Friday, April 23, 2004
Worst Conversion Ratio Ever
After reading about a custom built Star Wars Star Destroyer at eBay I decided I had to comment on it. Evidently, someone has spent the last 3 years of their life building this model, talk about insane. It's even been built to the scale of the 3'' Star Wars action figures. It's amazing, the listing has pulled in 109,940 curious visitors like myself but it's only been able to generate 3 bids. If you consider a conversion someone placing a bid then the ending conversion ratio is .000272876%, Can you imagine having that kind of conversion ratio on a site that gets the majority of it's traffic from ppc campaigns?
Let's do a little scenario.
You sell widgets for $50.00 a piece
Your average ppc for each visitor is .15 cents
You've been told your site should convert at 1%
If you have 1,000 visitors/day your costs would be $150/day
You'd have 10 sales for a total of $500 in revenues and if your cost is $25/widget then you'd make the following each day.
$500 (total revenues)
-$150 (ppc fees)
-$250 (cost of goods sold)
---------------------------
$100 net profit per day
Take the same pricing model we used for this ppc scenario and apply it to the Star Wars Star Destroyer on eBay. We'll assume an ending price of $1,000 which I think may be a bit liberal but we'll see.
$1,000 (final price)
-$16,491 (ppc fees) (.15 * 109,940 visitors)
-$0 (cost of goods sold - it took 3 years of his life and who knows how much material)
----------------------------
($15,491 net loss)
Thank goodness he's not using ppc to get his traffic right?
I think there's something we can derive from this little play on guerilla marketing meets ppc.
Guerilla marketing techniques don't typically end up in conversions. They're better suited for branding campaigns where you're trying to get your name out but not necessarily for an ongoing business model. They typically generate a lot of curiosity from voyeurs and usually make us laugh or make our jaw drop but they don't really persuade us to spend any money. I think that's the main problem with this eBay listing. I'm glad to see this guy's work is getting attention but it's unfortunate how the attention isn't converting into bids on his Star Wars Star Destroyer.
Long Story Short Summary
Before you begin a marketing campaign, make sure it's one that matches your end goals. Whether those goals are selling an item, getting a vote, or marketing your brand to the masses. Choosing the wrong tactic will backfire and you're left holding the bill.
Posted By Jason Dowdell at 08:45 AM
Permanent Link: Worst Conversion Ratio Ever
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