It’s a while since I’ve done an “Ask Kirsty” as a lot of questions I’ve been getting have been re-covering old ground. However, I had an interesting query a few days ago from Lee who has just found his first profitable niche which he has created through SEO. Here’s his question: -

Hi Kirsty!

I’ve been reading your blog for some time. You’re doing a great job. I
had a question or two, which I hope you will answer.
I’m new to Internet Marketing. I’ve only been at this for a few
months. After several attempts, which failed, I have finally found a niche and
created a website that is profitable. I modeled it on your perfume website you
created with a Wordpress blog.

I’m selling a high-end Amazon product, and since December 1, I’ve made
$120. That’s not much to you, I’m sure, but to me it’s a big victory.

Here’s my dilemma. I’ve done no paid advertising for my website, only
ezine articles and web 2.0 type sites. (Digg, for instance.) I’ve still got
some article and social bookmarking type marketing to do on this site, but once
I’ve completed that round of marketing, so to speak, I’m not sure what
direction to take.

Right now, with the visitor value I have, I’m not sure that PPC
advertising (sending them to my site, not Amazon) would make me any money.

On the other hand, now that I’ve got all the details figured out about my
niche site, I could make about twenty more of these in short order.
I would appreciate any advice, direction, thoughts, etc. you might have
about this.

Thanks so much!
Lee

Hi Lee,

Well, first off… congratulations in finding your first profitable affiliate niche. I’m very glad I was able to play a small part in your success. $120 is a good effort in that time frame, you are most definately to be congratulated!

Transferring SEO success to PPC can be a bit of a thorny issue. The key is whether or not you can push traffic through your landing page at a CPC that will give you a decent profit margin. You haven’t mentioned which sector you are in or what your conversion rates are like… so I’ll just give you a general guide. So here it is! Sit back, relax and prepare yourself for my SEO to PPC success step by step guide!!

1 ) Identify What Search Terms People Have Been Using To Find Your Site
A good first port of call in working out how a PPC campaign might work for you is to find out what search terms people have been using when they arrived on your site. Most web hosts provide this service these days either free or for a small fee. If your host does not do this, then another option given you are using a blog based site would be to sign up for My Blog Log and use their paid stats package (I think it’s $25 per year). It’s quite easy to use, I’ve got it for a couple of my sites and I find it adequate to give basic referrer information. However, more comprehensive packages can give really useful information about how visitors behave on your site (but that’s one for another tutorial!!).

Once you have found your search terms I’d then use these to create a more comprehensive keyword list using a tool such as Google Adword’s Keyword Suggestion Tool, there’s a great keyword video tutorial I posted about the other day that’ll show you exactly how that works and which also has some handy tips on analysis for PPC.

Remember, your current sales are only based on what you have been able to rank for so far. By increasing your site visibility using targeted PPC you might just be able to significantly increase your $120 profit.

2 ) What Is Your Current Site Conversion Rate?
Take a look at your current site conversion rate as this will give you an idea as to how well your PPC traffic might convert. The only proviso I would place on this is that a low conversion rate might not necessarily mean PPC will not work for you. As I mentioned above… your conversion rate will be based only on the terms you are ranking for. If you discover these are not entirely relevant to the product you’ve been pushing then you could seen a higher conversion rate using highly relevant PPC traffic. Similarly, if you have good conversion rates then you will know the kind of search terms you are ranking for are highly relevant and that you can base your PPC spend on current conversion rates with a reasonable amount of confidence.

For the benefit of those of you who don’t know how to calculate a site’s conversion to sale, here’s a handy dandy wee formula: -

Number of Sales / Number Site visitors x 100 = Conversion Rate (so if you had 8 sales and 150 visitors your conversion rate would be 5.33%)

A couple of tips: - When following step one you may discover there is a completely irrelevant term generating traffic. If this is the case, you could subtract the traffic the term has generated to get a more accurate idea of your PPC conversion rate.

Also, do not base your conversion rate on the traffic that got through to your merchant. Base it upon the traffic that went to your site in the first place. This will factor in traffic leakage (i.e. those who came to your site and left without visiting your merchant) to your analysis of how you might run a PPC campaign profitably.

