Search Marketing

When a $17 Product is Worth $16 per Click

A curious phenomenon was brought to my attention the other day:

ppc When a $17 Product is Worth $16 per Click

Notice the estimated average CPC for a product that sells, on average, for between $10 and $40. How is this possible? Even if every one of the dozens, maybe even hundreds of sites bidding for this keyword convert their AdWords traffic at a perfect percentage, the profit margin would be minimal. In fact, there is a pretty good chance that most of these sites lose a significant amount of money paying for top-position links just to acquire a customer.

But companies like Office Depot, HP, Lexmark, and the rest have learned the value of retargeting their existing consumer base, and printer ink cartridges happen to be one of the highest-potential products for turning one sale into several.

For anyone who hasn’t yet heard of the phrase “retargeting” it simply refers to marketing efforts that attempt to reengage past customers, and it can be very profitable. Your past customers have, after all, proven that they are comfortable with your brand, your website, have no aversion to purchasing online, and use your product, so they are a perfect well of potential business.

There are several ways to successfully retarget past and potential clients, but two specific strategies have come to my attention lately that I’ve seen return material results.

The first, surprisingly enough, is banner ads. Retargeting with banner ads works by only showing your promotions to someone who has already visited your website. When a person visits a site, the ad network recognizes cookies set in your browser and serves the user ads based upon their recent activity. Using some advanced last-touch attribution tracking techniques, one of our clients has seen marked improvement in the actual ad click-through and the re-visit rate through direct traffic from brand recognition.

The other successful retargeting technique, and probably the one being successfully implemented to allow a $16 bid on [color printer ink cartridge] is email marketing.

If you have a product that has a finite life cycle, no matter how short or long, email marketing can be a very powerful retargeting win for your website. Everyone needs new printer ink every few months. Why not send them a friendly email reminding them where they bought it last time? Want to sweeten the deal? Give them a coupon code and watch your conversion rates soar.

While not suitable for every market (retargeting wedding dresses may not be so profitable) it’s important to think of your past customers with more than just a thank you note on a shopping cart page. Are you maximizing your customer base as well as you could be?

jesse When a $17 Product is Worth $16 per Click

Jesse Laffen

Jesse Laffen is the Senior Consultant for Slingshot SEO in Indianapolis Indiana.

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13 thoughts on “When a $17 Product is Worth $16 per Click

  1. It is even worst than that….it’s the price for one click not for one sale…I don’t know what is the industry standard for conversion rate ( from click to customer ) but I sincerely doubt that anything can make this profitable

    1. agree it’s not a perfect example i would be focusing on lower value terms but if they are terms that drive conversions you might be able to get more than one… but that would require a very focused campaign

  2. This is a really profitable niche actually, I run a website printer business and we buy many clicks and convert at around 5%.

    You have to realise that if you are competitively priced and you provide a good service then most of these people will buy form you again and again without ever following up on them. for example today you buy a toner for your oki printer and you find my site because your shopping on price, were the cheapest so y0ou come back and back untill your printer is out of warranty or you need to replace the drums and now you find on my site that you can buy a new printer for the same price as ypour set of drums, what do you do? you buy the printer thats what and then the toners etc etc its a snowfall of cash and you might pay $100 to buy that customer but they buy from you for three years at $3000 per year on a small margin of 7% thats $210 per year works well, I admit we dont market enought to our existing but that will change in the future when we ahve the time, for now were too busy sending out orders :)

  3. Smart idea that is new to me – I’d never heard of retargeting, but I guess it makes a lot of sense. The key is to make sure you have accurate data showing that a $20 ink cartridge purchase can turn into $200 or so of spending.

  4. Very good post! I had worked at a company who had 8 million visitors per month and didn’t even have a newsletter! It was frustrating to say the least. Most of the top brands have a way to retarget their customer base.

  5. Good article..I am kind of new to PPC and just put a campaign ad up on FB, I’ve been getting impressions and clicks but still no conversion. I figure it doesn’t hurt to leave it since it’s only 00.1 a click and if it converts that’s still a big profit.