How much profit can I expect?

All the links, search engine optimising, page ranks in the world, are wasted if the company cannot make profit from its internet marketing spend. Marketing speak of ‘brand promotion, market positioning, customer awareness’ are all excuses heard when it comes to a poor return on investment for every marketing pound spent. There are two simple considerations:

1. What is the break even point?
2. Can the ‘internet’ supply the necessary traffic?

ROI formula, current Website Promotion Strategies

A simple formula for working out if a client is seeing an attractive return on their website promotion budget is as follows:

400 unique visitors to the website = 1 Sale
(Source historic data collected over 5 years studying over 220 commercial websites both B2B and B2C)

The value of the sale is determined by a client’s retail price (RRP) minus cost of product (RRP / 2.5).

Example
Website Promotion Cost: Client is paying Adam Woozeer £750 per month
Product Profit: Client’s average sale value (RRP) is £400
Profit = RRP – cost (£400 / 2.5) = £240

Return on Marketing Spend
One sale is worth £240 gross profit to a client
Website Promotion Cost: £750 pcm
Break Even = £750 / (Y x £120)
Y = 3 sales per month

100% ROI
A 100% ROI is often set as a target for new clients, as it is a simple memorable figure for all involved to be aware of, and if it is not reached we would question the viability of our strategy continuing.. In this example case a 100% ROI = 6 sales

Web Traffic Target
We know that it takes 400 unique visitors to a website to generate one sale. We would set a target of 3500 visitors to a client’s website, for a client to see a return of 100%. How exactly do we determine the right online marketing mix to ensure this traffic, is what we are expert at.