You know you should advertise your business online, but you are not sure how much you should spend. You need to figure out how much you can afford to spend and still earn a profit. Here are the steps of determining the value of each visitor to your site.
First, before you advertise, determine your conversion rate--divide the number of unique visitors by the number of sales you receive. Then, calculate your net profit on each sale. That figure is your gross revenue minus your total expenses, divided by the number of sales.
Calculating Value So You Can Advertise
Your net profit per sale divided by your conversion rate will give you the value of each individual visitor. Once you have that number, you will know how much to bid on keywords to advertise. It might also help you determine which PPC search engine you will use, since some charge more for their keywords.
To determine which keywords you should use in your ads, start by searching through your server logs or other web statistics to see which keywords your visitors searched for to get to your site. This will give you a good idea of the keywords to use. You could also ask some of your customers how they found you and what search terms they used before they visited your site.
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