(Part 2): Evaluating Online Traffic: Two Metrics That Matter When Arbitraging Media

Eric Beer 00:00

The more risk you take, the more margin you should make, the more money you should make. If you’re taking less risk, if somebody is going to run out for you and do it and be aligned with you on, you only make money when they make money, right? That kind of concept, well, then you, they should get more for that.

I spent the last 17 years building my eight-figure performance business without using any of my own money, working with some of the most brilliant direct response marketers in the world today. Now I’m looking for entrepreneurs to join my affiliate army built on ethics, transparency, and good old hard work. Join me to change the perception of how people view the greatest business in the world, affiliate marketing, and follow along as I learn, apply, and share performance marketing strategies, working with some of the brightest people on the planet. My name is Eric Beer, and welcome to the Performance Marketer podcast.

This is powerful stuff, guys, I get it. I could dive into this. I love it. Like numbers tell me everything. I need to see numbers to understand what’s going on in the business. Right? I can look at numbers and tell you things about what’s going on in the business. Without looking at the ad without looking at the landing page, I can tell you where the problem is - in the flow by looking at that, if I just have some data, right? And it’s just not the data, right? You need something that you compare it to, right? A lot of people will look at stats, and they’ll say they’re looking at it and trying to figure out is that good or not? Well, how do you know if it’s good or not, right? You got to be able to compare it to something, right? If we’re getting 18 cents per click here. Is that good? Well, oh, 14 cents, 14 cents, 10 cents, 13 cents? 10 cents? Yeah, it looks OK. That’s pretty good. Based off of the data that I have on this page, so this offer is the best offer. Or if this is the same offer on this on this spreadsheet, and these are all different sources for running traffic to my offer, well, then this source has the best traffic. So, I want to know what’s going on. I want to I want to dive in deeper on why am I getting 18 cents per click, when over here I’m getting seven cents two cents, two cents, nine cents? Like what what’s going on? Right? Are we running the same ad, same landing page for everything’s the same? Well, then the only thing that can be different is the source. And that type of traffic and who’s coming to the page and why they’re doing what they’re doing. Right? It may be that you got to optimize it, because the platform that they’re coming from is different than this. And the people are gonna respond differently. Right? It could be as simple as, but as an example of people when they’re consuming content that some people like to read. Right? So, you would look at a book or a blog, right? Some people like to listen, right? If you listen to podcasts, and some people like to watch videos, right? So, you know, if you’re selling something, if you can identify how they like to consume content, right? If someone likes to read books, are you going to sell them? And send them over to your podcast? Or would you try to sell a book? You try to sell a book, right? Because they’re telling you that’s how they want to consume your content. Right? If someone saying I love to watch videos, right? I love to listen to books. I don’t want to read a book, right? I get tired when I read the book. And it’s just hard for me holding it. I love to, to go to audible buy a book and listen to it. I can I can speed it up on how fast it is. I can skip around. And I can be doing other things while I’m listening. I could work out, right, I could be doing some busy work anything. And I love it. Right? So, if you’re going to try to sell me a book versus selling me the audible version, you’d want to some of the audible version. And to me that’s worth way more money. Right? I like having books. I like having them on shelves I like I like how they look. I’ll dive into books from from time to time to look at certain things. Right. But I don’t like to sit and read a book from front to back. So, my thing, right, I’ll listen to it front the back. I probably wouldn’t watch a video on it of somebody reading the book to me. Right? They I mean there have to be more to it. Right movies, right? It has to be more entertaining for me to watch it. But I like to listen to it. Right? So, you got to understand that that there’s a lot of different things that go into why stuff happens, right? But at the end of the day, the value per click Oh comes down to, if somebody clicks to our page, right? Somebody clicks this page, you’re looking at what the conversion rate is. So, a click to whatever the action is you need them to take, right? So, that is the click. Rate, percentage, right? So, here you have your clicks, right here. And now what is your click to conversion? Rate? Percentage, right 100 clicks 10 people take the action you want, fill out your form, take a survey, subscribe to YouTube, subscribe to podcast. So, if they get 100 clicks, you get 10. Calls to Action. CTA that is a 10% conversion rates. Right? Everything’s numbers, guys. Everything