Member Avatar for clarinetalex

How much percent of your daily revenue do you spend on CPC programs? My forum/article site started growing in size/revenue and I decided it would be best to spend a high portion of my income (50-80%) on google CPC, MSN Adcenter, and Overture. Will this investment pay off? It feels like a relative ripoff when articles in the newspaper are free and are more effective than a month's worth of CPC advertising (although articles in the newspaper will create a lot of initial interest and a lesser amount of prolonged interest -- this may be true with CPC programs but its harder to guage).

It also sometimes feels like a waste to be shelling out 20-30 dollars a day. In addition, the more I spend on these programs, the higher the CPC.

What's the best percentage/amount to spend on advertising?

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raised the right concern: dumping 50-80% of daily revenue into CPC is risky unless the math supports it. and hit the key point that the decision should be driven by unit economics and scaleability — not by an arbitrary percent. Below are concise, practical rules to turn this from guesswork into a repeatable process.

Work from the break-even CPC. Two simple formulas cover most cases:

  • If you sell/subscription model:

    max_CPC = (LTV * gross_margin) * conversion_rate

    Example: LTV = $100, gross_margin = 0.40 -> $40 per customer; conversion_rate = 2% (0.02) -> max_CPC = $40 * 0.02 = $0.80.

  • If your revenue is ad impressions (content site):

    max_CPC = revenue_per_visitor

    If you earn $0.05 per visitor from ads, paying more than $0.05 per click loses money.

Practical tactics to improve those inputs (so you can safely spend more): push conversion_rate and revenue_per_visitor up and lower CPC by using long-tail keywords, negative keywords, tighter geo/device targeting, better ad copy, A/B tests on landing pages, and improving ad relevance/quality metrics so auctions reward you with lower CPCs for the same position. Beware that aggressive scaling tends to bid you into higher-cost, lower-value clicks — incremental CPCs will rise as you expand.

Budgeting workflow: start small, treat CPC as an experiment, require positive unit economics and an acceptable payback window before scaling. Put daily caps, track cohort LTV (not just first purchase), and reinvest only incremental profit. s subscription example shows how reinvesting predictable LTV can scale, but only after churn and LTV are well understood.

If those measurements aren’t available yet, err on the conservative side and avoid spending a majority of cashflow on test advertising.

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Member Avatar for Dani

It completely depends on the ROI. Use conversion tracking to keep tabs on how much money you make for each click. PPC programs typically don't work as well for sites whose sole source of revenue is advertising money. But if you sell a product, it could very well be all the advertising you'll ever need - aside from word of mouth, that is.

Member Avatar for Slashdoc

It completely depends on the ROI. Use conversion tracking to keep tabs on how much money you make for each click. PPC programs typically don't work as well for sites whose sole source of revenue is advertising money. But if you sell a product, it could very well be all the advertising you'll ever need - aside from word of mouth, that is.

I agree, unless you're selling something, CPC serves a dubious purpose at best. I spend about 10% mostly as a "feel good" measure of driving targeted visitors who will hopefully bookmark the site and come back again. In reality, I lose about 90% of what is spend on each "click".

On the other hand I used to work with a guy who sold subscribtions to his site. He would then take all the money from subscribtions and reinvest it in CPC ads. He quit his job a few years ago because he was making so much money and I wouldn't be surprised if he is making 7 figures by now.

So I guess it really depends on the type of site that you are running.

Member Avatar for clarinetalex

Dani, I seem to remember that you wrote something about how you spent money on advertising. Is this correct?

Member Avatar for Dani

It's possible but I don't remember it. Not anytime in the recent past. As far as how I spend my advertising dollars ... a little on banner campaigns, a little on text campaigns, and a little on AdWords. I'm not a fan of Yahoo! / Overture and I have yet to try MSN ppc.

Member Avatar for clarinetalex

Yes, overture is very annoying, although they have a big network. I hate how they charge you when your account is "close to depletion." It makes it very hard to stop using the service.

As for MSN Adcenter, the control panel only works on windows, which I think is absurd and MSN search uses Overture ads anyway.

Member Avatar for Dani

I find the Yahoo! interface clunky and slow. It's too hard for me to work with and I depise their $0.10 minimum.

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