hen you first open your new site, hits will be slow in

coming (unless you are an expert at generating them). And sales

will be correspondingly scarce. Even so, you need to be checking

your stats and sales with care. The number that matters most to

you is …

The Value Of A Hit

By this, I mean, what is a hit worth to you? (By hit, I

mean one unique visitor or user session.) Compute this number

by dividing total sales amounts (gross profits) by the number

of hits. That is, find the total earned for say a month. This

includes your part of sales of products produced by others,

commissions on sales, and so forth. Your stats will provide

the number of unique hits.

For example, if you have a gross of $200 for the month, and

1000 hits, the value of a hit is 200/1000. Which is 0.20 or 20

cents. If gross was only $50, then this number is only 0.05 or

5 cents.

Moving Averages

With a mature site routinely generating hits, this number is

not likely to vary markedly from month to month. Even so, a good

plan is to include in your results a 3 (or 4) month moving

average. For example, given Jan: $0.30, Feb: $0.20, and Mar:

$0.10, add these three numbers and divide by 3. (30 + 20 + 10)/3

= 60/3 = 20.

The reason this helps is that looking only at the monthly

data, the above looks like an ugly downtrend. The 3 month

average eases that downer feeling. Equally important, it helps

you keep from getting too excited about an apparent up trend.

Suppose the value for April jumps to $0.40. For the new

average, January is excluded; you look at only the last three

months. This gives (20 + 10 + 40)/3 = 70/3 = 23.33 which is

roughly 23 cents. In considering 23 cents as opposed to 40 cents

for the month, there is a more reserved view of the sudden jump.

I chose numbers here to make things easier to follow. Actual

results for your site will look quite different. And since the

computations, while simple, can be tedious and prone to error,

most who take this sort of thing seriously use a spread sheet

program, such as Excel.

Why These Numbers Matter

The value of a hit is fundamental to what you can afford to

pay for advertising. And you’d like to stay a bit under this

figure. If the ad produces only this value per hit, the campaign

was a fizzle, for no profit was made. (The exception would be

the value of new customers as subscribers to your newsletter,

those who return to purchase other products, and so forth.)

There’s a lot of trial and error in testing ads, but the ins

and outs of it are off topic here. For our purpose, suppose you

have a well tested ad that can be expected to generate 25 hits in

1000 impressions. If the value of a hit to you is 50 cents, then

you can expect a gross of 25 x $0.50 or $12.50.

What this means is you can afford to pay up to $12.50 CPM

(Cost per 1000 impressions) provided hits add to your subscriber

list or returns for other products. If you expect only a one

time sale, you probably will not want to pay more than $6.25 CPM,

so that half of revenue is immediate profit.

With an established site, even given troublesome variations

month to month, it is a fairly straightforward matter to decide

what you can afford to pay for advertising. Things are

different, though, for …

New Or Small Sites

Initially you just don’t have enough hits or sales to produce

numbers that make any sense at all. There is likely to be large

variations each month. Even so, it’s best to begin this kind of

tracking even when only getting started.

Probably the best approach is to forget about a 3 or 4 month

moving average, and generate an average this month for all

earlier months. Whatever your results, you can not afford to

advertise until you have a tested ad and feel confident from the

value of a hit the ad will produce profits. For a new site,

unless you already know the advertising game, this may mean

waiting a year or more before even giving advertising a try.

Getting Started With Advertising

Most find advertising in ezines to be the most effective

approach on the Web. The trick is to find ezines directed at

your target. Then test your response to an ad in the least

expensive way. Given a poor or inadequate response, try another

ezine. But given a good response, go for it. In theory,

advertising that works can bring unlimited profits.

Ezine advertizing costs are often stated with a single price.

To make your numbers work, convert this price to CPM. This also

makes it easier to compare costs from ezine to ezine. For

example, if the circulation of an ezine is 4000 and the cost of

the ad is $20, you are paying $5 CPM.

Other Paths

I’ve haven’t heard any recent reports of good success with

banner advertising using the CPM model. Some are reporting

success with the pay-per-click model, which means you pay only

for clickthroughs to your site. This is essentially the same

model used with the pay-per-click search engines such as the one

at GoTo.Com. There are no tough decisions here. If the value of

a hit to you is greater than what you must pay for a click to

your site, go for it. If it’s not, ignore these avenues until

it is.

With an established site, several search engines, such as

Google, offer some interesting possibilities I have not tested.

Pricy, though, for new or small sites.

Directories

To submit a listing to Yahoo requires payment of $199.

Regardless of the value of a hit to you, submit as soon as your

site is sufficiently polished. Consider it a one

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