backs out the numbers. And I wasn’t even I don’t even love math. I never was a math guy. Like in school. Like, that wasn’t my thing. I love math in what I do. And the more I live life, the older I get, I just I recognize that math is just like, everywhere, everywhere. It’s like, you know, even like looking at, let’s say, God forbid somebody got into an accident. Right? Well, at two o’clock, if you are at the supermarket, and at 330, you end up getting into an accident where you’re going through a green light. And someone runs a red light and smashes your car. And you survive. You’re OK. Everything’s OK. It’s just scary, right? Well, let’s hypothetically say at two o’clock. You, you dropped your wallet, and everything splattered everywhere, right? So, now you got to, you know, bend down and pick up all the change in the money. You’re embarrassed, people are helping you. And it’s just a disaster, like you just you just disaster. You go you do it, you pick it up. Now, it took you about three minutes to get everything back together. And now you’re back to doing what you’re doing. So, by well. You’re not getting to intersection now till 333. Right. And if you’re getting there, 333 you’re going to get there. And the accident already happened. It’s math. Right? It’s It’s freaky, right? It’s just, you know, as silly as you know, how long does it take to get to Florida? Well, how fast are you driving? How many miles? Right? And this is all like school stuff that like I could never appreciate because I didn’t understand the value of it. Right. But now, when I can use it for for real life. Wow, man. It’s exciting, right? It’s really cool. You could predict a lot of things, right? We’re trying to predict here what we can afford to pay to make it worth our while. Right? So, if right here, we increased our bid by three cents. Now we got more clicks, we made $4,700 versus the 3100. We’re paying $900. So, we made 3866. The delta here is this minus that. Let’s make sure the maths right. OK, so we made $981 more. So, the projected net margin now is 19%. We’re making 19%. So, we lost 71%. From the 90%. net margin. Now I’m going to ask you this question. What’s better? What’s better? 90% net margin, or 19%. net margin? Well, obviously 90% net margin is better. But not in this case. Right? If you and I are or are doing the same thing. OK. Let’s pretend this on a daily basis, you’re making 90%. And I’m making 19%. net margin. I’m spending more. I’m making less. Right. If that’s if that’s correct. Right. 81%. Yeah. I don’t know who what numbers those are. So, in 81% is still less than 90%. Right? So, let’s go here. 200% 400%. Right. So, at 400%. Is it making sense? No, not really. But we’re increasing 150%. We’re paying four cents per click. We’re making 76% net margin versus the 90 which is worse, but we’re getting more traffic. And by getting more traffic, we’re making more money. We’re making 70 $50 more per day, right? So, if you looked at it like that, right? Well, if we did it were, let’s hear 90%. net margin. OK, and they are gi n, let’s pretend like we’re doing that. So, we’re netting out that times 31. So, we make $89,000 a month, if that was on a daily basis. Now, let’s look at it at the 76%. net margin, right, we increased how much we are willing to pay per click, which is going to, in effect, get us more clicks, at the same value per click. Right? So, in that scenario, right, we’re netting out the 3600 times the 31. And now we’re making $112,000. Right? We’re making less margin, but more money. And at the end of the line, that’s why I call it the bottom line. Right? The bottom line is, we’re making more money by working on less margins, right? And that’s it simple as that, you got to understand that that’s the mistake that people make they stop. So, in this scenario, we can increase our traffic to try to get more traffic, right? And play around with these numbers. If we’re, if we’re up 150, we can increase by 50%. Right? What happens if we now go up to 400%? Then let’s say, you know, 600%, like we said earlier, right? We’re negative, we’re losing money, like we said, but this time, now, we get a 250% increase in revenue in traffic, right? A 400%. increase in volume, right? Maybe a 600%. increase in volume. Right? So, what is happening here? Well, on 600% increase in margin, we’re paying 11 cents, right? Almost 12 cents per click. But we’re making now we’re now we’re getting 127,000 clicks, the it jumped up from 18,000 clicks of what we’re getting here. 227,000. Now we’re generating $22,000 in revenue. Our spend is 15. Grand, but we’re now making $7,200. Right? We’re making $4,300. More for scaling our business. Right? So, right here, we’re looking at 33% net margin, which is fair, right? Like, that’s normal, right? Obviously, you’re gonna have other costs, you might want to work at a little higher margin, because you have all your operating costs and all the things that are going on your cogs, cost of goods sold, right, and we’ll get into that right now. Right. But the difference here is, we’re now losing 50% of the margin, right? So, we’re making 33% instead of 90%. But look at the difference here, guys, right? Now, on 33%. net margin, which is here, we are making $225,000 a month versus 89. It’s huge. It’s a game changer, right? If you multiply