TAC, or Traffic Acquisition Cost, is a measure of the amount of money required to buy in traffic. It is usually calculated on a percentage basis, using either revenue or visitor numbers to yield a figure that can be measured over time.
For example, if you pay out $5 to Google in AdWords fees, and receive 1,000 visitors, then the cost per visitor is 0.5 cents (actually, it's more common just to say that the cost is $5 per 1,000 visitors, otherwise known as CPM).
Others may choose to measure it in terms of revenue - if you sell an eBook for $15, and pay $100 in advertising fees to sell 500 copies, then you have generated $7,500 for $100 of advertising. That's quite a margin!
Actually, these numbers might be a bit optimistic, and so helping reduce TAC costs is usually high up on the list of priorities for online entrepreneurs.
One method might be to hunt after JV's (Joint Ventures) where partners each get something out of the relationship. An eBook can be exchanged for the traffic that this might bring, for example - one partner offers the eBook to their list, and the eBook contains links to the other's online store.
Or, a software manufacturer or online service provider might pay a third party to pre-install software on a piece of hardware, or even supply software with certain settings that provide an opportunity for third party promotion.
This last example is use by advertisers to buy advertising in applications (so-called adware), which is a method that works, but can be costly and obtrusive to the end user.
When formulating your TAC cost reduction strategy, remember one thing - it's much better to offer something of value if all you're after is traffic; otherwise it may end up costing more than it brings in.
Showing posts with label cost. Show all posts
Showing posts with label cost. Show all posts
Thursday, November 10, 2011
Tuesday, June 24, 2008
How do you Calculate Traffic Acquisition Cost
One question that is often at the forefront of people's minds when it comes to generating traffic is how to calculate traffic acquisition cost. Every method of traffic acquisition, be it paid or free, has an underlying cost.
Clearly, free methods, such as using Twitter, a blog, or even a service such as Traffic Swarm are attractive because there is no direct financial cost. However, the traffic that is acquired may not be highly converting, and there is an investment in time, which has an inherent cost.
Let's take a quick example. If we assume that you spend 30 minutes crafting a short Traffic Swarm advert, then another 30 minutes to set it up, and then 60 minutes generating some credits by clicking on other people's adverts, you have spent 2 hours of time.
A copywriter can earn upwards of $200 in that short fraction of a day!
So, any traffic that is acquired has a cost of $200. And that's not the end of the story, because, if you generate 100 credits, that only means that your advert will be displayed 100 times. What percentage of those displays will generate visits? 1%? 2%? 10%?
There is an upside - over time, the investment might be worth it, but only if the cost of other traffic acquisition services are higher.
AdSense CPC Explained
One way to pull in traffic is buy buying clicks through a PPC (Pay Per Click) broker. Google's AdSense is such a service - you can pay them to display your advert whenever certain keywords are displayed on a given page.
(Get the inside scoop on AdSense here with the Keyword Cracker's Free AdSense Report.)
The CPC (Cost Per Click) is the amount of money that you (and competing content providers) are willing to put down for each person that clicks your advert. This can be as low as $0.05, but as high as $50!
Clearly, it is easy to calculate traffic acquisition costs in this case. If you want 100 visitors, based on a keyword that costs $1 per click, it will cost you $100. Now, this compares favorably with the analysis we did above for Traffic Swarm, but there's a problem.
Highly converting keywords often cost much more than $1 per click.
In such cases, free and low cost traffic acquisition models will be more favorable, but in order to figure it out, you need to know how to calculate the cost of traffic acquisition. Something you now know how to do.
A final note : if you are selling a high ticket item, like a used Ford SUV, then the commission on that sale might make PPC worth your while. If you're selling a $17 eBook, it surely will not be, unless you find a highly converting, long tail keyword phrase, at a low cost.
The Keyword Cracker was designed with that in mind, and is highly recommended by all who have used it to better their traffic acquisition strategies.
Clearly, free methods, such as using Twitter, a blog, or even a service such as Traffic Swarm are attractive because there is no direct financial cost. However, the traffic that is acquired may not be highly converting, and there is an investment in time, which has an inherent cost.
Let's take a quick example. If we assume that you spend 30 minutes crafting a short Traffic Swarm advert, then another 30 minutes to set it up, and then 60 minutes generating some credits by clicking on other people's adverts, you have spent 2 hours of time.
A copywriter can earn upwards of $200 in that short fraction of a day!
So, any traffic that is acquired has a cost of $200. And that's not the end of the story, because, if you generate 100 credits, that only means that your advert will be displayed 100 times. What percentage of those displays will generate visits? 1%? 2%? 10%?
There is an upside - over time, the investment might be worth it, but only if the cost of other traffic acquisition services are higher.
AdSense CPC Explained
One way to pull in traffic is buy buying clicks through a PPC (Pay Per Click) broker. Google's AdSense is such a service - you can pay them to display your advert whenever certain keywords are displayed on a given page.
(Get the inside scoop on AdSense here with the Keyword Cracker's Free AdSense Report.)
The CPC (Cost Per Click) is the amount of money that you (and competing content providers) are willing to put down for each person that clicks your advert. This can be as low as $0.05, but as high as $50!
Clearly, it is easy to calculate traffic acquisition costs in this case. If you want 100 visitors, based on a keyword that costs $1 per click, it will cost you $100. Now, this compares favorably with the analysis we did above for Traffic Swarm, but there's a problem.
Highly converting keywords often cost much more than $1 per click.
In such cases, free and low cost traffic acquisition models will be more favorable, but in order to figure it out, you need to know how to calculate the cost of traffic acquisition. Something you now know how to do.
A final note : if you are selling a high ticket item, like a used Ford SUV, then the commission on that sale might make PPC worth your while. If you're selling a $17 eBook, it surely will not be, unless you find a highly converting, long tail keyword phrase, at a low cost.
The Keyword Cracker was designed with that in mind, and is highly recommended by all who have used it to better their traffic acquisition strategies.
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