3 ) How To Work Out How Much To Pay Per Click?
Right. The next stage is to work out how much to pay per click based on the data you have about conversions plus data you will also have regarding the EPC (Earnings Per Click) of your current site. Basically, you need to work out the EPC you have been achieving on your SEO campaign. To do this, use the following handy dandy formula: -

Total Commission \ Total Clicks = EPC So, if your site got 500 clicks and this turned into £100 commission your site EPC would be 20p

Working out what you want to / need to pay per click will then depend on the competitiveness of your niche. Simply set up a PPC campaign and make your max CPC what your computations using the above methods suggest will work for your profit margins. As a newbie I’d suggest you don’t follow all the advice of these chaps who tell you to “bid high” first then reduce your CPC’s to maximise your positions. Yeah, this does work but your cash is precious at this time and that kind of advice is easy to give out when you know what you are doing and don’t mind the odd loss. That kind of advice could potentially wipe out newly found profit if used by the uninitiated! You can always up your bids a bit once your confidence in the campaign has grown.

4 ) Will Google Adwords Think Your Landing Page Has Sufficient Quality?

Ooohhh, and this is the stinger! I won’t attempt to answer this one here (my fingers would drop off with all the typing). Instead, I shall direct you to a guide that Kieron of UKOffer wrote: - How To Build A Page That Won’t Get Banned - With Examples

If all that sounds like too much work, try Yahoo or MSN…. they have improved a lot and I know Yahoo gives away a free £50 voucher to new account signups (not sure about offers currently available elsewhere).

5 ) Recording Which Terms Are Converting For Your PPC Campaign

Make sure that you have a method in place for recording which of your PPC search terms are converting to sales. That way, you can weed out the non performers and concentrate your efforts around money-bearing search term areas. It’s important you have some form of tracking in place before you switch on a campaign.

Finally, don’t forget to set your daily budget with your PPC provider. I was recently saved from a very costly incident by my daily budget on my Adwords account. I ONLY lost £230 instead of several thousand after a broadmatching incident I hadn’t anticipated. You have been warned!!

Good luck!!

P.S. If you haven’t already done so, give my Adwords For Beginners Tutorial a read through.

*edit* Just had a very, very pertinent point made in the comments, so I’m replicating it at the bottom of the post for all you chaps who don’t read comments on blogs.

1. Joe Connor Says:
January 11th, 2008 at 3:45 pm e

Good stuff Kirsty,
It’s also worth mentioning that it takes time to develop a profitable and efficient adwords campaign why is why many people give up thinking they can’t make a profit.
When I start a new campaign I accept that I’m going to be paying to learn on the job and it can take literally years to weed out all the dross with negative matching and Google is very adept at sliding around the edges of negative matches - there’s no negative broad matching option.
Go easy out there in PPC land.

I had a note last week from Dave, like many new affiliates on a steep learning curve he’s invested a heap of his time into learning how to build a site, but now he’s getting a bit of traffic he realises it’s not doing what he wants it to - converting to sales! Here’s his question: -

Ive been dabbling with affiliate marketing and PPC for a few months this year, although I started researching it over a year ago.

Thanks
Dave

*Please note that Dave’s already actioned some of the points below.. so a few recommendations I’ve made won’t make much sense if you look at his site!*

OK, lets see if we can point you in the right direction. You’ve certainly
been working hard and all in all are putting roughly the right information
into your sites.

The Replica models site first. Definately the stronger of the two, which
does demonstrate you are learning and developing in the right directions.
A few points on it: -

Get rid of the Google Adsense. You have to ask yourself what’s worth
more, the adsense CPC or the healthy commissions you can get from the
replica models you’re selling. In that position on the home page you
should be hitting your visitors with your best offers rather than an
excuse to leave your site immediately.

On the product pages…

You have a nice call to action button on the top left of your content that
says “buy online”. Make it clickable so your users can get to the
goodies.

There’s too much text. If this were my site I would have a clickable
representative image for each brand which channelled the traffic through
to the appropriate merchant site section.

I’d also make the links to the individual product types smaller and
clickable.

I think the current background image is a wee bit confusing. It makes
your text hard to read. As I said above, show the user what they’re
visiting your site for as soon as possible, or they will leave. You kinda
have to be aware that people don’t really “read” web pages. Users browse
sites in an almost semi-conscious way, you really have to set up big
arrows to point them in the right direction (much like the road signs we
see on motorways when there’s road works!).

