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Understanding Conversion Ratios

Understanding Conversion Ratios

January 28, 2002
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" This example illustrates the fact that the amount you will actually EARN is not the same thing as what the sponsor is offering to PAY. "

I've discussed many aspects of sponsor programs in the past, and today I'm going to delve into one of the most mysterious: the correlation of payouts, conversion ratios, and earnings. If you don't understand this, then you better read this article now!

One of the most confusing aspects of working with adult Webmaster affiliate (or "sponsor") programs is knowing which will be the most profitable for you. Notice that I did not say "highest paying" but carefully stated "most profitable." The difference is not merely semantic, but could be the deciding factor between your success and failure.

There are many types of sponsorship programs wooing Webmaster's for their surfer traffic; all singing the siren song of "Highest paying program on the 'Net!" or some such foolishness: and why not? Most newbies gravitate to the sponsor touting the biggest numbers in their ads, while rarely looking beyond the hype to the math underneath the offer, or the fine print behind it.

On the face of it, the choice between one sponsor offering a payout of $25 per trial membership, and another offering a payout of $50 per trial membership is a no-brainer. After all, since one sponsor will pay you twice as much as the other, then you should choose that one, and make twice as much money, right? Perhaps, but is that all there is to the equation? Not when you factor conversion ratios into the equation:

Converting Traffic Into Cash
Conversion ratios (or "conversions") are probably the single biggest factor influencing your actual earnings, yet so many Webmasters know nothing about them or even consider them in their exit traffic marketing plan. Simply put, a sponsor site's conversion ratio is the ratio of sales made per number of unique visitors you sent to the sponsor's site. In other words, if 500 surfers on YOUR site click a banner to visit your sponsor, and ONE of those folks then buys a trial membership to the sponsor's site, that sponsor site converted at 1:500 for you.

With all things being equal, and given the two payout examples above, you would receive either $25 or $50 for that sale, depending upon the sponsor you choose. The problem is that all things ARE NOT equal, and a site's conversion ratio is not a static value, but can fluctuate throughout a single day, let alone throughout the life of the site. Let's take a look at another example:

Let's say that sponsor "A" paying $25 per is converting at 1:250 for you, and sponsor "B" paying $50 per is converting at 1:500. You're now receiving an equal rate of pay (your actual earnings) from both sponsors, since "A" converts twice as well as "B" (1:250 vs. 1:500). This example illustrates the fact that the amount you will actually EARN is not the same thing as what the sponsor is offering to PAY.

Consider also that just because a program offers a higher payout rate, it does not mean that it will convert any worse than a program offering a smaller payout rate. In another example, sponsor "A" could convert at 1:500, earning you $25 for the 500 surfers you sent, while sponsor "B" converts at 1:250, earning you $100 from those same 500 surfers.

Factors Affecting Conversions
When evaluating conversions, realize that a sponsor's claims about their sites are all but meaningless to you. This is not to say that they are lying about how well (or poorly) their sites convert, but that conversions are a very subjective issue, and tossing out your best number is not the same as your average ratio, and certainly not representative of what YOU may expect.

Conversions are most heavily influenced by two factors: the quality of your traffic, and the quality of the sponsor's offer. The quality of your traffic is determined by its source (TGP traffic will convert differently from Search Engine traffic, for instance) and by how well you target it to the sponsor. For example, if your free site is focused on a Mature Ebony niche, your sales will be disappointing if you send all your traffic to "Cracker Teens" or "Asian Lolitas." Two "real world" examples of notable conversion ratios: I used to pull from 1:5 to 1:125 sending my AVS traffic to CyberErotica, while I pulled 1:3500+ sending blind TGP traffic to UltraTeen. In this case, traffic quality, rather than sponsor quality, was likely the main difference. Perhaps the "join page" was too slow, unintuitive, or simply wasn't available in the prospect's native language.

Sponsor "quality" can and does make a difference however. Some factors that will influence the sponsor's ability to convert the traffic you send in to sales are once again its quality, including the way in which it was sent: Blind link traffic will perform more poorly than traffic clicking on an approved banner, for instance. A sponsor's ability to "make the sale" is also quite vital, and not just the product of a decent tour that "pulls." Perhaps his credit card processor "scrubs" a bit too hard, declining potential members due to a poor credit rating; and no secondary processor was available to "cascade" the prospect's application into. Perhaps the "join page" was too slow, unintuitive, or simply wasn't available in the prospect's native language. There are many factors that come into play here, and almost all of them are beyond your control.

Since your traffic mix is YOUR traffic mix, and particular to your blend of sites and sources, you must find the sponsor and program that does the best for YOU, and it may not be the sponsor that does the best for everyone else. This isn't bad, or a problem, just an acknowledgement that your traffic has unique aspects that will prove more profitable at one site than at another, and the only way for you to know which is best is to test! Good Luck! ~ Stephen


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