AdWords Visitor Value

Visitor Value is defined as the amount of money you make on average per visitor to your website.

It is an important measure of your website's effectiveness as a business tool for two reasons.

1. If you don't measure how much money you are making per visitor and manage that figure upwards then you are not exploiting your website to the full. Given the importance of your website in the online world this is a bit like running a shop and not measuring your sales and footfall numbers. You want to get as much from your visitors as you can and to manage a figure you need to measure it.
    
2. The other reason why you need to know your visitor value is just as important. It relates to your ability to buy web traffic using Google AdWords or other Pay Per Click advertising systems.

Suppose you've got a visitor value of £2.50. Would you be interested in buying extra web traffic costing £0.80 per new visitor?

Clearly your answer is going to be "Yes". You would reasonably expect to make £2.50 - £0.80, or £1.70 per extra visitor. So you are unlikely to turn this offer down.

You can of course very easily buy this sort of website traffic using Google AdWords, Yahoo and Microsoft.

But how do you know how much you can afford to pay if you are not measuring your visitor value?

What if your competitor has a higher visitor value than you?

Now suppose you can buy traffic but that it costs £2.60 a visitor instead. At that price you wouldn't be interested in buying it because on average for each visitor you got, you would lose 10p. So you shouldn't do it.

But suppose your competitor had a visitor value of £3.25?

They'd be able to buy in traffic for £2.60 and make a profit. This means that on the big search engines, they'd hoover up potential new business whereas you wouldn't be able to afford to.

This gives your competitor another edge too:

When you buy in traffic from search engines using Pay Per Click advertising, in simple terms, the more you are prepared to pay for it, the more you'll get. This is because the more you bid for traffic, the higher up the page your ads will appear and in general higher ranking ads attract more clicks. (The AdWords ranking algorithm doesn't operate quite as simply as this but nonetheless this is a reasonable approximation of how things work with Google.)

So a site with a big visitor value can afford to bid aggressively for traffic. This means that its ads will be high up on the page and so they'll get more traffic. The website will convert this traffic into profits effectively because it has a high visitor value.

Conversely, a site that has a low visitor value will not be able to bid aggressively for traffic, will get fewer and fewer clicks and so make less and less money.

Without knowing your visitor value you can't make an informed judgement about how much you can afford to pay for clicks.

So what can we do to boost visitor value?

There are three standard techniques.

1. Sell to more people when they land on your site by increasing your overall conversion rate
    
2. Sell more things to customers using upsell techniques
    
3. Sell additional products to them later on, a process known as back end selling.

Lifetime value of new customers

Many businesses recognise and understand that the lifetime value of a customer is what really matters. This is the amount of money they expect to get from a new customer over the lifetime of a business relationship.

Provided they have done enough analysis and are confident in their forecasting, many businesses are prepared to spend very aggressively to get new customers to the extent that they make a significant loss on the first business contact because they know that in time, they will recover all their marketing costs and much more still by continuous back end selling.

You've doubtless seen examples of this where magazines offer you a free subscription for a period in order to get you to subscribe on a paid-for basis later on. They invest marketing money up front to provide you with free editions in the expectation that you will continue to buy from them in the future.

If you can generate backend sales to your existing and future customers you will significantly increase your visitor value. This can put you in a very strong position when it comes to buying in web traffic with Google AdWords because you can bid more aggressively, rise up the ad ranks and get a lot more profitable web traffic.

William Charlwood