that times 12 months, right? times 12. Right here, we have a million-dollar business. And here, we have a $2.7 million business. That’s guys a massive difference, doing the same thing. And the only difference here is we increased what we were willing to pay to get more traffic. I mean, it’s pretty simple, right? You didn’t You didn’t have to change anything. You didn’t have to change your ad, you did not have to change your landing pages, you changed nothing. On the backend, you didn’t have to optimize a thing. But you recognize that you’re working with a big amount of margin. You’ve identified that where you’re buying the traffic, there’s a lot more potential, right. And while the margins are great, you’re so willing to work on lower margins. If you can get more traffic, the more traffic you get, the bottom line grows, if everything remains the same, right? And that changes everything. So, all we really did here was we increase the percentage that we’re willing to pay on getting a click right 1000 Now we’re paying 18 cents, right? So, now, what has to happen right now we’re paying 18 cents a click That makes sense, huh? Nope. Right Why? That’s really important. All right, let’s see. Let’s see what happens if we get 1,000%. Let’s see if we get 5,000%. Let’s say we got 10,000%. How come? It’s not changing? Guys? Why is this going up? What’s going on? Hey, now we’re getting, you know, 50,000%. It’s way too big. Right? And we’re losing more and more money every time I do that, why? Guys? Remember, there’s two things we had to worry about. What are we making? On our on on here? What are we making on our revenue per impression? And what are we paying to get that impression? cost per impression? What are we making on the revenue per impression? Right? What are we paying on a click? And what are we making? on that? Click over here? Right? What are we making? on that? Click? Right? This is the click. These are the impressions the eyeballs when people land there, right? They equate to the same thing. It’s just a question of how you model out your business. Well, let’s go and look, right? The reason why this is negative is look, the new cost per pub click is now point 1855. Right? Remember, what are we making on gross revenue per impression? What are we making on the revenue per click 18 cents, I don’t care how much more traffic you get. If you’re making 18 cents, and you’re paying 18 and a half cents to get it, you’re going to lose all day long. Because nothing’s changing. All that is changing is you’re increasing the amount of traffic to a loser. Right? In this scenario, what would you need to do? Well, the simple thing is, obviously, you got to scale it back. Right? You can’t pay that much. Right? You can’t pay 18 cents, if you’re making 18 cents, right? You could pay anything under that, right? 1716 1514 13, whatever, right? As long as you’re paying less than 18 cents, you’ll make some money, right? Obviously, you want to spend the least amount of money to get the most amount of traffic, right? You want to scale it, but yield the highest amount of margin you possibly can get. OK, really, really important, guys really important? Well, we’re not going over this today. And I’m not going to go into all the data that goes into this. But what would need to happen if we want to pay 18 cents a click is we’re going to need to figure out how to increase our revenue per click, or revenue per impression. Well, how do you do that? Right? You know, the end of the day, you got to figure out how to make more money on the back end. If you guys ever see, right, like, you know, show you something that people miss. This is why data is so important. On the backend, right? So, let’s say that you do that. Let’s say this is on that visit. So, the ad a click, so your revenue per click is 18 cents. Let’s say your cost per click. Now let’s increase this traffic to 12 150. Right. So, now we’re paying 22 cents. So, now the cost is 2277. Right? So, right now, we’re losing. Negative. We’re losers here. This business is done. Ah, we got we’re going home. We’re not making any money. Loser. Not necessarily. Not necessarily. This is another thing that people make a big mistake on. OK. So, let me show you. Maybe you’ve seen this in the market before when people show you. Let’s use this. Right, right. You ever see. They’ll use an example? Where OK, let’s say you’re on a boat. And you see say this is an iceberg. Oh, terrible. I’m a terrible artist. I’m an outer J iceberg ice brj. Who knows? From above the water. Right? You see this tip? tip of the iceberg is right there. Right? Well, here on the back end is a gigantic, huge rock. Right? There’s huge thing like ice just to huge, huge, but you don’t see you just see the little tip. Right? That’s the concept of if you’re making now 18 cents on that first visit, right? So, if you look at it as a funnel, let’s upside down that right? Let’s say first visit, second visit, third visit. Fourth. OK. Well, in this scenario, what I’m showing you here is you driving traffic somewhere. And you’re trying to they call this like the slow the self-liquidating offer, you’re trying to break even, right? Because if you can break even, you have backend things going on where you’re generating revenue, right? That’s the business. That’s the