Must haves for affiliate marketers – Conversion Rate Optimizers

Jan

No doubt, if you are an affiliate or at all involved in online sales and marketing, you are going to hear the phrase “Conversion Rate Optimization” (CRO) a lot in 2010. It is not a new field, but it is now the most popular buzzword in performance-based marketing. In my opinion, CRO is always at the heart (and the art) of the science of performance.

If you are an online merchant, your websites are your best sales managers – they work hard (24/7) and cheap (compared to live salesmen). Whether you use your site to sell your products, collect leads or sell advertisement placements, there are two ways to make them perform better and sell more:

The expensive way – buy more traffic
The smart way – conversion rate optimization

Actually, to increase the profit you should do both; however, you should perform conversion rate optimization before you buy more traffic. The essence of CRO is enabling your site to “close” more deals.

Here’s an example , and yes, this involves some basic math!

Jake Sully rents the movie Avatar from his website. From his past experience, for every 100 visitors from his PPC campaigns, 2 visitors rent the movie from which he earns $4 commission each. Since Jake is paying $0.05 per click, he spends $5 and earns $8 commission for 100 visitors.

It looks like it’s a nice campaign, with a 1.6% ROI (8/5). Jake’s keywords generate 10,000 clicks a day, and with a $500 spend, $800 earning, that’s $300 profit per day.

Good…but not perfect.

By taking conversion rate optimization actions, Jake managed to improve his click-to-conversion rate from 2% to 3%, meaning that for every 100 clicks he is doing one sale more then he used to before the CRO. That’s one more sale of pure profit since the costs of clicks haven’t changed. So for every 100 clicks he spends $5 and earns $12. That’s 2.4% ROI! (12/5), and at the end of the day, after sending 10,000 clicks, Jake will spend the same $500 but will earn $1200, leaving him a daily profit of $700 (233% more!).

And don’t forget, one time CRO will affect the conversion rates for the rest of the campaign.

So, how should we optimize our conversion rates?

In one of my previous posts, “What’s in Your User’s Mind?”, we discussed the importance of understanding the user’s way of thinking in order to improve the conversion rate.

To make a long story short, here are few rules of thumb to improve the conversion rates:

Keep the opportunities for thinking limited
Make benefit-oriented headers, slogans and text
Remove navigation bars
Minimize the number of fields the user needs to fill
Lead the user’s eye to the important places in the page
Keep the important buttons (“Submit”, “Check out”, “Order Now”…) above the fold and use a clear call to action.
Make sure your banners and landing pages match. If a user liked the banner and the offer in it and decided to click on it, he should get the same offering and the same look and feel in the landing page.
Keep it simple, keep it clear and keep it short.

And as I always say – TEST, TEST and TEST.
Use few different designs and creatives, try different backgrounds, different buttons places, different “hero shots”, different headlines, different color combinations and whatever is replaceable. And always measure the conversion rate of each design in order to optimize it.

There are hundreds of tools and books on the net that can help you do the optimization such as:

As you can see, conversion rate optimization brings you pure profit and in the short and long-term it is a wise move, and an art that demands a good understanding of your users and the way they think. By testing and measuring you can do CRO with very low costs, but make a direct impact on your ROI.

Unleash the Beast – Part 3

Nov

This is the last in a 3-part series on analyzing online media quality. It’s a doozy,
but an in-depth look. If you missed the other installments, here’s Part 1 and
here’s Part 2.

The Sophisticated Approach
The sophisticated advertiser distinguishes between media sources and offers
a different CPA for each of them. Let’s take a simple example, an advertiser that
sets CPA at 3 levels:

$5 for regular traffic
$2 rate for incentivized traffic
$6 premium rate for SEM traffic.

In this example, all the traffic sources will run this offer, and the ROI will be

positive for all the sources.

Media Type	Quality	Capacity	CPA	Revenue	Total Cost	Profit
SEM	10.00	10,000	6.00	100,000	60,000	40,000
Banners	8.00	20,000	5.00	160,000	100,000	60,000
Email marketing	6.00	30,000	5.00	180,000	150,000	30,000
Pops	5.00	40,000	5.00	200,000	200,000	0
Incentivized	3.00	60,000	2.00	180,000	120,000	60,000
					Total	190,000

In this way, 5 different levels can bring the advertiser up to $300,000 profit from
160,000 users.
Let’s summarize the profit for each advertiser:

	Profit
Unsophisticated advertiser	$60,000
Semi-sophisticated advertiser	$80,000
3 payout levels	$190,000
5 payout levels	$300,000

This model works not only in theory. In my experience working with advertisers at
Adsmarket, I’ve seen many empiric example of how advertisers dramatically
increased their revenue and their profit by handling and monitoring the traffic
sources better. This brings me to two major conclusions:

There is no “Bad Traffic”. You need to find the right payout for each source
in order to take advantage of its full capacity and potential, “Unleashing the
Beast”.
By monitoring and optimizing media sources the advertiser can increase
profit by hundreds of percents, “Controlling the Beast”.

