One of the best, easiest and fastest ways to generate traffic to your site is by using Pay-Per-Click search engine advertising. In just a second I am going to show you how to skyrocket your profits by applying some “inside information”…

For the uninitiated, Pay-Per-Click search engines(PPC’s) are search engines where you can place a bid on a particular search term, paying that “bid” price every time someone searches for the term then clicks on your link.

Depending on the search term and search engine, your “per click” bid will be anywhere from a fraction of a cent to many dollars.

Search terms on PPC’s are typically listed in descending order, starting with the highest bid. What this means is the person who bids $5.00 per click will be above the person who bids $4.00 who is above the person who bids $3.00.

To see an example of how this works in real life, simply go to http://www.Overture.com and perform a search.

Often the difference between the number 1 position and the number 5 position can be many dollars per click—and add up to a huge difference in expenditure over the course of a month.

One question advertisers on PPC’s often ask is: How many more click-thrus will I get with a number 1 than a number 2 or 3 position?

Now a new study done by the Atlas Institute has answered some of those questions about Overture.

Question One: How Many Clicks can I Expect?

According to Atlas’ research, the average click thru rate for the number one position is 7%--meaning that, on average, for every 100 searches for a given search term, 7 people will actually click on the first search result.

Taking a real-world example, according to Overture’s search term suggestion tool, last month there were 54,525 searches for “used video game.” (You can use this tool yourself by going to: http://www.All-In-One-Business.com/stst )

So, assuming Atlas’ numbers hold true for this search term, those 54,525 searches should have resulted in about 3,817 visits for the number one advertiser:

54,525 searches x 7% click-thru = 3817

At the time of this writing, the number one position would cost 22 cents per click-thru meaning an expenditure of around $840 per month for those clicks.

Once you know the average Click-Thru (7%) you can then calculate how many clicks the various positions beneath #1 generate.

In Atlas’ study, they found the following click thru rates for various lower positions:

Rank 1 Click Thru Rate 100%
Rank 2 Click Thru Rate 80.0%
Rank 3 Click Thru Rate 62.2%
Rank 4 Click Thru Rate 45.9%
Rank 5 Click Thru Rate 35.0%
Rank 6 Click Thru Rate 32.3%
Rank 7 Click Thru Rate 26.6%
Rank 8 Click Thru Rate 23.6%
Rank 9 Click Thru Rate 21.0%
Rank 10 Click Thru Rate 21.1%

In our example, this is what these figures would mean:

Rank 1 3,817 clicks at 22 cents for $840 per month
Rank 2 3,053 clicks at 21 cents for $641 per month
Rank 3 2,374 clicks at 15 cents for $356 per month
Rank 4 1,752 clicks at 14 cents for $245 per month
Rank 5 1,336 clicks at 13 cents for $174 per month
Rank 6 1,233 clicks at 10 cents for $123 per month
Rank 7 1,015 clicks at 10 cents for $102 per month
Rank 8 900 clicks at 10 cents for $ 90 per month
Rank 9 800 clicks at 10 cents for $ 80 per month
Rank 10 805 clicks at 10 cents for $ 81 per month

A couple interesting things to note:

The number 10 and number 9 positions got virtually identical click-thrus, meaning spending the additional money to go from 10 to 9 will likely make little difference.

Because there is a big break in bid amount between the # 2 and # 3 positions (for this term), picking up the number 3 position would be much cheaper than picking up the number 2 position. The same is true, in this example, for the number six position.

But Which Would Be Most Profitable?

Since we are using the example of used video games, let’s use numbers which can represent a real website selling real products.

Let’s assume the average sale at our online used video game store is $70, the average cost to us to purchase and ship the order is $40. We make, on average, $30 per sale. We will also assume that we average one $50 sale for every 100 visitors through Overture.

In the number 1 position:

3,817 click thrus (visits), 38 sales, $1,140 gross profit.
Taking out the $840 for Overture leaves us with $300.

In the number 2 position:

3,053 click thrus (visits), 31 sales, $ 930 gross profit.
Taking out the $641 for Overture leaves us with $289.

In the number 3 position:

2,374 click thrus (visits), 24 sales, $ 720 gross profit.
Taking out the $356 for Overture leaves us with $364.

In the number 4 position:

1,752 click thrus (visits), 18 sales, $ 540 gross profit.
Taking out the $245 for Overture leaves us with $295.

In the number 5 position:

1,336 click thrus (visits), 13 sales, $ 390 gross profit.
Taking out the $174 for Overture leaves us with $216.

In the number 6 position:

1,233 click thrus (visits), 12 sales, $ 360 gross profit.
Taking out the $123 for Overture leaves us with $237.

In the number 7 position:

1,015 click thrus (visits), 10 sales, $ 300 gross profit.
Taking out the $102 for Overture leaves us with $198.

In the number 8 position:

900 click thrus (visits), 9 sales, $ 270 gross profit.
Taking out the $90 for Overture leaves us with $190.

In the number 9 position:

800 click thrus (visits), 8 sales, $ 240 gross profit.
Taking out the $80 for Overture leaves us with $160.

In the number 10 position:

805 click thrus (visits), 8 sales, $ 240 gross profit.
Taking out the $81 for Overture leaves us with $159.

So, if we are to put them in descending order according to net profit, we would have:

$364 net profit for position 3
$300 net profit for position 1
$295 net profit for position 4
$289 net profit for position 2
$237 net profit for position 6
$216 net profit for position 5
$198 net profit for position 7
$190 net profit for position 8
$160 net profit for position 9
$159 net profit for position 10

For this keyword phrase and average sale, it would seem you would be better off with a position 3 or position 4 rather than a position 1 or 2.