There’s no such thing as a free lunch. So make sure you scoff at anyone who tells you something is “free.” If you receive traffic from some place and it costs nothing, but you had to spend 300 hours to generate it, was it free? No, at worst, you could have earned minimum wage for those 300 hours. That is—at worst—it cost you 300 hours multiplied by minimum wage.

At best, you could have been doing something productive with your business that would have earned you ten times more than minimum wage during each of those hours. So don’t listen to this “free traffic generation” nonsense. Even traffic that comes from search engines has a cost – and that’s your time.

Now, with that caveat in mind, there is such thing as relatively cheaper traffic. If it takes you very little time to optimize your search for the search engines—and the result is considerable “organic” search engine traffic—well, great; you should generate traffic through search engine optimization.

In general, traffic that comes from search engine optimization does actually turn out to be quite cheap. In exchange for the time it takes to create some relevant content, use the proper tags, and exchange a few links, you could get a steady flow of several hundred visitors per day to your site.

If your wage is the only cost, this will be relatively cheap in comparison to pay per click traffic, which could cost you several dollars per visitor.

Other than simply being cheap, organic search engine traffic is also good for a number of other reasons. One obvious reason is that you do not have to spend time monitoring the flow of organic SEO traffic for fear that you will exceed your budget.

With PPC, you have to constantly check your Adwords account and other PPC accounts to determine how well your ads are performing. This is not so with organic search engine traffic. And the less time you spend thinking and actually generating traffic, the more you profit per visitor. If you spend your whole day watching statistics and you think you’re in profit – then you’re not adding your own wage to the equation.

Another major benefit to using organic search engine traffic is that it tends to convert better. In fact, many experts would argue that it converts much better than links from “sponsored” sections – even if they are on a search engine.

People tend to be considerably more skeptical of anything that looks like an advertisement. In contrast, if your site comes up as the first non-sponsored result on Google for a particular keyword, you will gain enormous credibility for that fact alone.

Last, there is one other major benefit of organic search engine traffic: high rankings tend to beget high rankings. That is – if you maintain the top position for certain keywords on Google, there’s a good chance sites will start linking to you, as you will be considered an “authority” on your topic.

This will solidify your top ranking and also improve your ranking for other keywords. In this sense, high search engine rankings can beget high search engine rankings.

And there you have it: there are several major benefits to using organic search engine traffic over popular alternatives, such as pay per click traffic.

Even though organic search engine traffic isn’t truly “free”—it costs your time at the very least—it may be considerably cheaper than other forms of traffic generation. Not only will it covert better than “sponsored links,” but it may beget future traffic; and will cost comparatively less.

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You’ve heard the wild-eyed “experts” raving about it: “You have to test and track”, they’ll tell you. They’ll rattle on, preaching on the virtues of tracking and testing. They’ll tell you that you can never have a successful business without testing and tracking. They may even tell you that, if you’re not already wealthy, it’s because you’re not testing and tracking. But is this all hot air? Or is there something vitally important about testing and tracking?

When it comes to business, being able to track the effects of all of your decisions actually is vitally important. The experts may not track and test as much as they urge you to, but their exhortation is nonetheless correct: you should test and track.

Doing so will allow you to determine when something really is effective and when something simply isn’t producing results.

When it comes to pay per click advertising, you have the unique opportunity to test and track everything. While you might not be able to test and track your other forms of advertising as easily, PPC is relatively easy to track; and, for that reason, you should consider doing it, so you can constantly improve your campaigns.

So what does testing and tracking consist of with PPC? There are several levels. The first level is testing and tracking the effectiveness of your advertising campaigns. For instance, out of every 100 people who view a certain ad you’ve posted, how many are clicking through? This is your conversion rate; and you should know this, so you can compare several ads to determine which is best.

In the aforementioned situation, the “tracking” component involves looking at conversion rates. The “testing” comes in when you slowly tweak the headline in your PPC ad, testing out different elements to determine which performs best. Eventually, you should come up with an ad that you cannot improve on significantly – and this will all be determined by tracking and testing.