Feel free to contact me at Yuval.bATadsmarket.com to learn more about these tools
and about traffic source optimization in general.

Unleash the Beast – Part 2

Nov

This is Part 2 in a 3-part series on analyzing online media quality. It’s a doozy,
but an in-depth look.
Did you miss Part 1? Click here.

In Part 1 of this series, I introduced the 2 Qs Formula for revenue and profit:

Revenue = Quality*Quantity

Profit = Quality*Quantity – Price*Quantity = Quantity*(Quality – Price)

Let’s take a numeric example:
Let us suppose in a certain market the following table represent each media source
quality (in life time user’s value), capacity (the number of users they can generate)
and the minimum CPA they want in order to run.

Media	Quality	Capacity	Minimum CPA (i)
SEM	10	10000	6
Banners	8	20000	5
Email marketing	6	30000	4
Pops	5	40000	3
Incentivized	3	60000	2

This is only an example, in different markets the order of the media sources may be
different depend on the criteria of the users and the type of the product or service
you provide. However, there are several assumptions that are almost always true

(but not always):

Targeted traffic has less capacity but higher value.
The best traffic, quality wise, is the most expensive one.

So, let’s take three approaches to the market described in the table above.

The Unsophisticated Approach
An unsophisticated advertiser can’t distinguish between the different media sources,
he sees all the traffic he gets as a one and tries to set one CPA that will fit all. The
traffic he gets is all the traffic that requires a minimum payout that is smaller than the
CPA.

Here is the sensitivity analysis of this advertiser:

CPA	Media Type	Total Traffic (users)	Revenue ($)	Avg quality ($)	Costs ($)	Profit ($)
2	Incentivized	60,000	180,000	3.00	120,000	60,000
3	Incentivized, Pops	100,000	380,000	3.80	300,000	80,000
4	Incentivized, Pops,Email	130,000	560,000	4.30	520,000	40,000
5	Incentivized, Pops, Email, Banners	150,000	720,000	4.80	750,000	-30,000
6	Incentivized, Pops, Email, Banners, SEM	160,000	820,000	5.125	960,000	-140,000

Media = all the media that the Minimum CPA (i) required is smaller the CPA the advertisers offers.
Example – for 3$ CPA only the Pops and the incentivized traffic will agree to work.

Total traffic = the sum of capacity of all media

CPAformula1

Revenue = the sum of the capacity of media times quality
CPAformula2
(Average Quality = Revenue/ Total traffic
Cost = Total traffic x CPA
Profit = Revenue – Cost)

As you can see, the maximum profit for the unsophisticated advertiser is by setting $3 CPA
he gets 100K users with profit of $80K. He is only uses 62.5% of the capacity of the media
and losing all the high quality traffic.

Stay with me here…

You can also see that the average quality is a logarithmic function of the CPA:
Beast3
*The “X” axis is the price and the “Y” axis is the quality

The green line is the “Break even” line when Price = Quality.
For CPA higher than $5 – Price > Quality and the advertiser loses money.

The Semi-Sophisticated Approach

The semi-sophisticated advertiser usually sets one CPA to all media sources but he
adds restrictions that don’t permit low quality traffic to run. Let’s take for example
advertisers who don’t allow incentivized traffic to run their offers. In this case, their
sensitivity analysis will look like this:

CPA	Media	Total Traffic (users)	Revenue ($)	Avg quality ($)	Costs ($)	Profit ($)
2	None	0	0	0	0	0
3	Pops	40,000	200,000	5.00	120,000	80,000
4	Pops, Email	70,000	380,000	5.42	280,000	100,000
5	Pops, Email, Banners	90,000	540,000	6.00	450,000	90,000
6	Pops, Email, Banners, SEM	100,000	640,000	6.40	600,000	40,000

In our example, by not allowing incentivized traffic, the advertiser get more profit

than the unsophisticated one ($100,000 instead of $80,000) but uses only 43.75%
from the traffic available.