I once tripled my click through rate on a landing page just by adding in a
big bold text link like this: -

Browse X Products > >

You can bet your ass my users didn’t even read what the link said beyond
picking out a couple of keywords and seeing the arrows.

I think some of the product lists might be a bit too long. I would break
the site sections up a little more. For example, if you sent volvo
related traffic to this page: -

http://www.replica-models.co.uk/Road_Car.htm

I think users would leave immediately. Far better to have a dedicated
page for each car brand and break it up by model type. That way, users
will see the brand they are looking for immediately and know they have
come to the right place.

From an SEO point of view, you should get a bit more content in there. It
would also help your adwords landing page quality score. For example, you
could knock out a quick overview of each car brand or racing team history.

I think the text on the site could look a lot nicer. Nothing too complex,
just a simple stylesheet would fix it right up (I see you’re currently
defining some styles within the page code). It would also let you create
some

nice headers

and define their sizes.

http://www.freeonlineprints.co.uk/style.css

Here’s the URL of a stylesheet I use in a simple site I created as an
experiment a while back.

OK, your first site

www.online-bikes.co.uk

I think you are absolutely right when you say you’re not getting people
pushed on to the merchant. As above, you need a really obvious call to
action. A big link saying “shop online for xxx” would be a big step in
the right direction. Even better, create a small shopping section and
link to it all over your site in prominent places.

It’s not immediately obvious to me what you’re trying to sell on this
site. Create some content around saleable items. When putting together a
site, put yourself in the shoes of the user. Based on your keyword list,
what would your users expect to see on the homepage? If you’re PPCing on
puncture repair kits, that should be the first thing they actually see on
the landing page. Create a page for each product area you are trying to
push.

A very successful mini site of mine I created ages ago (in terms of EPC,
not sales volume) probably demonstrates this quite well. It’s for
delicate feminine products (medical, not naughty!!) http://www.vaginaldilator.co.uk

This site pays me around £1.20 for every visitor I send to the merchant
and the product is only retailing at £46. It’s highly relevant to what people searching on the key terms are looking for and therefore converts phenomenally well despite low traffic.

Don’t rely on the banners from merchants to channel your traffic. Once
you’ve got a few sales under your belt your stats will show that the vast,
vast majority of sales come via text or product feed links. Internet
users tune out banner advertising (that’s why those irritating banners
that move about the page were invented!!).

Again with this site, remove the adsense, and make the text look nicer.

Phew! Well, I could bang on about lots here but I suspect I might have
given you a fair amount to have a think about. In my opinion, your second
site is stronger because its more of a niche area. For a first effort I
might even have looked at creating an in-depth site focusing on one brand
of replicas. It means a lot less work to see if your methodology is
working!

I hope this helps, and do let me know how you get on.

I had a wee e-mail in from a nice Chap called Babar this morning. He was concerned about his lack of web design skills. Given my recent post about how smashing Wordpress is for the non technical, I thought it was an appropriate “Ask Kirsty”.

Here’s his question….

hi,i would like to create a website.Something from which i can hopefully earn
money from in the future.The trouble is i lack the skills.

P.S-i like your style of writing.It is warm and welcoming;gives the impression
thst your a very happy and content person.I hope this is the case ,and i wish
you a happylife.
now your obliged to respond.

Ha ha Babar,

You know how to ingratiate yourself don’t you?

I don’t think you need to be a web design expert to try out being an
affiliate (It helps though).

Check out my most recent post about using wordpress. It helps if you are
able to understand what’s going on in a web page to make use of some of
the plugins… but it’s not 100% necessary.

I think you could find a basic html course online for free. That’s how I
started out. http://www.davesite.com/webstation/html/chapX1.shtml

This one looks quite good at first glance. If I were you, I’d look
through that and then get into things with a Wordpress blog. They are so
easy to use, and have a content management system which includes a WYSIWYG
editor allowing you to put together a page at the push (or two) of a button!

Good luck Babar,

Kirsty

I had a quick mail from Jamie, one of my readers, a while back asking about the best criteria to apply when choosing a merchant to match with site content. Here’s his question: -


Hi Kirsty,
firstly let me say thanks for creating this blog - it has certainly helped me
make my first small step in to affiliate marketing.

