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Obviously, the pay-per-click search engines are a powerful opportunity to increase your web site traffic for little cost. The trick, though, is making certain that you choose your maximum bids based on the monetary value of one visitor to your web site.

And this is where a lot of people get confused or make costly mistakes... They either abandon bidding in the pay-per-click engines because it seems too confusing, or they bid more than a visitor is actually worth to their site, losing money on their advertising!

STRATEGIES FOR MAXIMUM PAY-PER-CLICK SUCCESS:

In the following article, I'm going to lead you through a simple step-by-step process that will show you how to collect the numbers you need to calculate the value of a visitor to your web site -- using a special three part formula -- and how to use this information to purchase targeted advertising in the pay-per-click search engines.

STEP #1: COMPILE A LIST OF KEY STATISTICS

Before you'll be able to start calculating the worth of your visitors and what you can afford to pay for advertising, you'll need some key figures; chiefly total number of sales, gross revenue, total expenses, and unique visitors for a set period of time.

a) TOTAL NUMBER OF SALES:
This figure is easy to calculate -- you probably keep a close eye on your sales totals anyway. Just add up the number of sales you have made over a set period of time.

For example, this month you may have sold 73 widgets. So your total number of sales equals 73.

b) GROSS REVENUE:
Here's another figure that you probably already have at your fingertips. After all, what business owner doesn't keep track of their gross revenue?

If you sold 73 widgets for $10 each this month, your gross revenue would be $730.

c) TOTAL EXPENSES:
This is an important figure that many new business owners neglect because, honestly, it's just more fun to calculate gross revenue.

However, until you know your total expenses, you won't be able to accurately calculate your net revenue -- your "in the pocket" profits!

To guarantee that your business always generates a profit, your gross revenue should always be greater than your total expenses.

So sit down and start adding up all of the expenses that you deal with to produce, package, and deliver your product or service. This figure should also include all of your operating costs for a set period of time.

d) UNIQUE VISITORS:
Frequently confused with "hits" (which refers to the number of times each file that makes up a particular web page has been requested from your web host's server), "unique visitors" refers to the number of different people who visited your site. And it's the most important measure of web site traffic hands down!

To calculate the number of unique visitors to your web site, you'll need to contact your web host to get your server logs.

(For those of you who don't know what a "server log" is, it's simply a file that records each time someone requests one of your web pages and the files associated with it -- and IT'S LITERALLY A GOLD MINE OF DATA!)

Your web host should be able to provide you with your server logs. In fact, they may already have log analysis software that will convert your server logs into easy-to- read reports, graphs, and charts.

If not, you can download your own log analysis software by searching "log analyzers" at Download.com (http://www.download.com).

WARNING! If you decide to research and test log analysis software, be careful to look for those that offer "unique visitors" as part of their reports, not just "user sessions." One visitor may return to your site numerous times (user sessions), so to be certain your calculations are accurate, you must know "unique visitors."

STEP #2: CALCULATE THE VALUE OF A VISITOR TO YOUR WEB SITE.

Once, you've collected the statistics and figures you need, doing the actual calculations is the easy part. Simply plug the numbers into the following 3 SIMPLE FORMULAS:

a) CONVERSION RATE: Figure out how many unique visitors you need to close one sale.

Unique Visitors / Total Number of Sales = Conversion Rate

EXAMPLE: If over the month of November, you calculate that your web site received 4,298 unique visitors, and you sold 35 widgets, your equation would look like this:

4,298 Unique Visitors / 35 Sales = 122.8 Unique Visitors Per Sale

So in this case, your conversion rate would equal 122.8, which means that you typically close 1 sale for every 122.8 visitors to your site.

b) NET PROFIT PER SALE: Figure out how much profit you earn on a single sale.

Gross Revenue - Total Expenses / Total Number of Sales = Net Profit Per Sale

EXAMPLE: If over the month of November, you sold 35 widgets for $97 each, your gross revenue would be $3,395 (35 X $97). And let's say you calculated your total expenses (production, packaging, web host fees, etc...) for the month of November to be $2,537.

This means that: $3,395 Gross Revenue - $2,537 Total Expenses / 35 Sales = $24.51 Net Profit Per Sale

In this example, your Net Profit Per Sale would be $24.51. This is "in your pocket, after expenses, you can bank it" profits.

c) VISITOR WORTH: Figure out how much a single visitor is worth to you.

Net Profit Per Sale / Conversion Rate = Visitor Worth

EXAMPLE: This is the easy part. Just take the Net Profit Per Sale that we calculated in part b ($24.51) and divide it by the Conversion Rate that we calculated in part a.

$24.51 Net Profit Per Sale / 122.8 Conversion Rate = $0.1995 or $0.20

So in this example, each visitor to your web site is worth $0.20. (Not to be confused with the value of a customer, which is $24.51!) This means that you can afford to pay as much as $0.20 to attract one new visitor to your web site without losing money.

STEP #3: PUT YOURSELF IN FRONT OF YOUR BEST POTENTIAL CUSTOMERS.

