Vincent Nguyen

June 23, 2014

We’ve recently boarded the paid advertisement train and we’re finding great value in stepping away from focusing strictly on organic traffic. From an ROI perspective, if putting in $1 got us at least $2 (or more!) wouldn’t it make sense to pour money into the engine?

If putting in $1 got us at least $2 (or more!) wouldn’t it make sense to pour money into the engine?


It was interesting to stray away from the mainstream paid advertisements (AdWords, for example) and experiment with lesser-known methods. In fact, we’re surprised more people aren’t doing this.

Our goal is to drive opt-ins into our email list where we have each member self-select their own interests. Those on the “buyer” sequence get emails relevant to buying websites; sellers get emails about selling; builders get emails about building sites; etc. We call this the “Choose Your Own Adventure” autoresponder approach and the feedback from subscribers has been awesome.

Because we don’t have one single squeeze page that pushed a specific product, we had to play with numbers to determine a conservative value estimate for each subscriber.

We didn’t want to overestimate when calculating ROI, as overvaluing each subscriber would have made it too easy to assume a campaign was profitable. Even if it really wasn’t.

We broke the formula we used down into six steps for you, so that you can determine your own ROI as it applies to your business:

1) Determine your gross revenue by adding up all your income sources and figures in a given time period (three months, six months, one-year).

We added up the revenue we made from June 2013 – December 2013 in brokered site sales and our products/services to calculate the last six months’ gross revenue at $180,000.

2) Divide your monthly gross revenue by the number of months in your given time period.

Since we had chosen to use the six month given time period for determining our gross revenue at $180,000, we then divided by six (6) to get our average monthly gross revenue of $30,000.

3) Multiply your average monthly gross revenue by your average profit margin percentage to get the average monthly net profit.

We know our average profit margin runs at about 50%, so we multiplied $30,000 by 50% to get $15,000 average monthly net profit

4) Take your total email subscribers and multiply by the engaged percentage to find the monthly engaged subscribers.

Our list is 10,000 people strong (thanks everyone!) so we multiplied that number by 57%, as that is how many subscribers open an email at least every two months from us. This gave us a monthly engaged subscribers count of 5,700 subscribers.

5) Divide your average monthly net profit by your monthly engaged subscribers to determine your monthly value per subscriber.

With our average monthly net profit at $15,000, we divided that by 5,700 monthly engaged subscribers to get a monthly value per subscriber of ~$2.60.

6) Multiply your monthly value per subscriber by the campaign duration in months to determine your campaign value per subscriber

By multiplying our monthly value per subscriber of $2.60 by a campaign duration of six months (6) we landed on a campaign value per subscriber of $15.60

This could be a little confusing as we used the six month given time period at the beginning of this process and are also running a six month campaign duration in months. Depending on the number of months you use for determining the ROI, your figures for these time periods may be the same or they may be different.

If a subscriber is worth $15 to us over six months, how much are we willing to spend to acquire that one subscriber?

Well, let’s get into that.

For our paid advertising campaigns we decided to try Retargeting, AfterOffers, and Facebook Ads.

To keep consistency and make sure we measured each method evenly against the other we decided to break each method down into five sections: what it is, what’s special about it, who the method is for or isn’t for, our results, and a final analysis/summary.

Method #1: Retargeting (Using Perfect Audience)

Retargeting with Perfect Audience

1. What is it?

The first thing we tried back in January 2014 was retargeting. The cool thing about retargeting is that it displays ads to folks who have visited your site before, so the only people who see your ads are the ones already familiar with you. We hoped that these warmer leads would convert at a higher rate than cold leads who we still need to be introduced to our brand.

It’s also interesting when you consider somewhere between 95%-99% of your visitors will NOT sign up for your email the first time around, but they are familiar with your brand.

For this, we used Perfect Audience to get the job done and hired a good friend of ours, Dave Huss from GrowthScout, to manage the campaigns for us.

2. Cool; what else can you do?

It doesn’t end there. You can customize it so that visitors who view a certain page are segmented from those viewing other pages.

For example, visitors who read a post on how to sell their site on our marketplace will be on our “Sellers” list and get ads related to website selling. Landing on a blog post about buying websites puts you on the “Buyers” list and you’ll see ads about buying profitable websites.

Once you have them segmented by interest based on their choice of content, you can make sure you continue to deliver them only what they’re interested in through narrowly-focused autoresponders.

3. Who can use this? Who can’t?

This works really well if you have a high amount of traffic with a lot of new visitors. We’re somewhere in the middle where we get a lot of visitors per month, but about half of our visitors are returning. With that, the list we have for retargeting is a bit light and doesn’t add to itself as often as we’d like. If you’re not driving enough new visitors to the site, you might not have a big enough pool of people to target the advertisements at in the long run.