Many thanks!
Jamie

Well, it’s no easy task trying to work out which merchant is the best match for your carefully crafted content. In many ways, the ability to choose a merchant well is the hallmark of a truly successful affiliate. After all, what’s the point of your carefully obtained traffic if you can’t actually make it pay you dividends in the form of lucrative commissions?

So is there a secret formula to choosing a good merchant? There is a formula, but as we all know a good formula is only good if the numbers are actually right. As I mentioned in another post recently, here is the formula I use to help me work out if a potential PPC campaign might work out. You can use merchant data or network stats to work out the following: -

Avg Basket Size x Avg Conversion rate = Avg Sales Per Hundred Clicks x
Affiliate Commission = Avg Earnings Per Hundred Clicks

OK, this is a formula to work out if paying per click will turn a profit. However, it can also be used to work out if you think a merchant you’re considering is going to convert well enough in comparison with other merchants offering similar products.

But Are Network Stats Reliable?

And this is the issue. Whilst network stats are an excellent guide, you have to bear in mind that like any data they can be skewed by several factors.

For example, if a merchant is being heavily promoted by discount code or cashback sites, this could create artificially high conversion rates. Similarly, if the merchant allows brand name bidding or there is a closed group in play, this could make conversion rates look better than they really are.

However, a merchant’s conversion rate can also be skewed downwards if an affiliate is promoting them using methods such as incentivised clicks.

Finally, it’s also difficult to pick which merchants your own traffic might be a best match for.

OK, So It’s Less Than Straightforward Kirsty… What Can We Do?
Well, the solution is almost both the things that Jamie is talking about. Yep, look at the conversion rate but take it with a pinch of salt. Look at it and ask yourself “is that realistic?” Eventually you will gain an eye for various different industry segments and will begin to learn what is and is not a reasonable site conversion rate and EPC.

The second part is kinda “pick the cheapest”, but not quite. I’d say “pick the site you’re most likely to buy from yourself”. If you’d buy something from an online shop and you’ve researched your niche well… then it’s likely to be a good candidate for promotion. I also thoroughly recommend going through the order process once you have chosen your merchant. It may well highlight whether you’ve stumbled upon a winner or not.

Finally, once your traffic stream is coming in remember to check what your site users are looking for when the arrive on your site. Make sure that the search terms people are entering match the kind of products you are featuring. Sometimes you can unwittingly rank for a search query which generates good traffic. You’d be missing a trick if you didn’t make sure you had the product your visitors were looking for!

Jamie has a mainstream marketing blog here

I had an interesting e-mail recently from one of blog readers, Chuck. He’s been struggling to turn his first PPC campaign into a profit, and wanted to know why this was and what the hell he could do about it! here’s his first question: -

Hi,

I jusy set up a simple site with a different page for each keyword group. I am
selling an eBook there.

I then sent Chuck an e-mail asking for more detail about the product he was pushing, the type of keywords he used, and how much he was paying per click. Out of respect for the work Chuck has put into finding his niche so far I’m not going to publish the name of the product (just some general sector details) and in a similar vien I’m not sharing the links to his landing pages which he sent me. Instead I’ll pop up a screenshot at the appropriate juncture.

This was his response: -

These links are to my mini landing pages
I actually sold one ebook. I can’t say which ad or keyword.

Here’s my response to Chuck: -

Well, I can immediately see a few things you are doing that you need to
take a look at.

1 ) It’s really important to track what’s working for you in terms of
keywords. That way you can identify what’s working for you and weed out
anything that is drinking up your budget and not providing any returns.

2 ) Google contextual ad network… I never touch this as I’ve
traditionally found the traffic hard to make work. Often your ads are
displayed on sites that are not entirely relevant. It really is best to
be displaying ads in response to a real, targeted search engine query.

3 ) Some of your keywords are waaaay too general. If I was going to
promote an e-book (and I probably wouldn’t!). I would restrict myself to
the name of the e-book (as you have done) and similar sounding names. I’d
also only seek to drive traffic from people genuinely looking for an
e-book solution to their weight problems. See, a big factor in successful
PPC is getting the “buying” traffic. I always base my activity on trying
to get someone right at the end of their online decision making cycle. In
your case, this would be targeting them when they’d decided to buy an
e-book with dietary tips. At the moment, when you send traffic to your
landing pages for people looking for “weight loss” or “weight loss” tips,
you’re basically aiding people in their research. It would be far better
to target things like “weight loss e-book” or “diet e-book”. There might
be less traffic, but you will undoubtedly find that it converts better.