Go to Part 3…

Unleash the Beast – Analyzing Media Quality

Nov

Contributed by Yuval Ben-Harush, Director of Advertiser Relations

This post is divided into three parts.

Very often I use the word “Beast” to describe the World Wide Web. It is an

amazing advertising platform that can bring you unbelievable quantities of

customers, from all over the world, at all ages, genders, and socio-economic

levels. Unleashing the beast, meaning using all the traffic sources available,

can bring you, as an advertiser, millions of impressions and hundreds of thousands

of potential clients every day. That’s a fact.

The problem is that this Beast can eat you if you fail to control it. I have seen it

happen that failure to monitor, optimize and control traffic can cause companies

to lose a lot of money.

The Two Q’s Formulas

In order to understand better the beast model, let’s go back to the science of

performance: The two parameters that control the revenue are the two Qs:

Quality and Quantity. From that perspective, “Quantity” is the number of users

(the conversions) and Quality is measured by the users value ($$$$)

Revenue = Quality*Quantity

Profit = Quality*Quantity – Price*Quantity = Quantity*(Quality – Price)

As you understand, in order to maximize revenue and profit we need to maximize

the two Qs. Of course, in order to make a positive profit the following equation

must exist:

Quality > Price

The challenge begins when unleashing the Beast. Working with the large quantities

required from large networks (like Adsmarket) that contain a variety of media

sources, each media source brings a different user value (quality), has a different

capacity (quantity) and asks for a different CPA (price). The unsophisticated

advertiser, the one that does not know how to control the beast, might decide

on a uniform price for all the publishers based on the average quality of users; in

this way he prevents good, high quality publishers from running his offers.

Go to Part 2… and stay tuned by signing up to

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What’s in Your User’s Mind?

Oct

This is a follow-up article from Yuval’s first post, The Science of Performance, Explained, posted on October 3rd, 2009.

In my last article, “The Science of Performance, Explained ”, we discussed the most important parameters for publishers in order to make your offers as an online advertiser attractive and to generate high volumes of traffic. One of the parameters was the offer conversion rate. High conversion rates are not only in the interest of the publisher, they need to be in the interest of the advertiser as well. Relevant users need to be converted into action quickly and easily in order to optimize traffic and decrease marketing expenses.

Many books, articles, posts, and eBooks have been written about how to build a good landing page. This is not my intention for this article (but later on I do give you some tips…). I want to discuss with you my way of reviewing, analyzing and building an offer.

The first master rule in building an offer I learned from a very big Israeli affiliate: “Think like a first time visitor in all of your offers”.
You are probably saying now: “This is obvious, tell us something we don’t know”, but unfortunately, most of the advertisers don’t follow this online marketing rule. I review hundreds of landing pages every month and I can tell you that 90% of them can convert much better with a few small changes.

So, let’s talk about the users:
The user is exposed to a lot of data while he surfs the web. There are many so many options! The number of web pages is almost infinite, he sees dozens of banners with every visit, gets more than a few marketing mails every day and every search he does in Google shows hundreds of millions of results.
This causes a very severe users symptom – they are impatient! The average user visit on a web page is less than 5 seconds!
Users have their trigger fingers on the mouse over the “back” button before they see the content of the page, and are moving forward to the next page (BTW, many statistics systems don’t even count fast-bouncing users, so don’t count on them to see the stats of your landing pages).
The user asks himself 2 questions when he visits your site (in this order):

What’s in it for me? – Why should I stay in this website? What can I find here? What’s my incentive?
What do I need to do? – in order to get the incentive from the first question.

As you probably understand by now, you have less than 5 seconds of attention span to explain to the user why should he stay in your website. That’s mean that you need to explain your offer, your product, your service and what makes you different in 3-5 words or a clear image. “Free iPhone”, “Best Pizza in Manhattan”, “Low-cost Flights in Europe”, “Win a Wii”, “1 Day Loan”, “IQ test”, “Online Games”, image of a PSP, screen shots from MMORPG etc. Reading is working too hard, so if you are not doing SEO, content is your enemy. Keep it simple, keep it clear and keep it short.