One answer to this problem is periodically turning the campaign on and off. Run the campaign until you’ve reached critical mass and then turn it off again while your targeting list continues to grow over the next couple of months.

4. Results:

Period Of Time: January 26, 2014 – June 1, 2014

Landing Page Conversion Rate: 16% (averaged over four different pages)

Total Subscribers Acquired: 610 subscribers

“Real” Subscribers Acquired (not counting those who subscribed before 1/26/14): 480

Total Spent: $3,764 (Perfect Audience) + $2,000 (Dave/GrowthScout’s fee) = $5,764

Cost Per Subscriber: $9.45

Cost Per “Real” Subscriber: $12

5. Analysis

Retargeting got us SUPER excited when we first started off and the first two months had great momentum, just as we’d hoped.

Unfortunately, we soon saw diminishing returns and the cost per subscriber began to climb as more time went on until eventually we were losing money.

Our retargeting campaigns attracted a lot of trolls who created obviously fake email addresses like ****@you.com and john@john.com. I mean, hey, maybe we really ran into the John who registered john.com back in the beginning of the interwebz, but how likely is that?

One of the biggest upsides that is near impossible to verify is: We may have made sales we wouldn’t have otherwise, even if they were already on our email list or familiar with our brand. For example, someone was bent on buying a site from us but it slipped his mind for three months. He sees our ad, suddenly remembers, goes on our marketplace, and buys.

Is it likely? I have no idea, but it’s plausible.

With that said, I would rate Retargeting (for our purposes) a B-.

Overall, maybe Retargeting wasn’t best for us, but I can see how someone with the right amount of traffic could do well with this. I also think that lower-priced products with a finely-crafted sales funnel might have more success and a much more accurate ROI.

If you have more money than time and you’re at the level where you have enough traffic and profit to make hiring a consultant viable, you can hire someone else to be on top of rotating ads so you have more time to focus on your own business. With our current traffic, the costs of a third party running our campaigns lowers our ROI too much to make it worthwhile.

Method #2: Facebook Ads

Facebook Ads

1. What is it?

I think we all know what Facebook Ads looks like. They’re the advertisements on the sidebar and newsfeed that we see on a daily basis while we’re browsing to see what our friends are up to and while we’re stalking our crushes.

One popular appeal of Facebook’s advertising platform is its ultra-relevant targeting feature—only the people you want to see your offer are shown ads.

Instead of focusing on everyone in our audience, we’ve decided to tailor our copy, ads, landing page, etc. to focus strictly on website sellers. The main message was basically: “LIST YOUR SITE WITH US!”

Here’s a screenshot of our LeadPages landing page with two different headlines:
Facebook Ads Landing Pages
Interestingly enough, the default cloud background beat out our custom design backgrounds.

Once they’ve converted they were brought to a page that explains the benefits of listing with us and provided resources on how to get started.

Check out a copy of our post-conversion sales page.

2. Cool; what else can you do?

Although Facebook’s default targeting system is good, we took it a step further by targeting only people who Like our competitors’ Facebook pages.

Although Facebook’s default targeting system is good, we took it a step further by targeting only people who Like our competitors’ Facebook pages.

We found that it was difficult to accurately target these users using Facebook’s standard features because what we’re doing at Empire Flippers isn’t exactly mainstream. Targeting something vague like “Entrepreneurship” isn’t likely to be an exact match for people looking to sell websites and online businesses.

We followed Matthew Woodward’s advice for the majority of this. First, his basic Facebook Ads guide allowed us to get more comfortable with the whole thing—first time and all. Once we got it started, we took notes from his March Monthly Report where he shares the exact tool (FaceSniper) he used for creating custom audiences.

3. Who can use this? Who can’t?

Retargeting works best for those with high traffic volume and large marketing budgets to scale, but Facebook is the best bet when it comes to versatility and ease of use.

Facebook doesn’t need you to have existing traffic to reach its over one billion active users. They let you set your own daily/monthly budget and you can create a hard limit so you never spend more than you intended.

Another bonus is its ability to run multiple campaigns and ad sets so you can split-test and find a winning combination.

4. Results:

Period Of Time: May 7, 2014 – June 1, 2014

Landing Page Conversion Rate: 20%

Total Subscribers Acquired: 214

“Real” Subscribers Acquired (not counting those who subscribed before 5/07/14): 199

Total Spent: $796

Cost Per Subscriber: $3.72

Cost Per “Real” Subscriber: $4.00

5. Analysis

Like Retargeting, the results were GREAT at the start while the targeted list was still fresh, but I found that I actually had to change out the ad image every 5 days or so.

