In spite of the plaintiff cries of school children, there are times in life when you will use that stuff you learn in school — or at least should use it.
Case in point. What if a certain organization is selling you 2000 ad views for $800 a month. Now 800 new customers for less than $1000 sounds great. Or does it?
Let’s assume a reasonable ctr (click through rate) of 2%. That means of the 2000 ad views you can expect 40 people to actually click the ad. That means that you are play a not very modest $20 for each new visitor to your website.
But wait. That is $20 per visitor, not $20 per new customer. A visitor to your website is not automatically a new customer. In fact, of new visitors a significant number “bounce” from the page almost immediately. Let’s be pessimistic for the sake of easy math and assume that 50% of new visitors bounce when they hit the front page. That means we are now spending an even less modest $40 per visitor that doesn’t run away.
But wait. A visitor that doesn’t run away within the first 30 seconds is still not a new customer. Let’s go wild and assume that 1 out of three people that hang around on your website for more than 30 seconds convert and become new customers. That means that each new customer is costing $120.
So how attractive does $800 for 2000 ad views sound after doing the math?
This little tale illustrates two things.
- It is not easy to follow the trail of percentages from first action to final conversion.
- Promotion in this new world is not an easy nut to crack.