One of the first sales tips I got from my father was “If you want to sale jewelry to a woman show her 3 options to choose from. If you’ll show her 20 options she won’t be able to decide and she will leave without buying”. Too many options is too much work, so:

Keep the opportunities for thinking limited
Remove navigations bars
Minimize the number of fields the user needs to fill
Lead the user’s eye to the important places in the page
Keep the important buttons (“Submit”, “Check out”, “Order Now”…) above the fold and use a clear call to action.
Make sure your banners and landing pages match. If a user liked the banner and the offer in it and decided to click on it, he should get the same offering and the same look and feel in the landing page.
And again, keep it simple, keep it clear and keep it short.

One last point, why build one landing page when you can build 3? One of the advantages of advertising online is the simplicity of testing and optimizing different creatives to see which performs better and to improve their conversion; it is cheap, easy, and should be a mandatory step in every new offer launching. My dear friend Dov Yarkoni at Xtend wrote a good post about landing page optimization on the Xtend Blog.

If you have any questions, if you want to consult me about defining a flow, designing a landing page or banners, testing and optimizing, don’t hesitate to contact me at Adsmarket! We have the experience needed, we promoted thousands of creatives and landing pages, we know what performs well and what doesn’t, we know the publishers abilities, we have a team of very talented designers and most important we are here for you, to help and consult.

The Science of Performance, Explained

Oct

Yuval Ben-Harush here, Advertiser Relations at your service! Many advertisers ask for our consultancy – “How can we make our offers more attractive and how can we bring more users to our offers?” The first question I ask them is: Who are your customers? The users? – Wrong! Your customers are the publishers! If you will keep in mind that your offers need to be attractive to the publishers, and take the right actions, they can drive unbelievable volumes of users to your offers.

There are two important parameters that you control as a saavy advertiser that influence the attractiveness of your offers to the publishers:

The first one is the most obvious one and the most easy to control: The Payouts (for CPA offers)! Your payouts need to be competitive (compared to other advertisers from the same category for the same countries) and must be profitable for the publishers, meaning, the cost of media will be lower than the total revenue.

Total revenue > α * Total cost of media

Total revenue = CPA * Total number of conversions

Total cost of media = CPC * clicks (or CPM * impressions)

α = the ROI the publisher expects

As you can see in the Total Payout formula above, the second parameter that the publisher takes into consideration is the number of conversions per the traffic he sent. Since the advertiser is usually responsible for the creatives, including landing pages and banners, you have the power to influence the conversion rate for the publisher.

To explain the idea better, let’s take an example:

“Sylvester” is a publisher who wants to run a movie selling campaign in the US. In Adsmarket there are two companies who have such campaigns – Rambo LTD and Rocky INC. Rambo LTD offer $10 CPA per movie sale and Rocky INC offer $5 CPA per movie sale. At first glance, it looks like Rambo LTD offer, $10 payout, is more attractive for Sylvester; however, after testing both of the offers, Sylvester found out that out of 200 users (200 clicks) sent by him to Rambo LTD there were 2 sales (1% conversion rate). Out of the same amount of users sent to the Rocky INC offer there were 6 sales (3% conversion rate). The total incomes from Rambo LTD and Rocky INC are $20 and $30 respectively. Surely, Sylvester will prefer Rocky INC offer because, per 200 clicks, the revenue is higher. If the cost of media is for example $12 per 100 clicks (CPC) the conversion rate makes the different from a profitable and non-profitable campaign (see the table below).

	Rambo LTD	Rocky INC
CPA	$10	$5
Clicks	200	200
Conversion Rate	1%	3%
Conversions	2	6
Total revenue	$20	$30
Total cost for 200 click (CPC*2)	$24	$24
Profit	(-$4)	$6

In order to compare performances of different campaigns with different amounts of traffic, publishers usually measure the profit per 100 clicks (EPC) or per 1000 impressions (eCPM).

EPC =	Total revenue * 100
	# of Clicks

eCPM =	Total revenue * 1000
	# of Impressions

In our example, Rambo LTD’s EPC was $10 and Rocky INC’s EPC was $15.

The EPC and eCPM functions elaborate the conversion rates and the CPAs. Bottom line, the publisher looks for the following as proof of a worthy campaign:

EPC > α * CPC

eCPM > α * CPM

How can this work to your advantage as an advertiser? By changing and adjusting the Payouts (CPA) and the conversion rates you can influence the publishers EPC and eCPM. Improving these values makes your offer more attractive and by that, encourages them to send more users to your offers.

In my next articles we will discuss ways to improve the conversion rate of a landing page and what is the right way to change and optimize the payouts.

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