concept, you don’t have to always be profitable on the front end. Right? The front end, right? So, there’s a funnel, whatever that is. That’s funnel one. So, it’s a survey funnel, and you lost money. Right? So, here, you made the 18 cents. Now, you paid no revenue, per, per click, you paid 22 cents, CPC. So, now you’re negative four cents on that trip, right? But you got the person into your database. Now, right? Now, let’s say you send them emails, right? Day one day to day three. You’re nurturing this person you’re talking to them, you’re just introducing them to things you’re giving them value. OK, well, even so let’s say you make $0 Here. Here, you make two cents. Here, you make two cents. Here, you make a penny. And on day five, you decide that you’re going to go and give them a higher offer the people that are buyers here, you’re going to now try to ascend them up the ladder, right? So, on day five to that list, maybe you make $5. Right? If you add that up, you paid 22 cents to get there. But you’re 18 cents, you have to add you have to attribute this revenue. Right? That’s another mistake people make. And they lose a lot of business because of it, because they think that they have a losing business. When if they if they do it the right way. It’s a homerun business, right? You’re making $5 here and a penny to Penny for $5.05 plus your 18 cents, right? So, what is that $5.23? Right total value that you’re making on somebody minus your 22 cents. The cost? So, you making $5 in a penny per per person in your entire list, right? Someone might spend 50 grand another person may spend, you know, 15 cents, but we’re just averaging it out. Right? So, it’s all based on now volume, because you’re backing it out to everybody, you’re doing an average, yes, you optimize you, you do all those things, but I’m just making it super simple for you. Bottom line is, that’s a killer business. And you’re making money in the back end. So, there’s a lot of different things that are going on here, guys. I’m painting this picture for you. It’s beautiful. I mean, there’s so much value here what we’re talking about, I think you got to watch this like 1000 times, but slowly washes and follow along, take notes. This is it. This is all the stuff. It’s so fun. I could geek out, I could sit here and talk to you for another five hours about so much stuff. There’s so much stuff here. But you know, sometimes you just got to simplify stuff. And the simplest way to do it is by looking at these two metrics, what are you making on a revenue per click? And what did it cost you to get that click? Or what are you making when someone lands on your front page? Revenue per impression? What did it cost you to get that impression? Or, right? Just going down that theme? If you’re generating leads, what are you making on a revenue per lead? And what does it cost you to get that lead RPL revenue per lead, CPL cost per lead. It’s all relatively the same thing, a little bit of a different dynamic, right? And how you’re backing it out. But the beauty is you’re looking at your business in a way where you can now reverse engineer things and buy traffic right. I can make money by selling leads. But I can buy traffic on a CPC right Now how does that work? You got to figure that out, right? You got to figure out the numbers of what can you afford per click to generate elite? And what’s that lead worth to you? And if you do that, you’re taking risk. Right? You’re out there and you’re buying, let’s say you’re competing with 10 other companies, and they’re all buying leads exactly like you are, well, they always say, Whoever can afford the most to buy media will get that traffic. Right. And that’s true. But in some cases, there are other reasons why someone might run your offer instead of somebody else’s. If you’re making the conversion to get paid easier. Some people just want to get paid on a click, some people want to get paid on, on sending on a CPM cost per 1000. So, when they send to a million people, if they charge you $5 1000, right, that means you are spending $5,000. Now, doesn’t matter how many people click doesn’t matter, you will fill out their form for them. They got paid $5,000, they’re happy with that, right? And if you were testing that, you’d have to figure out, can I afford that? You’d have to back it out to see, can I afford to pay for those and you’d run these numbers, all these numbers to kind of figure it out. But the thing is, is that, Let’s hypothetically, say, when you’re doing that, you need to figure out what is your revenue per 1000. If you’re going to pay $5 1000, you need to figure out what is your revenue per 1000. Right? Even if I’m out there, and I’m buying leads for $10 a lead, right? If somebody wants to charge me a CPM, I need to back out that $10 per lead to figure out what am I making on a revenue per 1000 to be able to figure out if I can afford that, or if I’m willing to test that. Right. If you do that most people don’t do that. Right. So, when you’re arbitraging media, it’s a I mean, it’s such an advantage to understand this stuff, guys, because now, it seems like you’re taking risk, but it’s a calculated risk, you are taking risk. And that’s why you should make more margin, right? I’ll say, the more risk you take, the more margin you should make, the