Internet Marketing Math: Excel Calculator and Sensitivity Analysis

A financial model for affiliate marketers or direct internet marketers that helps show profit based on PPC ads.

by Jason Varner
smarthelping.com - Financial Modeling for EveryoneFollow 165

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Description
Let's talk about the first type of internet marketing. This is for those that are affiliates. They promote products in return for a percentage share of the generated revenue or some cost per lead or sale that they earn. In order to generate leads, some of these marketers may have their own original content-based websites, while others may focus on PPC (pay-per-click) campaigns.

For those focused on using paid advertising methods to generate leads or sales, this is a great planning calculator to help figure out required conversion rates / click-through rates / number of sales needed / max cost per click spend. Specific math and logic were used to differentiate an affiliate from a direct marketing campaign and both can be selected with a dropdown to get a 12-month cash flow forecast. There are dynamic inputs and clean output tables to show the expected ROI and profit per day at various volumes and in different conversion scenarios.


One of the most helpful output values is the break-even cost per click or in other words, the max amount of money you can spend per click and not lose money.


Two visualizations were built to make this abundantly clear.


Affiliate Marketing Inputs Include: 
- Number of Clicks Landing On Your Website
- Number of Clicks that Go to Merchant Site
- Number of Sales Resulting from those Clicks
- Conversion of Clicks to Sales (formula) 
- Average Earnings per Sale 
- Click Interval Increase 
- Days in Period 
- CPC You Plan on Paying 
- Break Even CPC (formula)


Direct marketing Inputs Include: 
- Number of Clicks Landing On Your Website 
- Number of Sales Resulting from those Clicks
- Conversion of Clicks to Sales (formula)
 - Average Earnings per Sale 
- Click Interval Increase 
- Days in Period 
- Break Even CPC (formula) 
- CPC You Plan on Paying

This Best Practice includes
1 Excel model and 1 Tutorial Video