Understanding the Pay Per Click Business Model for Affiliate Marketing

by WorkFromHome on July 2, 2011

The general formula for making money in affiliate marketing is to point targeted traffic at content that’s designed to get conversions. While a lot of people use search engine optimization to get traffic, the pay per click model, also known as PPC, is also valid. The pay per click model uses paid advertisement dollars to drive traffic instead of trying to rank in the organic search results for specific keywords. Here we’re going to explore what makes PPC different than SEO and how to excel at affiliate marketing using the PPC model.

Pay Per Click Keyword Research

Keyword research is a bit different between the PPC and SEO traffic models because the definition of competition is different between the two models. Competition when using SEO is based around the PageRank of the top sites for the keyword in question and how many results there are for specific keyword variations in the search engines. In PPC, competition is based around how many other people are paying to use a keyword and how much they are willing to spend per click.

Testing will help you to find which kinds of keywords perform the best for your website. To progress as an affiliate marketer using the pay per click model, you’ll need to use the information you get from your testing to find keywords that make you money. Equally important is the ability to use your results to stay away from keywords that will lose money, since money saved can be spent just as much as money earned.

The Mathematics of Pay Per Click Traffic

When compared to the use of search engine optimization, the pay per click model uses less long-term strategy and more mathematics. The math needed to do well at PPC isn’t very complex, but you have to be very good at applying the small amount you need to know.

An important value to know when using the PPC model is your return on investment, or ROI for short. Your ROI is your profit divided by the total amount of money you’ve invested, and is typically represented as a percentage. For example, if you spent $100 at a 20% ROI, then you will have profited $20.

The other important value to know for the PPC model is the volume you can do. If, for example, you were looking at paying for the keyword “blue widgets,” then your volume for the keyword would be how much money you could invest in getting traffic for the keyword. If clicks for the keyword “blue widgets” cost $0.25 each, and you are able to get 200 clicks each day, then your volume would be $50/day.

Once you know your volume and your ROI for a specific keyword or group of keywords, you can find your profit per day by multiplying the two values together. For example, a keyword that averages an ROI of 10% and a volume of $20/day would make about $2/day. A keyword’s ROI and volume are equally important when it comes to how profitable the keyword is.

Advantages and Disadvantages of Using the Pay Per Click Model

There are a few notable advantages and disadvantages to using the PPC model. The most important disadvantage to using the model is that you need more money to get started. Along similar lines, there are more chances for large losses for the unskilled. However, the logical advantage that comes from this is that working harder, getting better at finding winning keywords, and getting better at avoiding losing keywords both lead to quickly making more money. Because of this long-term build-up is less important, it’s easier to get started in PPC than SEO.

Concluding Thoughts

If you like doing constant analysis and you have sufficient starting capital, then affiliate marketing using the pay per click model could be a great place for you to get started making some money online. The PPC model greatly rewards people who are consistent and put a lot of effort into their work. If that sounds good to you, then you should probably give PPC a try.

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