ROI – How it Works

Return on investment is commonly referred to as ROI. In internet marketing, it describes the relationship between how much money you spend on advertising versus how much money you end up making as a direct result of that advertising.

There are several different types of campaigns you can run when you are running a sales site, and others you should employ if you are allowing advertising on your own site.

Pay per click is just what it sounds like. For every click there is by a consumer on a given ad, the advertiser pays the person who owns the webpage it is shown on. If your ads are being shown next to Google results, you are paying Google for every click. If some-one else’s ads are showing on your website, the advertiser will be paying you.

Sometimes pay per click isn’t effective enough to justify the expense. This is why more and more advertisers are turning to pay per action. This means that not only must the consumer click on the ad and be whisked away to their site, they must complete an action whilst there – fill out a subscription for a newsletter, perhaps, or sign up for free alerts or a trial by entering their email address.

If you have these types of advertisers on your site, it might be worth your while to tout their product a little – you want them to complete the action, right? You can’t be blatant about it, though – there is a hard and fast rule that says promoting the links blatantly is not good practice, and crazily clicking or getting others to click on ads is the biggest no-no of all: click fraud.

The best way to operate is to set up as many of your own ads as possible to be pay per action ads, but attempt to get pay per click ads displayed on your own site. That way you get paid for each and every click on your own pages, but don’t have to pay others unless you get results.

In some cases, you may want to shell out a little extra on your Google ads – being in a paid search listing periodically can boost you if you don’t have high enough rank to make it to page one. You don’t have to run it all the time, and you can play around with times of day and demographics until you see what yields the highest ROI.

Ideally, your spend will always be well outstripped by your incoming revenue. In the very beginning you may have to spend a little more to get started, but once you find your footing you should be able to optimize your ads and keep the clicks and actions coming.

Don’t forget that you can also be an affiliate for major brands, and this normally can bring in even higher pay per sales commissions. Don’t lock yourself in a box – try different approaches until you find the best ROI you can get, then stick with it.

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