budget was too low. The third day I raised my daily budget to $250 and also raised my CPC to $3.25 per keyword so that I could see some volume and test out the conversion rate. To my luck, the conversion rate was awesome for the landing page the affiliate network gave me for the offer. I was doing about 1 conversion for every 7 leads.
I ended up spending the $250 over an even 24 hours and walked away with about $400-$450 a day in sales, which left me with $150-$200 a day profit for almost no work other then finding an affiliate offer, getting keywords and ads made, and turning on the traffic. Traffic seemed to go up and down during the week, but I average about 90-100 clicks a day with what is mostly a second page ranking for the platform I am on.
Even if I was pulling $50 a day profit, it is very little work to setup ( maybe 2 hours max upfront ) and does not need very much attention after it is set up and running. I maybe spend 30 minutes a day looking/thinking about it max. That $150 a day average will give me a cool $4500 a month extra revenue that I could focus on other projects.
I got a bit greedy and decided to remove the daily budget and raise the CPC on 2 of the better performing keywords/ads and it totally messed up everything. I actually went in the red for a day and have since lowered the CPC back down on the 2 keywords/ads. I did leave the daily budget off though. The lesson I learned is change one thing at a time and do it in incremental values.
When this gets sorted out and is back on track, I am going to start disabling the ads/keywords that are not producing traffic/good conversions and just let the campaign run with the better performing ads.
Here is some numbers for you:
Out of 7747 keywords/ads, only 47 produced a convertible lead
Out of those 47 keywords that produced a lead, only 8 of them produced at least a second lead.
Out of those 8, only 3 keywords produced more then 2 leads
See where I am getting with this? True some of these ads focus on the same keyword ( remember I did 3 ads per keyword ), but the point is that when I look at raw keywords ( not ads, but just keywords ) less then a handful are bringing in volume and sells. Since I am converting at an average of 1 in 7, I would have to give all my ads at least 21 clicks before I judge them not converting well ( you may have 18 non converting clicks, then 3 converters in a row ). Not to mention the time it may take those keywords to even get 21 clicks ( some long tails may never get clicked ).
So, after a weeks worth of testing, I feel that it is safe to take a winning campaign and start dumping the losing keywords/ads that are just bringing my campaign down some. If I still had a daily limit running, this would ensure more money for the proven winners so that they get even more exposure on the network I am running ads on.