Affiliate success is as much about finding the traffic stream that works
for you as it is about finding a product that people will genuinely want
to buy.

4 ) You don’t mention commission levels, but I think your initial bid
level may be too high (but that’s just a guess). It’s really important to
have a sit down and work out how much money you might make from a sale,
what the merchants conversion rate is likely to be, and therefore how much
profit for every click you send you think you might make. I’ve mentioned
this in my Google Adwords For Beginners Guide, but here’s the relevant
section: -

This simple formula should help you avoid losing money by over spending on
your PPC, or helping to identify a merchant whom you may not be able to
make a profit from. Please note that this is a very generalised method and
will never be spot on. However, it should help you make a more informed
decision about who you should be sending traffic to.

5 ) Your landing pages need a lot of work before they are truly Google
friendly. Their lack of graphics probably mean a lot of people would be
turned off by them, and they might leave quite quickly. Landing pages are
really, really hard to put together though, particularly when you are just
starting out and trying to ascertain what works. What I really recommend
you do is use some direct to merchant activity to find a niche that works
for you. If you want to persevere with the landing pages, get some
banners on there at the very least… they will really help.

6 ) Perhaps being in the weight loss niche is a little too competitive for
when you are just starting out. You’ve done the right thing in selecting
a single product and something that’s a small niche of a large and popular
sector. However, if you can’t get the traffic cheaply enough to make it
work, it may be worth thinking about finding another area.

That said, the figures you mentioned were not too bad. You did lose a bit,
but given the general nature of a lot of your search terms, it could have
been WAY worse! On another note, I just bet your conversion came from
“xxxx diet”. If I were you I would run that term on it’s own for
a wee while and see what happens. You may just find it works out for you.

Good luck!!

Hadi dropped me a wee line with a question that’s asked frequently on lots of forums.

Hi Kirsty

Thanks for a great blog btw.

Hey Hadi, You’ve heard of the first past the post system? In affiliate marketing the system is a little different! The affiliate who was the last referrer actually gets the sale.

i.e. Customer goes to Affiliate Site A, clicks on link to merchant site and affiliate site A’s cookie is set on their computer. They then leave without a purchase.

7 days go past, and the same customer then returns to the merchants site, but via another affiliates link on Affiliate Site B and makes a purchase.

This sale and its commission would be attributed to Affiliate Site B and the cookie from Affiliate Site A would be overwritten. Now there has been a lot of debate about this over the years. Some people feel that this is not fair to the original affiliate. However, the reasoning is that the second site may have gotten a visitor to return who might not have otherwise returned and made a purchase at all.

Hence, the second referrer wins!

I got a line the other day from Craig… who feels he’s done enough research to take his first exciting leap into an affiliate project. He’s wondering what tools he should use for this first project. Here’s his question : -

Hello Kirsty,

A fan of AffiliateStuff,

Well Craig, first off and software aside… for your first attempt I would
actually suggest that you find a niche area which you are interested in
and perhaps even go so far as to create a site purely focusing on one or
two products.

I’ve answered a question relating to this on the blog. Honestly, it is so
much better to hone your skills on a small project. That way, when you do
a big site and put a lot of work into it, you can be sure that it is
genuinely going to work for you. So many would-be affiliates jump in feet
first with a gargantuan project only to discover the concept / their
techniques are duff and they have wasted a disheartening amount of their
valuable time and effort.

http://www.affiliatestuff.co.uk/getting-started-as-an-affiliate/what-size-of-affiliate-site-effective-content-ask-kirsty/

http://www.affiliatestuff.co.uk/getting-started-as-an-affiliate/ask-kirsty-how-do-i-find-my-first-affiliate-niche/

In terms of what software to use.. well, I can only tell you what I use
personally! I create site templates in dreamweaver (although friends have
said great things about Joomla being easier), and for sites featuring lots
of products I get my dear old other half Duncan to do me a nice SQL
database.

