Expert Photography was a strong candidate for AdWords (and paid traffic in general, it was already doing quite well with Facebook Ads) because it had high CLV (customer lifetime value) relative to it's industry. Expert Photography has several months of autoresponder series that upsells existing customers. That means that each subscriber is worth more over several months.
In fact, Expert Photography's conversion mechanisms and funnels, together with some solid AdWords account structure has made each subscriber via AdWords worth over $5. This means that on average, if we can get a subscriber for less than $5, we'll be making profit (maybe not at first, but over several months). In fact, we barely break even on the front end sale (a $10 e-book). All the profit is made on the back end (we know this because we have conversion tracking in place, right? Right?!)
For a customer like Navion (Navion Case Study) a lead is worth 4x more - $20. But the insurance space have CPCs to go with that high lead worth. The CPCs in the photography education space is no where near the CPCs in the insurance space (insurance CPCs are over 10x higher!). They key here is the CLV relative to the industry.
How could we not win? We can afford to pay more per visitor than our competition can.
The data tells the story
Below is the cumulative profit for Expert Photography from AdWords. Below that is the evolution of cost per conversion on the front end.
We broke even in just over a month. Our largest outlay was -£482 on the 20th of November (about 3 weeks in) which marked the turning point where we started consistently hitting our CPA targets and making profit.
The decrease in profit that you see at the end there is because we almost tripled the click volume to test new placements:
We had reached over 160%+ ROI in Jan but this has gone down since we started aggressively growing the account through more testing.
Where we are now
These initial results are encouraging and right now we're focused on aggressively growing what already works.
After that we'll be looking to mirror Expert Photography's autoresponder sequences with remarketing to strengthen his conversion rate and CLV further.
We're also looking to approach one of the main profitable sites with an offer for a direct media buy to negotiate a better rate and in the aim of growing volume 5x-10x for that specific placement. This will also diversify Expert Photography's traffic sources further and dilute the reliance on Facebook and AdWords - which is ideal since long term, networks have a tendency to update their policies on ads and landing pages with little warning.