Okay! You're almost ready to put your newfound knowledge to profitable use and start buying targeted traffic in the pay-per-click search engines. I say almost because there is ONE MORE IMPORTANT STEP you may need to take...

Do you know who your target market is? Do you have an accurate profile of the folks who are purchasing from your web site? And do you know what keywords they're searching to find your web site?

If you're not sure, then I'm afraid you'll need to do a bit more homework before you start purchasing traffic because until you know who your customers are and what keywords they're using to find your web site, you risk wasting money on unqualified traffic.

The best way to learn who your customers are and why they bought your product is by speaking with them directly. Get on the phone, do an e-mail survey, offer a free gift for feedback... whatever it takes!

The more you know about the people who have already bought from you, the easier it will be to TARGET NEW CUSTOMERS.

However, another way you can figure out which keywords your target market prefers is by using WordTracker (http://www.marketingtips.com/wordtracker), an online tool that collects the search results from 24 major search engines and compiles them into a database which is constantly being updated.

With WordTracker, you can simply type in your keyword or key phrase, and it will return a list of related keywords and phrases. This is a really useful feature because it will often produce keyword combinations that you may not have thought of!

STEP #4: USE THIS INFORMATION TO PURCHASE TRAFFIC IN THE PAY-PER-CLICK SEARCH ENGINES.

Now that you know the keywords and phrases that your best potential customers are typing into the search engines, and you know the worth of one visitor to your web site, you're ready to start purchasing traffic.

You can start bidding on the targeted keywords and phrases that you've researched based on what one visitor to your web site is worth.

In the earlier example, a single visitor to your site was worth 20 cents. So you could afford to bid as much as 20 cents per visitor in the pay-per-click search engines without losing money.

Now of course, you'd probably want to bid significantly less than that, because you'll want to still turn a profit. But if you were to bid 7 cents per visitor, and it took 122.8 visitors to close a sale, YOUR PROFITS WOULD STILL BE QUITE SUBSTANTIAL:

(20 cents profit per visitor - 7 cents advertising cost per visitor) X 122.8 visitors to close the sale = $15.96 Total Net Profit Per Sale

Sure, your net profits drop a bit when you pay for advertising, rather than rely on free sources of traffic. However, you need to remember that YOUR TOTAL SALES VOLUME IS GOING TO GO UP -- perhaps considerably -- as long as you purchase targeted traffic! And that means more cash in your pocket at the end of the day!

PAY-PER-CLICK SEARCH ENGINES:

The pay-per-click search engines that you choose to buy traffic from will depend on your budget.

Overture.com (formerly GoTo.com) is still the granddaddy of the pay-per-click search engines, but its popularity has driven up the cost of advertising there.

Minimum bids now start at 5 cents per visitor, there's a set-up fee of $50 (though it's applied to your click- throughs), and there's a monthly minimum of $20.

Of course, with that said, if you can afford Overture , it's still the best choice for driving targeted traffic to your site.

You're likely to GET A HIGHER VOLUME OF TRAFFIC FASTER than with any of the others. Plus, if your site is listed among the top 3 under any particular keyword, you can expect your site listing to appear in AOL, Lycos, and AltaVista searches, too.

Other good choices for purchasing traffic include:
FindWhat -- http://www.findwhat.com
7Search -- http://www.7search.com
Kanoodle -- http://www.kanoodle.com
Bay 9 -- http://www.bay9.com
GoClick -- http://www.goclick.com
ePilot -- http://www.epilot.com
SearchGalore -- http://www.searchgalore.com

From this list, I would recommend purchasing traffic from FindWhat first because this is one of the faster-growing, better-known pay-per-click engines. But all of the above should prove to be...

Good sources of cheap, targeted traffic!

In the less popular pay-per-click engines, you can still purchase listings for as little as one cent per visitor. And remember that while you may not receive high volumes of traffic from any one in particular, because you only ever pay for actual click-throughs to your site, YOU NEVER LOSE MONEY!

FINAL THOUGHTS:

Without a doubt, purchasing traffic from the pay-per-click search engines is one of the most profitable, most effective ways to drive targeted traffic to your web site.

As long as you always base your keyword bids on the value of one visitor to your web site, you can BE CONFIDENT THAT YOUR ADVERTISING WILL ALWAYS BE PROFITABLE.

If you're new to Web statistics, you'll want to base your initial advertising budget on the costs of acquiring a first-time customer. Over time, however, you'll be able to calculate the value of your lifetime customers, and use these figures to consider purchasing higher volumes of advertising.

To ensure you remain profitable, though, and until you're comfortable accurately calculating these statistics, you should focus on purchasing your advertising based on the value of your first-time customers.

Remember: Don't GUESS! Base your advertising budget on tangible statistics -- not your predictions of what your site might earn in the future!

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ABOUT THE AUTHOR:
Corey Rudl is the owner of four highly successful online businesses that attract more than 6,000,000 visitors and generate over $5.2 million each year. He is also the author of the #1 best-selling Internet Marketing course online.

To check out his site that's JAM-PACKED WITH THE EXACT INFORMATION YOU NEED to start, build, and grow your very own profitable Internet business,
I highly recommend visiting his website - This guy really knows what he's talking about!