It’s starting to see faster diminishing returns in a shorter amount of time than Retargeting did.

Click-through rates and conversion rates were still decent, but this was definitely not a passive strategy with a lot of ad and audience rotation required.

Also, Facebook seems to have really shut down a lot of the scraping tools out there—I was using FaceSniper before it got taken out—so it may be more difficult to target your competitors now.

Not enough time has passed for Facebook Ads so it’s difficult to say for sure, but I think experimenting with more custom audiences (before Facebook took the scraping tools down) would’ve made this a big winner.

Right now, I’d give Facebook Ads a B+/A-.

Method #3: AfterOffers

AfterOffers

1. What is it?

AfterOffers has a network of websites in similar niches that have email lists. When someone subscribers to a website in their network they get sent to a “Thank You” page and are met with an option to subscribe to our email list. It’s simply a checkbox they have to click on, and they’re in.

We interviewed the founder, Tim Bourquin, on one of our podcast episodes and he shares a bit of information on AfterOffers.

2. Cool; what else can you do?

This one’s fairly straightforward and there’s nothing else you can modify, as Tim keeps the finer details secret. It’s strictly passive and you get sent an invoice at the end of every month.

It’s nice in that it’s completely hands-off—all we have to do is pay the invoice AFTER we’ve received the new subscribers.

3. Who can use this? Who can’t?

AfterOffers is invite-only—for now anyway. They do allow you to reach out to them to determine eligibility and we handled everything through a Skype call.

4. Results:

Period Of Time: March 20, 2014 – Today

Landing Page Conversion Rate: N/A

Total Subscribers Acquired: 149 (last updated 6/21/14)

“Real” Subscribers Acquired (not counting those who subscribed before 3/20/14): 149

Total Spent: $149 (last updated 6/21/14)

Cost Per Subscriber: $1

5. Analysis

Justin and I really want to scale this thing up and pour more money in, but unfortunately it’s out of our hands. AfterOffers is onto something great here, but we’re limited by the amount of websites they feature us on and that’s 100% in their control. We’d LOVE to spend hundreds or thousands of dollars on their service.

It’s a great service that we can’t complain about with the cost being a mere dollar per subscriber. If you’re looking for scale and huge volume, though, this won’t be your holy grail (at least not yet).

I wish there were more transparency, but the most they could do is assure us that the sites are all relevant and high quality. They handpick their clients and keep their information private. Maybe this will change in the future.

For now, AfterOffers is a B+/A-. We’re not losing anything with each subscriber costing us a mere $1.

The lack of volume and transparency are two downsides but, they haven’t deterred us from using their services.

The campaign is looking great from an ROI perspective and the company’s led by a brilliant entrepreneur who won me over on the first phone call.

Summary:

I went into this expecting to find a highly scalable, passive engine that just brings us more subscribers and customers, but I’m finding that I have to temper my expectations a bit.

We still haven’t really done anything with AdWords yet, and I think that’s the next step. I just started a few campaigns to get familiar with the interface before we launch our redesign, where we’ll start putting more money into paid ads.

We’re pausing Retargeting for now and if we do pick it back up in the future, I may end up running the campaigns instead of hiring someone else to manage them. At our traffic levels, the additional cost of having a third party run the campaign just doesn’t make much sense and cuts deeply into ROI.

AfterOffers is ongoing and Facebook Ads is on pause for post-redesign.

All in all, we’ve had good experiences with all three.

I’m sure there are TONS of awesome paid routes out there that are worth trying. Which ones are have you tried that brought you great results? Any different experiences with the three above?



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Discussion

Leave a comment
  1. Will Tjernlund says:

    This was a great post Vincent! I always love when an blog post breaks down the numbers for you and really tells you what works and why! I have bookmarked this post for future reference. Thanks!

    • Thanks, Will! Glad you enjoyed and got value out of it.

      I was actually having a conversation with Justin on whether we should include or exclude certain figures but it looks like it’s a good thing he won that talk.

  2. Healthy says:

    Good advice Vincent. Funny enough I was just thinking about how to work out the value that I would get from each email sent a few minutes ago.

    • Good timing!

      Matthew Woodward also has his own method for estimating value of subscribers in case you want to give that a go:

      “Over the previous 90 day period use Google Analytics to work out what % of traffic came from email.

      Then look at the total earnings for that 90 day period using that %. Finally divide it by how many email subscribers you have.

