AboutJim Novo Expertise Questions about using customer data to inmprove online profitability, particularly in retailing. Topics include profiling customers using weblogs, figuring out which ads generate the highest value customers, how to reduce the numnber of 1x buyers, how to generate higher sales from current customers, customer analysis, ROI calculation, reducing discounts while increasing resaponse rates. Do you collect customer data (purchases, page views, surveys) and not really use it for anything? Want to find out how? Just ask.
Experience
Past/Present clients Cellular One, MBNA, SteelTorch Software, Retek Direct, CBS Sportsline, Kobie Marketing, Aerial, Tupperware, Barnes and Noble, Comcast Corporation, Home Shopping Network
Expert: Jim Novo Date: 1/14/2006 Subject: More Questions 2
Question Dear Jim,
There's a lot of talking about spending and shopping wisely. I was wondering how many people actually observe that, instead of impulse spending.
I still don't know much about online advertising. Generally, how much are small sized businesses willing to spend on advertising? Is it based on $/week/month or $/click? If a business prefers one over the other, why? Are businesses desperate to find a really good advertising avenue? I mean, what is the situation, generally, facing the advertising world both for the service providers and the advertisers (unreliable service, high costs, etc)? Is there any really effective place to advertise other than yahoo! and google? Why would some people be so desperate that they be willing to spend a few hundred or thousands of dollars on webpages like milliondollarhomepage.com and the likes?
Answer If you are thinking about getting into an online business you should probably read a book or two about it...
Pay-per-click ads are just that, you pay for every click. Hopefully, some of those clicks turn into sales, and most people using this kind of ad track the behavior of the people clicking to see if the clicks turn into sales. The amount you can spend in tempered by the profit you make.
If you are selling a $20 item and it costs you $10, upi have $10 profit in a sale. If you are paying 50 cents for a click, 20 clicks = $10, so if only 1 in 20 clicks turns into a sale, you have spent all you profit on clicks. If 1 in 10 clicks turns into a sale, you make $5 in profit ($10 - (50 cents x 10 clicks)). So depending on what you are selling and what the margins are, you can but a lot of clicks. Understand this though - "clicks" is just the way the ads are measured, what you really are buying is visitors who hopefully will, buy from you. If they don't, you will lose money.
I don't think businesses are desperate to find a really good advertising avenue, there are plenty of them out there. Why people act stupidly with their advertising / money I can't tell you. There are tons of places you can waste money advertising, and people do it every day.
