opinion

Using Revenue, Cost Data to Project Growth

Juicy Jay

In XBIZ World’s July issue, I wrote about projecting revshare profits based on an example campaign that was being managed by us here at JuicyAds. Shortly after starting, we quickly exceeded the pay-per-lead (PPL) payout.

Since then, the campaign has gone on to earn more than double what we would have been paid on the PPL model, so it was an obvious good move to go with revshare.

Spending money to make money is true no matter if you are an affiliate or a direct advertiser.

The campaign has shifted to managing the large amount of data and scaling it. The data is the strongest advantage, and that's what is used to make smart decisions.

Know the sales funnel.

The conversion ratio is the only thing most affiliates pay attention to, but there is an entire sales funnel to consider. You need to send an offer a certain amount of raw traffic to get sign ups or leads.

From those leads, there are less people who will buy, and even less who will re-buy multiple times. The key is to ensure that there is a consistent flow of productive traffic to maintain the flow of leads and sales. You should use the data to figure out the time frame between the sign up, and people spending money.

This is important because changes to your campaign do not have instant effects. For example, cutting traffic off on the front end may not cause an immediate drop in sales and revenue, but as time goes on the impact will take effect. That cycle is important to see if that change you did today will be a good or bad decision when the results follow later.

Control spending.

There is a balance between spending and income that needs to be managed for sustainability. It’s easy to overspend if a budget is not set, even when a campaign is successful. When working on revshare there is a delay before getting paid, so for many affiliates its critically important to not "blow your load" in order to avoid negatively impacting the trends by pausing campaigns when they are beginning to gain momentum. In the example, spending was increased tenfold as revenue increased.

When to increase was determined by analyzing the revenue coming in with the spending going out. Projecting the curve determined that further risk could be taken by increasing budgets. Buying advertising or traffic from an advertising network like JuicyAds on revshare sometimes means spending into a hole and earning your way out of the initial loss. Spending money to make money is true no matter if you are an affiliate or a direct advertiser.

As the returns start to come in more consistently, overall budget should be increased. Letting spending get out of control can be the downfall of any established campaign. People get lazy and don't review campaigns, or they are slow to adapt to changes and trends.

Optimize before spending more.

With a long-term campaign on revshare, it makes little sense to play vulture over the sources and kick anything out that does not immediately convert. When starting a new campaign, it’s important to ensure that poorly producing sources are removed from a campaign, but also to give sources time to convert. With an established campaign, knowing your cost per acquisition or cost per lead (amount you spend to get an action from a visitor) allows you to determine which sources are worth keeping, even when the revshare sales are trailing.

The campaign was reviewed briefly every day, optimized every 2 weeks, and deeply evaluated every 30 days. At the start, the worst performing source on the example campaign became our highest earner with time. That wouldn't have happened if we were cutting all sources immediately based simply on immediate revenue.

The sales funnel kept telling us the property was a winner, even when emotion said it was a loser. The data is important, in combination with using an advertising network where you can simply turn off sources that don't work. Once you've got something that is stable and working, then it’s time to scale — not before.

Bid higher.

You will be outbid at some point and need to decide if you can bid higher or not. Many people make a mistake and only look at how much they've earned and how much they have spent at their bid to determine if they can bid higher. When in fact, working revshare is like putting money in the bank and collecting the interest. Every signup is money in the bank and the revshare is the interest. By knowing the average revenue per lead, you can compare that to your spending and how many leads are being generated to determine if bidding higher will make sense.

If you are buying $100 worth of traffic per day and you are getting 20 signups per day, and know that you earn $10 per signup on average, that means you're going to earn $200 per day even if your immediate revenues don't reflect that.

You are doubling your money each day and just need to be patient. This is how many programs do their PPS or PPL payout, they know exactly how much a signup is worth over time and pay the affiliate as much as they can and still make a profit. Revshare pays for patience, per signup pays for impatience.

Commit and run with it.

When you find something that works it’s time to run with it and don't screw it up. Initially, the example campaign was spending too much and making too little. Calculations based on the volume of traffic and revenue were used to figure out the actual eCPM. That meant that we knew exactly how much the campaign could spend and be profitable on average.

When the campaign reached certain benchmarks, the campaign budget was increased to simply buy everything possible below that price because the math said so. New campaigns were then started at higher bids to create a pyramid effect. Because the highest-quality traffic is the highest priced, creating higher bid campaigns is a sustainable way to buy higher-quality traffic without paying more for everything (which is what happens when you simply increase your bid). The smarter way is to keep the lower bidding campaigns and stack higher bidding ones above it.

Fit the round peg in the round wet hole.

Remove elements of your campaign that don't work and embrace the ones that do. When new pyramid campaigns were added it became obvious that some countries were just not going to continue to work, so they were removed from the higher bidding campaigns.

It was noticed that sales spiked on the weekends. So, a new campaign was setup at a higher price point and day-parting was setup to run the campaign on Friday, Saturday and Sunday to capitalize on that. Focus on both quickly squashing the problems and emphasizing the winning factors of your campaigns.

Juicy Jay is the CEO and founder of JuicyAds, the Sexy Advertising Network. You can follow Jay on Twitter @juicyads, visit JuicyAds.com, or like on Facebook.com/juicyads.

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