Does PPC work only for high-ticket items?

[keyon]

When people talk about stepping up their marketing efforts, they usually talk about including paid advertising (PPC) in the mix. Some even make it sound like it's a natural step to take -- after you've dabbled in SEO for a while and are now serious about building a sustainable business. Nothing wrong with that logic, really. However, I see a LOT of products on the web (including my own) that are low enough in price that a PPC campaign could never generate a return on investment, at least from what I can see.

Of course, the real deal breaker is the conversion rate. I've been selling stuff online for more than 10 years now, and the conversion rates I've seen in my niche have been surprisingly consistent -- around 1 percent (maybe 2 on a good day).

So let's say I have a digital product that retails for $15. Most PPC programs I've looked at (Adwords, etc.) will cost me upwards to $.50/click. With my average conversion rate being 1 percent, it would cost me $50 just to make one $15 sale. Or in other words, I would need a $50 price tag on my products just to break even. And keep in mind we're talking about digital goods with 90 percent profit margins. If I were selling physical products, the scenario would be even more bleak.


Does PPC work only for high-ticket items? I'm befuddled.

[REWilliamson]

Seems to me that the answer to 'befuddlement' in this case, is to determine the possibility of improving your conversion rate. If you use PPC without a highly targeted campaign, you are correct in stating that you cannot make a profit on a 1 or 2% conversion rate unless your product is over $50 or so. If your PPC campaign targets persons of the appropriate gender, age, education level, identifiable interest (such as hunting, knitting, weight loss) and confined geographic area, you can increase the conversion and thus lower the price point at which the product generates profits. Try split testing small/short campaigns with a small target audience until you identify the right combination of graphics, description, title and price that motivates your target group to buy. Then expand your campaign gradually....if the profitability drops off....the offer many be 'stale' and need to be pulled off market and a new campaign created.ll

[ornamentlady]

We sell low ticket physical items, Christmas ornaments. We have taken advantage of promotional offers worth $100 in clicks on two occasions. We targeted specific, unique and/or less popular designs due to the lower cost per click and the ability to better determine whether a click converted into a sale. Obviously we had only a relatively small volume of clicks with a $100 budget but we could find no direct correlation of clicks to sales. In our opinion, PPC is not cost effective for low priced items.

[keyon]

If you use PPC without a highly targeted campaign

I thought the very nature of most PPC programs (like Adwords) is that they do provide a highly-targeted campaign - since ads show only on content-relevant sites. Seems hard to get more targeted than that.

As far as conversion rates go, to turn a profit I'd have to somehow quadruple my current rate (from 1 to 4 percent). Like I mentioned, I've been doing this a long time, and I've never seen this high of conversions, even with a highly targeted campaign.

If someone is getting conversion rates above 4 percent (in any niche) I'd sure like to hear it (no number fudging please).

[REWilliamson]

I thought the very nature of most PPC programs (like Adwords) is that they do provide a highly-targeted campaign - since ads show only on content-relevant sites. Seems hard to get more targeted than that.

As far as conversion rates go, to turn a profit I'd have to somehow quadruple my current rate (from 1 to 4 percent). Like I mentioned, I've been doing this a long time, and I've never seen this high of conversions, even with a highly targeted campaign.

If someone is getting conversion rates above 4 percent (in any niche) I'd sure like to hear it (no number fudging please).

Hi Keyon,

The targeting to which I was referring, is targeting the reader, not just the site that Adwords might choose to post your ad on. In Facebook (and I'm sure some others) you can choose the demographic of your targeted buyer in quite some detail including other brands, people, etc. that they have 'liked' or followed. Example: someone marketing a particular genre of books might target people who 'also like' author 'xyz' in the same genre.

I've used PPC for both Adwords and Facebook, and in my opinion, Facebook allows you to target much more precisely, thus improving conversion and reducing price per sale. I last used Facebook for an opt-in for a free book that led to an upsell, got 15% conversion.

[keyon]

I last used Facebook for an opt-in for a free book that led to an upsell, got 15% conversion.

Thanks for the update!
So with the Facebook campaign, which thing gave you the 15% conversion -- the free book offer, or the upsell?