Before You Get Started: Traffic Sources

Visits are listed in the top line graph.

As I mentioned in my previous post, my background is in buying advertising and managing campaigns, not in selling advertising. And one of the things I’ve noticed as I’ve been managing the Desing*Sponge ad program for the past few years is that there tends to be a major knowledge gap between professional media buyers and the average small business owner buying ads to promote own business.
The good news is that the information you need to bridge the gap is out there, and one of the purposes of this blog is to help share that information.

In this series, “Before You Get Started” we’ll discuss things to know and/or think about before you get started in Online Advertising.

Today’s topic is Traffic Sources.

THINGS TO KNOW ABOUT YOUR CURRENT TRAFFIC:

1. how much traffic you’re getting

We’ll talk more about setting campaign goals in a future post, but an extremely common goal for online advertising is generating traffic to a website. For today’s article, we’ll assume that’s the reason we’re considering advertising online in the first place.

It stands to reason that before you start spending money to generate more traffic to your website, you should know how much traffi you’re already getting. The first thing to do is to make sure you have Google Analytics installed. It’s easy to install and it’s free, and it’s the most accurate gauge of your site’s traffic. It’s also incredibly powerful, and can give you just about any data that you’d need.

For now, the only data you need is how many “visits” you’re getting per month.  [I'm not going to focus on "unique visits" for the moment, because when we measure advertising, we'll be mostly looking at how many "clicks" your campaign got, and there's really no metric called "unique clicks" - a click is a click. So for our purposes, we'll be equating a "click" to a "visit".  If you have any questions about these terms, feel free to post them in the comments and I'll address them there.]

If you know how many visits you get on average, per day, then we can start trying to figure out how many more visits you need to start meeting your business goals. The way we do this, is by learning thing #2…

2. how much your traffic is worth

Let’s assume for the moment that you run an e-commerce site.  You look at your Google Analytics and see that you get 25,000 visits per month.  Then you look at your PayPal account (or whoever you use for your merchant account) and you see that you make, on average, about $5,000 in revenue per month. That means we can estimate that each visit to your site is worth approximately $0.20.

That’s valuable information! Now you know that if you can bring in similar quality traffic (more on that in a moment) for less than $0.20 per visit (or “click”) your ad campaign will be profitable.  You’ve now got some good benchmarks (or numbers you can use for comparison) for your next campaign.

If your cost per click stays below $0.20, and the quality of the traffic you buy is consistent with your current quality, you should buy as much traffic at whatever price you can get at that price.  Why? Because every click you buy makes you money.

A couple of points about this:

  • the quality of the traffic you buy may not be the same as what you’re currently getting, it may be better or it may be worse, but even if it’s worse, it can still be profitable if you can get it at the right price.
  • depending on where you choose to advertise, you may not be buying the media on a cost-per-click basis.  You may pay by the day, week, or month, or you may pay by the impression (or each time the ad is shown), or some other arrangement.  But that doesn’t mean you can’t calculate the cost of each click you get from your campaign (especially if you have Google Analytics installed – because you’ll be able to see all the clicks that came in from your campaign).

Once you know how much traffic you’re getting, and how much it’s worth, there’s only one piece left to know…

3. where your traffic is coming from

Google Analytics Screenshot

Google Analytics "Traffic Sources" Report

If you’re happy with the value of the current traffic you’re getting, the next logical step is to try to get more traffic from similar sources.

For example, if the majority of your traffic is from incoming links from blogs, you should consider contacting those blogs and see if they accept advertising (they probably do). Or, if most of your traffic comes from keyword searches on products you sell (such as “ceramic bowls”, “letterpress cards”, etc.), now you’re likely going to want to look at advertising on search engines (to have your ad appear when people are searching on those or similar keywords).  I’ll write more about how to do that in a later post, but it’s something to start thinking about now.

Obviously, there are all types of other traffic sources that you may find when you’re looking through your traffic data.  These are just examples.

The point is, before you start spending money, take a look at where you’re already making money.  It’s going to give you some good guidelines for how and where you can make more.

Here’s what to do next:

  1. Install Google Analytics on your site.
  2. See how many visits you average per day or per month.
  3. Take a look at the average daily or monthly revenue you get from your website.
  4. Calculate the average value of a visit to your site.
  5. See where the majority of your traffic is coming from.
  6. Investigate the advertising options at sites that are similar to your current traffic sources

Thanks and we’ll talk to you soon!

Aaron

2 Comments

  1. Mabel Forsyth

    on 31st Aug, 10 11:08am

    Excellent post!
    I use Google analytics for my site and blog, but have never really been able to use the information to any great effect till now- – This is really simply explained, and will definitely help me target potential future advertising plans.
    Many thanks!

    reply to this comment

  2. nurse practitioner

    on 8th Sep, 10 01:09pm

    Terrific work! This is the type of information that should be shared around the web. Shame on the search engines for not positioning this post higher!

    reply to this comment

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