      So for example if you had-

      40% visitors came from email

      $10,000 profit

      200 email subscribers

      The calculation would look like this-

      40% of $10,000 = $4,000

      $4,000 / 200 email subscribers = $20 per subscriber”

      His technique is for valuing email blasts to the list rather than accounting for people signing up to your email list and visiting your site through any and all means.

  3. James Michael Andrews says:

    Awesome post Vincent. I’ll buy you a beer next time I see you buddy! Such a shame about the diminishing ROI, but I’m sure with some tweaking and a lot of experimenting something great can be found.

  4. Tom says:

    Great stuff – it’s always interesting to see results of these kind of tests but as you say it’s hard to value a lead especially with high value items. Have you tried G+ much ? If you spend a bit of time filling your circles and looking at your ripples you can build a pretty targeted following without paying for it.

    • We haven’t been using G+ all that much, if at all. How would you recommend growing our G+ following? I’ve had some success with using G+ communities for my personal site but there aren’t too many communities in our niche.

      • Tom says:

        Yep G+ does take some effort. Looking at a few of your competitor’s pages there’s no interaction there at all. Circlecount is useful to see who’s influential in your niche. Look at who’s interacting with their posts and add these users to your page’s circles (limit of 5,000 though) I’m not sure how you’d quantify them as customers. All subscribers are not equal.

  5. Carl says:

    You should definitely test Adwords and maybe Bing ads (tends to be cheaper and good quality).

    You wont get more targeted traffic than paid search, you can target people specifically searching by keyword who are looking to sell and buy sites.

    I also cant help thinking PPV would be good to test, you could pop over sites like Flippa and any other sites to do with buying and selling sites, you could even add your remarketing scripts to your PPV landing pages and build remarketing lists for pennies per subscriber :)

    • I haven’t even thought about using Bing ads, writing that one down so I can look into it.

      Have you had good experiences going the PPV route?

      • Carl says:

        Yeah I have had plenty of good experience with PPV both as an affiliate and promoting my own consulting business, its a little saturated now in the affiliate space (everyone running similar offers and bidding on the same placements), but if your promoting your own stuff you instantly eliminate a lot of competition.

        Also at traffic prices like $0.015 per view its dirt cheap, you could try to get the optin with the pop and then also capture the user in a custom remarketing list.

        Recommendations for trafffic sources would be – Leadimpact & Trafficvance.

  6. OnlineAdPro says:

    Evaluating Retargeting “vs.” other ad methods is kind of like deciding to eat turkey OR to eat gravy. In fact, it’s not an either / or choice. Just as we eat gravy on top of the turkey, retargeting works on top of a base advertising program. You did touch upon this to some degree.

    It’s a mistake to stop and start retargeting. For most sites, it should continue 365 days per year. Let’s say you keep retargeting turned off for 2 months, and you have 5,000 new unique visitors every month. You would lose the opportunity to cookie and segment those 10,000 high-potential prospects. Even if you still have retargeting tags on your site and are still cookieing visitors, if you’re not running retargeting ads for, say, two months, you’ve lost the opportunity to put your message in front of those users during the highest-potential time window. Visitors who visited your site yesterday are much hotter prospects with a much higher likelihood to convert than those who visited months ago.

    Your quickly diminishing returns and significant number of nonsense signups could be due to several factors, such as the retargeting campaign not correctly using include / exclude pixels, not effectively using frequency capping, etc.

    AfterOffers sounds like a very smart, if small-scale, idea.

    I wonder about the comment that “$0.015 per view (is) dirt cheap”.
    If this refers to banner ad views, that price is 100X what we pay per banner ad views. If this refers to Cost per Site Visitor, that price is 5 – 10X what we pay per visitor, albeit, we’re buying broad targeting, not niche site visitors.

    Looking forward to reading about your search word campaigns.

    • Fortunately, we’re still tagging visitors into our list so we haven’t 100% shut down RT. It’s just our campaigns that are paused for now.

      Opportunity cost is always something to think about but we’re looking to save RT for after our redesign. May be a mistake stopping it now, but we were actually losing more money than we were making off of our estimated value per subscriber. After about a month of that trend we had to have a more serious conversation about whether or not we should put it in pause.

  7. Bobbie Chan says:

    Great article Vincent, I run a start up and now I have a much better understanding about all these stuff. Thanks!

  8. Daniel Christian says:

    Very informative. Nice to see a post from you on EF Vincent.

  9. Nino says:

    Now this is what i call data packed post that could be translated into valuable information. I probably wouldn’t have realized the difference to be so big between facebook and other options.

    Great one Vincent

    • Thanks, Nino. It’s pretty hard to accurately predict these things. You never know how it’ll work out for you until you try and continuously tweak until you find a winning combination that you can keep building on.

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