I’ve not ventured into sites with price comparison functionality, but I
have heard a few good comments about Price Tapestry. I believe it could
be used quite adequately to make a small first site (although as I say,
not a forte of mine). Perhaps you could nip onto the A4U Forums and ask
about that as there are a whole lot of people on there deeply into price
comparison who could point you in the right direction if you told them
roughly what you were trying to do. If you’re not already on there (Not
sure if you are a UK bod or not), give it a go… they’re a friendly
bunch. Just tell them I sent ya!

A Wordpress blog might be a really easy way to set up your first site. There’s a huge number of free templates available, and many can be easily altered to create a good basis for a site. Then you have the added benefit of the many powerful and easy to install widgets that plug right into the back end, and a really easy to use content management system. I find this makes it really easy to add lots of valuable content and new pages at the touch of a button. This would be a really easy way to create a first site centred around a very small number of products. This blog is based on a free Wordpress template… it took me around 1 day to work out the system (I’d never used Wordpress before) and alter it to my requirements.

Hope this helps a bit. I know that finding your way in affiliate land can be an uphill struggle at times!

Craig also asked a follow-up question based on my response: -

Firstly thankyou for the reply and of course you can use it in your ask
kirsty series.

This is what im getting from your reply i think it’s helped me greatly, then
keep these websites small and targetted. Like i used halloween masks above,
then do halloween kids costumes ect..

You’re definately on the right lines there Craig. Pick a small niche area and work on that first then expand your activity to build your expertise.

In terms of datafeeds, the data you download from the affiliate network and then use to create your SQL feed will contain prices, images, and product names and descriptions. As you suggest, it’s really essential that you add your own unique content to this in order to create a decent chance for yourself to rank for some of your niche terms. It’s also a good idea to identify the terms you think you should be ranking for prior to creating this content so you can angle your carefully devised prose towards them.

Good luck!!

Here’s the first of the questions I got in from blog readers about those burning issues newbies need to get to grips with!

“Hey Kirsty, thank you for taking the time to answer my question.

Great down- to-earth blog!”

Some affiliates do create one ad per key term using the Google Adword editor. However, you don’t necessarily have to do this when you are first starting out. It would be perfectly acceptable for you to create an adgroup bringing together similar keywords / product areas that would be covered by your ad text. This is the strategy I tend to follow.

Also, you could use dynamic keyword insertion to make sure that the ad title was always reflective of your target search term. If you haven’t heard of this handy dandy Adwords tool, you can basically place a command in your ad which will dynamically place any of the search terms in your adgroup in the title of your advert in response to a search made by a potential customer in Google or one of Google’s search partners.

Clear as mud? Don’t worry. Kirsty shall explain!!

Below is a screen shot of the dynamic keyword syntax in action within a fictitious adgroup yours truly created for illustrative purposes: -

Basically, by inserting the {Keyword:Search Term} operator in place of the title you are asking Adwords to show the search terms listed in your adgroup as the title of your ad. The alternative text will be shown as the ad title in the event of a search term falling outwith Adwords 25 character title limit, so it is important to make it as relevant as possible to maximise click through rates.

For further reading on adwords dynamic keyword insertion see Google’s own guide here.

I hope this helps a little, and good luck with all your new PPC campaigns with swish dynamic titling!

Hey hey!

Well, I’m just kinda getting back into the swing of things here at Affiliate Stuff HQ (AKA the dining room in the house where I grew up!). Obviously the old blog posts have been quiet for a wee while what with all my world wide larking around, so I’ve been getting myself all settled in and up to speed with affiliate issues old and new.

I was thinking that the posts in which I publicly answered the questions of people who had e-mailed me (with their permission) had turned out to provide some really pertinent answers for newbie / wannabe affiliates desperately trying to make sense of the huge amounts of affiliate information which is broadcast on all freqencies. Researching and understanding the mystic art of affiliate marketing, and more importantly separating the internet wheat from the chaff, can be hugely confusing.

So, with that in mind I’ve popped all the previous posts into a new category appropriately named “Ask Kirsty“. I’m now chucking the floor open to anyone who wants to ask me a wee question. I’ll answer it on the condition that you know I’ll publish it on my blog. Obviously if I get two similar questions I’ll sort of group them together.

