A few days ago I told you about how I tested a whole bunch of different business models in my new passive income business.

At each step of testing I had to send some traffic to my website to see how people would respond. Today I’d like to show you some different ways I got traffic to my site, and how to measure their effectiveness.

Step 1 – Google Adwords

In the first business model when I was charging clients, I got started by driving some traffic with Google Adwords.

There are a million ways to drive traffic, but Google Adwords is one of the first places I recommend people start. You can literally get a targeted ad in front of millions of people in about 10 minutes. It knocks the socks off traditional print or television advertising which typically takes months (not minutes) and isn’t targeted at all. You know someone reading “Car and Driver” magazine is generally interested in cars, but you know far more about someone who just typed “Nissan 350z road test” into Google.

Anyway, I digress. I bid on some keywords like “math tutor”, “biology tutor”, etc and used Google to geographically target people who lived in a certain area where I was testing (geographic targeting is another thing that is much easier online).

For each click I had to pay about $0.50. Since the average sale on my website was for about $10, that meant I had to turn at least 1 out of 20 people who came to my site into a customer.

Here’s how the math works to determine that:

$10 / $0.50 = 20

That means $10 in advertising will get 20 people to your website. If 1 out of those 20 people generates $10 in profit for you then you have “broken even”. You have spent $10 and made $10.

If you can get past “breaking even” in your marketing, you have done a truly magical thing. After all, if every time you spent $10 you got back more then $10, how many times would you do it? You would never stop!

This whole idea of have a “marketing budget” as an expense (which most big companies follow) is a mistake. People who consider marketing an expense are just not tracking their conversions properly. They are guessing. Your marketing budget should provide a measurable ROI, or you shouldn’t be doing it, period.

Anyway…

1 / 20 = 5%

That means I needed a minimum 5% conversion rate to make this advertising method viable. If I could turn 5% of the website visitors into customers, it would pay for itself.

• Cost per click: about $0.50
• Break even conversion rate: 5%

Unfortunately for me, I did not quite achieve 5%. I can’t remember exactly now, but I think it was closer to 2%.

To remedy this I could attack the problem from two angles: find a cheaper source of leads or turn more people into customers! I started by trying to find cheaper clicks.

Step 2 – Facebook

Eventually I started getting a lot of free “client” leads through organic search results (which is a topic for another post) and I also switched the business model over to charging tutors instead of clients.

That meant my “leads” now were tutors. I turned to Facebook because I knew tons of college students used it and those were the tutors I wanted to hire.

Facebook’s advertising system is very well done, and allows you to target people geographically, by school, by keyword, etc. Another bonus is that they are less well known and less competitive compared to Google Adwords, so the clicks were cheaper: about $0.22.

By the same math as above…

• Cost per click: about $0.23
• Break even conversion rate: 2.2%

You notice that the cheaper my clicks, the lower the conversion rate I need to break even.

This was great, now my break even rate was starting to come in line with my actual numbers. Keep in mind also that the tutors here were paying a monthly subscription price of $10, so I had to look at the payback period.

If I looked at a 1-month time frame, a sale would bring in $10. But if tutors subscribed for many months then it would bring in even more. I didn’t have any good data yet on how long tutors would stay subscribed, so I decided to take the most conservative approach of look at a 1-month time frame. Obviously, if it made sense that way, it would be even better over longer periods of time.

Step 3 – Student Job Networks

Facebook was working pretty well, but I wanted to continue my search for new sources of leads. By looking at the career services page on a number of university websites, I discovered that many of them use a service provided by an outside company to keep track of their student jobs.

It was free to post a job at one school so I tried it out. The response from students was good. Unfortunately it was tedious to create an account and fill out forms at each individual school.

Luckily the job network sites (there are several bigs ones as I discovered like CollegeGrad.com, NACELink, and Experience.com) offered a paid option that would allow you post your job to ALL the schools in their network.

I’ve tested out one of them so far (NACELink) and the results have been good with their bulk rates.

• Cost per click: about $0.14
• Break even conversion rate: 1.4%

Conclusion

I will continue testing other methods of bringing in leads of course, but there are a few important takeaways from this I think.

• There are tons of sources of leads out there. Never stop searching for new advertising opportunities! Sacrifice early profits and test a lot to find the rights ones early on.
• Your goal is to reach and go beyond the “magic” place where each lead you bring in pays for itself. Once you achieve this there is no limit to how much you can spend on those leads.
• There are only two ways to get there: find cheaper leads or raise your conversion rate

Finally, it’s interesting to note that of the two, raising your conversion rate is far more powerful. Why?

Because if your site converts with the expensive leads then it will also convert with the inexpensive leads. That means you can use ALL sources of leads to grow your site that much faster.

That’s why I’ve been working on raising the conversion rate as well.

Hopefully this sheds some light on how to get early visitors to your website. Until next time, keep breaking free!
Brian Armstrong

P.S. You may have noticed that Google un-banned my Adsense account after my appeal. Thank you Google! I still have no idea how it happened, but let’s hope it doesn’t happen again.