more money you should make, right? If you’re taking less risk, if somebody is going to run out for you, and do it and be aligned with you on, you only make money when they make money, right? That kind of concept. Well, then you they should get more for that. Whatever they need to make, you should make sure they’re making it. But if somebody is like, I’m not, I’m not, I’m not running your offer. Unless you pay me on CPM, right? Well, what happens if you’re paying $5 1000? And that $10 lead backs out to $100 1000? So, you can afford to pay $50 $1,075 1000? Well, you’re gonna keep $95 1000 that you made $95 1000? That person wanted five, that $5 1000 That’s what they wanted. They’re happy with it. Great. Now, why would you pay them more to get more traffic? If they have more traffic, than perhaps you would increase the price? Right? If they have that traffic? And you want to outspend your competition? You might be like, Hey, listen, if you got me a million emails to send, if you can get me 20 million emails to send over the month, I’d be willing to pay you $7 1000 The person’s like, well, I’m making photos 1000. So, I’m increasing to $2. More on that 20 million. Hmm, no brainer, right? If they’re currently selling it at $5 1000, right? 20 times, at five grand there’s, they’re making 100 grand a month. Now, they’re increasing it by an extra 40. So, now they’re making $140,000 a month from us. Right? We’re paying seven. Now we need to make sure that quality stays the same. When you increase volume. That’s really important. Sometimes it happens when you increase some volume. It’s just there’s it’s ultimately you got to you know, think about impressions, traffic, those are people, right? Those are real people taking actions, that conversion rate needs to stay the same that that revenue per impression needs to stay the same, that revenue per lead needs to stay the same. If it changes, you need to calculate that to see are you profitable, are you still profitable? It could change it probably is going to change. Right? But if you’re at the end of the day, bottom line, making more money, you don’t care. You don’t care if your revenue per lead goes down. You don’t care if your net margin goes down, right or your revenue per impression goes down you don’t care because bottom line is you’re making more money. So, guys, that’s it. I mean gold right there. I hope I hope you guys you know stayed for the end here through this video. If you did, you’ve got a tremendous amount have information that you can now use for your business. Listen, subscribe, please, it helps share this thing with anybody you think could need it. Subscribe to my text, community 917-636-1998 ask me any questions you want, comment, ask me questions. I’m happy to help you, I’d love to help you. And look out man, I just finished a chapter my books coming out the launch is April 9, Million Dollar Identity and with a bunch of awesome other authors, I talk about media arbitrage, I talk about survey funnels and survey detective and all that good jazz. And that’s also like, putting like a kicking my butt to, like, do so much more stuff that I’m pretty excited about. I’m gonna announce it yet, but is pretty close to writing my own solo book all around, you know, Survey Secrets, and how to use surveys to generate leads and increase your profit margins and make more money and be more relevant and kick butt on the internet. And that should coincide with launch of our server detective software. So, a lot of cool stuff up ahead. Really excited about it. So, stick around, like, you know, keep your ears open, and we’re going to be doing some coaching and training. So, if that’s exciting to you, and you want to be hanging around with me more in my community, subscribe to everything, because it’s going to be announced. And you know, hopefully, you guys can be there. You know, my goal is just to obsess over you, obsess over the customer, I’m taking a page out of Jeff Besos book, that is my goal. I just want to obsess over the customer. Yeah, my technology needs to work. Yeah, my strategies need to work, right. But how I want to be differentiated from everybody else is that the people that are in my community, know that I care. And everybody in the community cares for one another, and we’re all helping each other. And if that doesn’t align with what I’m doing, then you don’t belong in that community. I entrepreneurship is lonely, right? We’re all alone. We’re on our own wherever on companies. But it doesn’t have to be right it you just have to find places where you’re with other entrepreneurs that are similar to you doing similar things. And we all want to help each other. Right, we all want to help each other to get our messages out into the world. So, that we can help people that need our help. And we can make an impact on their lives. And in return, you’re going to grow your business. And we’re going to start to build legacies. And it’s going to be a beautiful thing. It’s already happening and let’s just keep the momentum going. So, with that said, guys, I appreciate all of you. I hope you’re all well. I hope you’re all safe out there with what’s going on in this world. And until next time, be blessed. Talk to you soon. All right, I’m out.

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