Ask away guys! There’s a Contact Form with your name on it!

I had a really detail e-mail from Iry the other day asking loads of questions about how to best maximise the adrank on his fledgling campaign. Here’s his question (s). I’m going to answer them within his text, there’s a fair few and answering afterwards would be too confusing!

Hi Kirsty,

1. We always say that we need bid high first to earn the quality score, it
doesn’t matter if we loss up front.

Now, I know a lot of people say this and I do tend to bid a little higher up front to boost the ad on initially. However, I rarely make a loss at this, merely a reduced profit. This kind of thing is personal in my opinion. Do what feels right for you. Perhaps practise this technique on a very small set of keywords and compare to another campaign where you haven’t bid as high?

a. Let say they are 7 – 9 advertisers for a keyword, do we need to bid until
the 1st place? Or we can bid about the 3rd-4th place?

You certainly don’t “have” to bid until you are in first place. Your position in the listings will depend on a combination of Adrank and what actually turns out to be affordable in order to make your campaign profitable. If merchants are in those top positions (or even worse, a PPC agency with a massive budget) it can be impossible to bid enough to get those positions affordably regardless of Adrank. Basically, your aim is to rank as highly as possible, as cheaply as possible, and still turn a good profit!

b. How many clicks that we are looking at before we reduce our bid?
i. E.g. $50/day budget per campaign
ii. Are the clicks referring to per campaign / per ad group / per keyword

How long is a bit of string? I can’t really quantify it. I usually adopt a bit of a “finger in the air attitude” to this (yes, scientific I know!) I monitor the CTR. This will usually gradually increase. Once I feel it has peaked I leave it running for another few days. You should monitor your adrank / CTR at the adgroup level. The rest will take care of itself! That said, as your entire Google Adwords account gets older it will acquire an adrank all of its own. This will assist your performance as time goes on.

c. When we reduce our bid, do we reduce the bid dramatically or gently? Do you
reduce the bid manually (means per keyword)?
I tend to reduce my bids gently on a daily basis if I think competition is strong. This lets me guage the point at which I can’t reduce further without affecting performance. You can also reduce dramatically, but there may be some Yo-Yoing as you try to find the right bid level to run a campaign effectively.

d. Another question is, what are the CTR that we are looking at to obtain a
good quality score? I know we should strike for the best but is 2 – 3% rate
acceptable?
2 - 3% is a reasonable CTR IMHO. However, do not get hung up on CTR as a measure of success. If you have an adgroup you’ve optimised the hell out of with a low CTR that makes you money, it’s a success. Money in the bank is the name of the game after all, and the odd adgroup with low CTR will not relegate your account to Google Adwords purgatory!

e. If the commission of a product is about $15, should we bid until $1.0 to get
the high position? ( assuming the conversion rate is 1%)
Not unless you have very deep pockets and enjoy losing a lot of money! Perhaps a better way to do it (particularly for a beginner) would be to work out how much you need to pay for a click to give your desired profit based on your estimated commissions and converstion rates. Say for example you paid $0.10 per click. This would mean that you would pay $10.00 for one conversion leaving you with $5 profit. Bidding $1.00 a click for this product would undoubtedly leave you in top position, but the kind of loss you might incurr with this strategy might take an excessive amount of time to recoup.

As a beginner, perhaps it would be better to follow a strategy not including any planned losses till you really, really have a feel for how Adwords will behave with your bid amounts?

2. Let say if there is a scenario when I look at the data

I would like to know does the Average Position actually include the previous
data before 1:00 a.m. as well.. If it does include, does it means that the
current position of my Ads are probably at 6 – 8 position because the
system has factor in the average position when my Ads were in 2.3?

You’d be best to manually check the search results to see where your ads are really sitting! Quite often an average position report isn’t entirely accurate. Sometimes it can be skewed by terms you may be showing for on broad match etc. A visual check would be best.

Kirsty .. Sorry, I know that’s lots of questions and I really hope that you
can help me on some of these questions which have been bugging me quite a
while.

I actually really like your life style and I hope one day I can travel like you
as well!

Good luck Iry, it’s a great old life… but it needs a lot of hard work to achieve. Seems from your detailed question you’re certainly working hard at it, so I’ll see you in the Caribbean for cocktails in a couple of years!