I had a really good chuckle over a comment made by Bob about ROI (return on investment) on the PPC Classroom blog in response to the “#1 Question: How Much Did Jeremy SPEND?” post.
The post reports Jeremy's earnings as follows:
EARNINGS: Slightly Over $1.4 Million
PPC SPEND: Slightly Over $560,000
Gross Profit: $837,465
ROI: 147%!
Bob's comment went as follows:
OK, set me straight here. His advertising costs are 40% of his gross income. For some one of his experience isn’t this a bit high?
I’m just small fry but my advertising costs are consistently around 35% of my Gross. This is better than what he’s doing.
It’s the middle of the month and right now my ROI is at 197%. And generally it gets better towards the end of the month.
Last month my advertising ran at just over 28% of gross. My ROI was 255%. If Jeremy has such a great sytem why isn’t he running well over 200% ROI.
I’m only dealing with gross income in the $2500 range. But its all relevant. If I do what Jeremy is doing I am going to loose [sic] money.
If I’m wrong, set me straight.
Also, how much of his profit does he use to increase his advertising budget each month?
OK, Bob wanted to be ‘set straight', so here goes…
Bob's runs an ROI of between 197 and 255 percent, where Jeremy's is a paltry 147%.
Bob is ‘dealing with gross income in the $2500 range', whereas Jeremy made over 1.4 million last year.
Bob's advertising costs are consistently around 35% of gross that means his net was approximately $1625.00 last year – whereas Jeremy's was $837,465.
“Better than what he's doing…” and “lose money”. HUH?
I'm not sure what Bob has been smoking or which version of new math he's practicing – but those conclusions are just warped and WRONG.
Producing an ROI of 200% is easy when you sell only one or two products.
Most affiliates would be extremely fortunate to produce an ROI of 147% if they were selling hundreds of products like Jeremy does. Just try getting a 147% return from the bank or the stock market!
Sure, ROI is a big factor to consider when you start promoting a product and want to make sure that you are making a profit, or when you start tweaking your ads and site to improve your ROI.
But once you've confirmed that you're making a good profit on a promotion, it's time to work on increasing the bottom line and move on to the next profitable promotion.
Bob's primary concern should be to increase his PROFITS – not maintain a high ROI – 'cause $1625 won't cover groceries, let alone pay either the mortgage or health insurance for the year.
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[tags]PPC Classroom, ROI, profit, Jeremy Palmer[/tags]