What we are going to discuss in this post actually is not only for Amazon affiliate niche websites. We can use these ideas and calculations for any website that is heavily relying on content marketing to bring in traffic.
As you might already know, the core business model to Amazon affiliate niche website is to create quality content that answer users’ questions, issues, and problems then recommend a solution (=product) to make money.
In theory, this means more money can be made by pumping out more content on a website. However, that is not the reality because a lot of times those content don’t rank on search engines or convert users to purchase products.
I have already introduced some metrics for how to measure article performance in “2015 Amazon affiliate income report“, but I want to dive little deeper here to see how we can set up an active monitoring system to make sure the newly created content are performing.
Why using Google Analytics alone is not enough?
Google Analytics is a wonderful tool that allows us to get pretty reliable web traffic data for FREE. Google initially announced that they would only keep the data for 25 months, but now that timeline seems to be much longer.
When I became a full time SEO consultant, I noticed that many of my colleagues would pull data by hand and compiled them into an Excel spreadsheet. My initial thought was why we would need to waste time doing such thing. As it turned out, in order to monitor and measure what really matters-especially KPI, keeping data in Google Analytics (or any other Web analytics package) is just not good enough.
For example, let’s say we want to see which channel is bringing in the most traffic to the site each week. There isn’t really an easy way to visualize this in Google Analytics. Even if we manage to display it in a graph on Google Analytics, we can’t see the actual Week over Week (WoW) number for each channel.
On the other hand, if we compile WoW traffic channel data in an Excel spreadsheet, we can easily visualize this (image below).
Not only that, we now have numbers in hand to do all kinds of cool calculations.
In addition, there are fixed cost every month to keep the business going (website hosting, email software, SEO software etc.).
This means we need to know exactly how much money is spent to keep each article online, so we can calculate how much money each article needs to make in order to have a successful online business.
We can determine this by calculating Average Revenue Per Post (ARPP) but before we get to that, we should also know how the articles are performing in terms of bringing in traffic and converting that traffic.
1) Average Traffic Acquisition Per Post (ATAPP)
Total Organic Traffic / Number of Posts = Average Traffic Acquisition Per Post
ATAPP can tell us how many visits on average each article is brining in. This ofcourse depends on what keyword each article is aligned to; what is the average monthly search volume of the keyword; how well the article is ranking for the keyword.
As we add more articles to the site, ideally this number should remain steady or increase.
By actively monitoring this number, we can see if the articles are ranking well on Google and other search engines.
2) Average Click Through Per Post (ACTPP)
Total Clicks / Number of Posts = Average Click Through Per Post
ACTPP can tell us if our site is well optimized for users to find products they need, and when they find it, if they actually click on it.
There are so many different elements that can influence this number. We can experiment with different Amazon affiliate link placements, change the wording in the article, change the color of the links etc.
To give us a better context of the number we should expect to see, according to this article, 2 to 5% Click Through Rate (CTR) seems to be a realistic number for Ads placed through Google Adwords. This means out of 100 people, only 2 to 5 people would click on the Ad.
I know in our case, we are talking about links on websites rather than ads on websites so we should see a better number than this.
In fact, based on the numbers I have for ASS (the site I will be working on the most in the next several months), it had 41% CTR in 2015. This translates to ACTPP = 29.
This means on average, each article on ASS brought 29 people from our site to Amazon.com in 2015.
3) Average Conversion Per Post (ACPP)
Total Item Orders / Number of Posts = Average Conversion Per Post
ACPP tells us how many item orders each article managed to generate.
Obviously we want to see this number to be high but it is a number that we have very little control of. Once we send the users to Amazon.com, we can’t really do anything other than hoping Amazon.com would do a good job making the users buy what they are kooking for.
Also, we have no control of how many items people would buy so there isn’t anything we can do on our website to increase this number.
The only thing I can think of that might make this number better would be to promote items that are normally bought in bulk.
However, those items are more likely to have lower price so it’s not in our interests to target those products.
So to sum it up, we don’t need to pay too much attention to this number.
4) Average Revenue Per Post (ARPP)
Total Revenue / Number of Posts = Average Revenue Per Post
ARPP can tell us how much money each article generated. Obviously this is the number we care the most.
Assuming each article costs $20 to create, we want to see ARPP to be $20 within few months or even a year.
Unfortunately for ASS site, its ARPP is only $5 for 2015. This means it would take 4 years for me to recoup my initial investment.
Not only that, there are business costs to keep the website running. Based on the calculation I did, the business cost was about $10 in 2015. so the actual cost was more like $30/year for each post.
This means unless I increase ARPP to more than $10/year, I will continue to lose money running this business.
So the idea is,
If ARPP becomes $11, I will be able to cover all the business cost and recoup the article cost ($20) in 20 years.
If ARPP becomes $12, I will be able to cover all the business cost and recoup the article cost ($20) in 10 years.
Alternatively, I can try to bring the business cost down, but either way, the current ASS site’s ARPP of $5 is not going to work.
Which KPI will I use for Amazon affiliate site – ASS?
For the next few months, I will keep my eyes on ATAPP the most because if those new articles do not rank high on Google, there is no way I can increase the other KPI numbers.
I have done the following calculation to estimate how many people each ASS site article should bring in for me to breakeven.
This calculation is based on ASS site’s 2015 performance so it’s not that accurate, but it should still gives us a “number” we can shoot for.
As we mentioned, it costs about $30/article per year to operate this business.
Based on the ASS site numbers.
The amount of money the ASS site needs to make in 1 year to breakeven = $30 x 53 (currently there are 53 articles on ASS) = $1,590
How much money each organic visit generated in 2015 = $265.08 /2,776 (revenue/organic traffic)=$0.096
How many visits are needed to generate $1,590? = $1,590/$0.096=16,651
How many visits each article needs to generate? =16,651/53 =314 = ATAPP
This means each ASS site article will need to bring in 314 visits per year for me to break even.
So converting it to per month = 314 / 12 = 26 visits.
Is it possible for each article to bring in 26 visits?
Currently, annual ATAPP for ASS site is about 69. So monthly, it’s 69/12= 5.7!
I will need to improve it about 5 times!
Considering the assumptions used in this calculation are influenced by so many other factors, the best way to find out is to just try and see.
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