Next, you will want to track and test your sales page. Again, here, determine your conversion rate. How many sales do you make per 100 visitors? Also, are there significant differences in conversion rates for each advertising campaign? Are people searching for certain keywords and clicking on certain ads more likely to buy than people searching for different keywords and clicking on different ads?

If this is the case, then you may be able to afford to spend more money on certain ads; or you may want to reword other ads, so that you can weed out traffic that isn’t likely to convert.

Even if you’re already running profitable PPC advertising campaigns, you can still probably improve your profit margins; however, in order to do that, you need to know where the deficiencies and break-downs are in your system. Are they on the sales page? Are they in the ads? Did you select the wrong keywords? Did you pay too much for certain keywords? Are certain ads not converting as you expected?

Whatever the case may be, you need to figure it out if you want to increase your profit margins. Luckily, if you’re advertising with Adwords, Google provides a whole host of tools you can use to track and test your PPC campaigns.

Not only can you monitor your PPC campaign statistics, but you can also insert a piece of code in your sales page, which will allow you to track visitor behavior, so that you know everything visitors do from the point in time when they view your ad to the point in time when they buy (or don’t).

Testing and tracking may not be simple, but it is necessary. Even if you’re running a profitable business already, you should consider testing and tracking as a means to increase your profit margins.

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Bidding to make a profit on Google Adwords might not seem as obvious as the experts tell you. In their 5 minute videos, they’ll show you some quick technique to figure out how much to bid and for what keywords.

You’ll walk away thinking you understand the process. And then something strange will happen: you’ll be absolutely unable to implement their suggestions. No matter what you try, you’ll struggle to break even with your campaigns.

So why is this? Why can’t you experience the success that the experts suggest is completely within your reach? One common culprit is inept bid-setting. Many people who are new to Adwords do not know how to calculate profitable bid amounts. In fact, it is quite simple, but you have to work through it carefully. Here’s a step-by-step process for doing it:

1. Based on past selling experience, determine a rough conversion rate for the product you are selling. For instance, if you can usually convert 4 people out of every 100 who land on your salespage, then you have a conversion rate of 4%. Even if you cannot estimate this perfectly, try to come up with some rough measure before moving on to the next step.
2. Now that you’ve determined your conversion rate, you now need to calculate how much you profit per sale. Don’t get lazy here. If you sell an affiliate product and make a 50% commission, you might be tempted to simply multiply the price by ½. In reality, if you’re using Clickbank or Paypal, they will extract a fee, so you’re not earning 50% per sale. You need to calculate this, too.
3. Next, take the profit per sale and multiply that number by your conversion rate. If, for instance, your conversion rate is 4% and your profit per sale is $50, then you would multiply 50 by .04 and get $2. This means that the maximum amount of money you can afford to spend (if your conversion rate is 4%) is $2 per bid – your break-even point. Spend more than that and you’re actually losing money.

The most important thing to observe here, however, is the relationship between all of the variables.

For instance, think about what increasing your conversion rate means. It means that you would either profit more (without changing anything else) or it means that you could increase the amount you could pay per bid without exceeding your break-even point. i.e. if you cannot break into profit with your current conversion rate, you may have to improve your sales page.

Additionally, if you increase the price of your product (and it doesn’t decrease conversions significantly), then you can afford to bid more without exceeding your break-even point.

In addition to simply setting prices below your break-even point, you will eventually want to refine your bids so that you are deriving the greatest amount of profit.

Let’s say, for instance, that you will earn $50 per sale on a product that has a conversion rate of 4%. Given the keywords available, you can bid $1 per click and get 700 visitors per day or pay 30 cents per click and get 300 visitors per day. Which should you choose?

In the first instance, you would sell a total of 28 units and make $700 ((28*50)-(700*$1)). In the second instance, you would sell a total of 12 units and make $510 ((12*50)-(300*$1)). Even though you are spending more per click on advertising in the first instance, you will still profit more, which means you should select this option.

At first, using this entire math may seem unnecessary, but it isn’t. Without tracking these variables and making decisions based on them, you will have no idea how to set bids; and will suffer as a consequence.

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