Initially, you set your daily budget with the primary goal of limiting how much you are willing to lose while taking a chance on a new campaign. Once you have determined that your campaign has potential, your focus will switch to tuning. Budget tuning is a simple enough process. Your first goal in setting a daily budget is to keep your costs in line.
You want to ensure that you do not run out of money, and as your advertising bill will have to be paid several weeks before your commissions will be paid out to you, you must make sure your daily budget is set at a level that will allow about 60 days based on the cash you have on hand to pay for advertising. For example, if you have only $600 on hand, you do not want to spend much more than $10 a day, or you run the risk of having to shut off your campaign, which would allow your competition some number of days or weeks to operate in the same space without the price pressure of your presence.
Your second goal is to allow a profitable campaign to generate as much traffic and income for you as possible. Over time, as you become more and more successful, you should find you have a good deal more money with which to buy more clicks. As your bankroll grows, you should continue to raise the daily budgets of your most successful campaigns until you find they are no longer able to give you more traffic than you can afford.
Each time you improve your keyword list, raise your bids, or perfect your ad text, you must revisit your daily budget to make certain it still meets your twin goals of generating as much traffic as possible and ensuring you do not run out of cash before your next commission check arrives.
By far the most complex task you will undertake in this business is to performance-tune a campaign for an affiliate program that includes performance goals or a tiered commission structure. Don’t panic, it isn’t rocket science, and I have an approach that should make it far simpler for you than it was for me in the beginning.
The first thing you need to be aware of is how the performance metrics we have discussed can function as simple levers that allow you to increase or decrease at will the traffic your campaigns generate. These two metrics are your keyword list and your maximum bid amount (and, of course, you must remember to adjust your budget to allow this additional traffic). By raising your bids or expanding your keyword list either through broader matching or additional keywords you can increase the traffic of a successful campaign pretty much at will.
Normally, you would raise these metrics only until you see your total return level off or start to drop, but with a tiered commission structure, pushing these metrics further, even as the total return dwindles, might make sense if you can increase that traffic just enough to reach the next tier, at which point, a higher rate of return for all of your sales/leads could push the total return back into positive territory, and possibly even push it above its previous peak within the lower tier.
Your plan, then, must be to raise your bids and/or expand your keyword list for a few days in order to capture enough data to determine (1) whether you can generate enough business volume to reach the next performance tier and (2) whether your total return at the new performance tier will be able to exceed your total return at the old performance tier.
After capturing a few days’ worth of cost and return data with your higher bids and/or expanded list of keywords and phrases, you must project (as you learned how to do earlier in this article) what your total return would be if you left these metrics at these higher levels for an entire performance period (usually one month or one quarter). Let us say, for instance, that you double the maximum bids for three days for your Jungle.com campaign from earlier in this article.
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