Spending money to earn money

I agree in a way, especially that break even is a good opportunity to improve but at some point you’ve got to put a value on the time taken to create & monitor the campaign so 1% profit wouldn’t be acceptable for me in the longer term.

I agree for the most part. However the saying it takes money to make money is only half true. It’s true with most things and untrue for others. In PPC, this definitely applies

Hi Chad,
When you try to maximise the ROI ( Conversion Rate ),whats the benchmark to stop tweaking to maximise the profits ? 5% ? How do you know tat you have squeeze out the maximum from this campaign ?

Thanks !
melvin

I see this on the corporate side too, where companies will obsess over the ROI and place pressure on me to trim underperforming keywords when all they’re doing is shooting their total profit and revenue in the foot. I even break out monetization models for the site and that still doesn’t regster w/ some. Thanks for the post.

One justification for setting profit margin goals is risk. No matter what business you are in, there is always a risk that all of your accounts receivable can go into default.

In this business its definitely possible to spend your entire net worth in one month.. be it $100k or several million. How much do you risk, and more importantly, how much are you as an individual comfortable risking? (and yes, everything should be in an LLC or Corp to shield your personal assets)

I think this hasn’t been so much of a problem recently because of how much growth our industry is seeing right now. However, when we hit a down turn I will certainly be tightening my requirements. In the meantime you bet I run regular D&B reports on my affiliate networks and their advertisers.

Astounds me too! Think about people in CDs or money market accounts or even the stock market – 30% return is quite nice!