- Has anyone shown me the actual, proven profitability for pay-per-click, affiliates, adwords, social media, and all the other micro-stuff? Is it accounted for in the same way as catalogs or any other marketing effort? Is it accurate? How do I know that?
Maybe I've always been wrong.
Take your average $50,000,000 online/catalog brand. Assume that it costs about 4% of net sales to keep the wheels on the website --- servers, bandwidth, widgets, web analytics tools, commissions to 3rd party vendors for each sale, IT staff, programming code for new applications, inventory system alignment across channels, you name it.
4% of $50,000,000 is $2,000,000.
Finally, assume you have 12,000,000 annual website visitors.
One could make an argument that each visit to the website costs $2,000,000 / 12,000,000 = $0.167.
Imagine adding $0.167 to every paid search visitor. Or to every organic search visitor? Or every visitor who randomly visits from Twitter? Here's a paid search example:
|# of Buyers||105||105|
|Less Marketing Cost||$2,500||$2,500|
|Less Est. Fixed Costs||$0||$835|
|Profit Per Buyer||$7.18||($0.77)|
The most important part of this exercise is to think! I'm not saying one way is right or wrong, but we have a responsibility to consider whether our activities are truly profitable or not --- we need to ask ourselves if some channels get a free ride while others carry too much of the freight.