Why PPC only businesses are unlikely to work

[Erratic]

Hello all. Firstly, please don't take my title as an intention to flame. I consider myself an entrepreneur (I've started several businesses over the past 8 years) and have been spending quite a bit of time working on the muse concept from the book. However, having worked it through mathematically it just doesn't seem to add up as a good way of creating a sound business. This seems to be backed up by the lack of muse successes seen on this forum.

Rather than rewrite again please see my blog post for explanation:
http://www.erraticmusings.com/?p=26

and the google spreadsheet of my calculations here:
http://spreadsheets.google.com/ccc?k...N0fwJGMA&hl=en

Appreciate this may not go down well in this forum but perhaps you can all correct my understanding. I believe Tim's intentions are good and I hope that there will be more entrepreneurs as a result of his book.

To me the reason why BrainQuicken succeeded was because of Tim's links with the UFC and some amazing athletes who gave him fantastic credibility through their testimonials + the quality of the product and how unique it is.

I would also like to criticise Tim's Muse Math pdf:
1. he earns approx $430 revenue against $115 of sales but does not include production cost of each unit in his final profit figure
2. extrapolates that he will get same ROI from lots of other terms like "speed reading" e.g. rapid reading, accelerated reading. If you look at the searches for "rapid reading" on the Trellian Keyword Suggest tool you see it only gets about 100 hits (not the 1,000s "speed reading" gets). Therefore, you can't expect the same revenue.

What does everyone think? Have I made a mistake in my calculations?

[Vagabond]

Originally Posted by Erratic

Hello all. Firstly, please don't take my title as an intention to flame. I consider myself an entrepreneur (I've started several businesses over the past 8 years) and have been spending quite a bit of time working on the muse concept from the book. However, having worked it through mathematically it just doesn't seem to add up as a good way of creating a sound business. This seems to be backed up by the lack of muse successes seen on this forum.

Rather than rewrite again please see my blog post for explanation:
http://www.erraticmusings.com/?p=26

and the google spreadsheet of my calculations here:
http://spreadsheets.google.com/ccc?k...N0fwJGMA&hl=en

Appreciate this may not go down well in this forum but perhaps you can all correct my understanding. I believe Tim's intentions are good and I hope that there will be more entrepreneurs as a result of his book.

To me the reason why BrainQuicken succeeded was because of Tim's links with the UFC and some amazing athletes who gave him fantastic credibility through their testimonials + the quality of the product and how unique it is.

I would also like to criticise Tim's Muse Math pdf:
1. he earns approx $430 revenue against $115 of sales but does not include production cost of each unit in his final profit figure
2. extrapolates that he will get same ROI from lots of other terms like "speed reading" e.g. rapid reading, accelerated reading. If you look at the searches for "rapid reading" on the Trellian Keyword Suggest tool you see it only gets about 100 hits (not the 1,000s "speed reading" gets). Therefore, you can't expect the same revenue.

What does everyone think? Have I made a mistake in my calculations?

Hi Erratic,

I think there are some mistakes in your assumptions.

- A 2% CTR and 2% Conversion rate are both dismal. I played around with some random offers on CJ and Clickbank and was able to get CTR's of 4%-7% within a couple days without further optimizing the campaigns because I decided to stop the campaign for other reasons. Developing a campaign with an impressive CTR and Conversion rate takes months of tweaking and perfection.

- You search total for "niche businesses" are not keywords that people would actually bid on. If you are selling a condiment, you dont bid on the word condiment, you bid on words that would lead people to the type of condiment you are selling. i.e. If you are selling a type of bbq sauce, you would want to bid on words about grilling sauces, barbeque sauces, grilling seasonings, maybe a specifc spice or flavor unique to your sauce. Perhaps individually they are only 50 searches a day for this word and 15 from that one. But across the whole campaign there would ideally be thousands of searches. I guarantee you that Tim wouldn't bid on the words "Dietary Supplement" if he were actively amrketing Brain Quicken today.


- BrainQuickens success: Has nothing to do with the UFC. There arent nearly enough UFC fighers to support a $40,000/month business. The formulation was unique when he started it but it's not really that amazing of a formula and is quite underdosed in my opinion. The fact that he doesn't list dosages for individual ingredients in questionable. However, at his core he is a great marketer (look at how he has marketed himself!). The testimonials and using logos of things like USA today all build credibility. But testimonials and credible logos arent just available to him.

- PPC Only Business - Theres no reason to limit yourself to PPC marketing. I will definitely be using PPC when I launch my product but it is one of many types of marketing that I will be using. BrainQuicken wasn't PPC only. It was heavily marketed through newspapers and direct selling.

-Vagabond

[storm33229]

@Erratic: Here's the deal, your calculations are correct but your assumptions about them are incorrect.

* Condiments - 1060 searches per day & avg price £10
* Rugby Tops - 33 searches per day & avg price £45
* Dietary Supplements - 814 searches per day & avg price £30

Right so one of these words is not enough to generate 3,000 USD per month according to 2% conversion rate.

Condiments :
21.2 CTR = 0.424 conversions per day 0.424 * 28 = 11.872 in sales/mo.
21.2 * 28 = $593.6 PPC Costs @ .10 CPC

11.872 * $75 = $890.4 NET/mo.
$890.4 - $593.6 = $296.8 Income/mo.

Condiments produces $296.8 per month in income. Now no one ever uses 1 word ad campaigns. I personally do 20-25 word lists.

25 words * 296.8 = $7420 per month.
20 words * 296.8 = $5936 per month.
15 words * 296.8 = $4452 per month.
11 words * 296.8 = $3264.8 per month.
10 words * 296.8 = $2968 per month.

It really takes a minimum of 11 words assuming they have a relative value to the word "condiments" to generate 3,000 USD a month. I calculated this for a product that's either very hard to find (niche) or invented. However, if you use more specific keywords or brand names you'll yield very similar results.

You're calculations weren't wrong, just the assumption that you only ever use one word per campaign.

*edit*: I just looked at one of my past PPC Keywords list..I have 42 words on it. Do the math on that one hahah.

[bd301]

As others have pointed out, your flaw is in assuming only one keyword.

My PPC campaigns generally have at least 50, and professional affiliate marketers sometimes have thousands or tens of thousands of keywords in their campaigns.

I do agree with you that using ONLY PPC may not be a great strategy unless you really know what you're doing. Some "super-affiliates" use PPC very effectively and make absurd sums of money, but they treat PPC like it's their job, whereas our goal is to maximize our free time rather than our income.

I think PPC can be an effective channel for certain products/markets, but it shouldn't be the only channel you use.

[DrifterInc]

Google has a PPC calc built into google analitics, USE IT. This will show you in detail what words are creating conversions, you can track those conversions with a geo script showing what locations are using those key word and buying. This will let you create non searched location keywords. like "chicago steaks" so when some on in chicago does a search for "STEAKS" you have a better chance of being served. the key word costs less as well... be sure to use negitive keywords as well, so you don't end up in places you don't want to be... like "steak" keyword being served for "Kansas city Steak" because you only sell ribeyes.

[Livingit]

Tim also talks about SEO, which is a lot more profitable then PPC (Which I know because I've worked at a large search firm that does both for the past 3 years)). I've also worked at a direct marketing agency, nothing comes close to a better cost per acquisition.

PPC is great for testing products and finding out which keywords will convert best, but SEO will provide the best possible return on investment.