Check that your visitor value exceeds you traffic
Google will provide you with the average visitor cost
directly from your AdWords control panel. The figure you need
to use is the CPC, or cost per click.
Measuring your visitor value is usually much more complex
and depends on
your average sales value
your business margins
your conversion rate.
You know, or at least you ought to know how much money you
make from an average sale. You then need to calculate your
profit per sale and multiply that by your overall conversion
rate to find what your visitor value is.
Let's walk through an example.
Suppose you sell widgets for $50
These widgets cost you $10 so you profit it $40 per
Suppose further that you have a 10% conversion rate. This
means that one out of every ten people who visit your site go
on to buy from you.
Your average visitor value is then $40 * 10% or $4.
If you can buy targeted traffic for under $4 you are going
to make a profit. If you can get it for 20c you'll do fine!
So the first thing is to measure these key business numbers.
If you find that you are making good money per visitor and your
ads are ranking low, then increasing your bids will probably
generate more traffic and increase your overall sales and
Note that many businesses make a mistake at this point and
focus too much on Return on Investment or ROI, which is the
ratio of what their advertising costs are to their profits. To
see why this is a mistake click