When a $17 Product is Worth $16 per Click

A curious phenomenon was brought to my attention the other day:

Notice the estimated average CPC for a product that sells, on average, for between $10 and $40. How is this possible? Even if every one of the dozens, maybe even hundreds of sites bidding for this keyword convert their AdWords traffic at a perfect percentage, the profit margin would be minimal. In fact, there is a pretty good chance that most of these sites lose a significant amount of money paying for top-position links just to acquire a customer.

But companies like Office Depot, HP, Lexmark, and the rest have learned the value of retargeting their existing consumer base, and printer ink cartridges happen to be one of the highest-potential products for turning one sale into several.

For anyone who hasn’t yet heard of the phrase “retargeting” it simply refers to marketing efforts that attempt to reengage past customers, and it can be very profitable. Your past customers have, after all, proven that they are comfortable with your brand, your website, have no aversion to purchasing online, and use your product, so they are a perfect well of potential business.

There are several ways to successfully retarget past and potential clients, but two specific strategies have come to my attention lately that I’ve seen return material results.

The first, surprisingly enough, is banner ads. Retargeting with banner ads works by only showing your promotions to someone who has already visited your website. When a person visits a site, the ad network recognizes cookies set in your browser and serves the user ads based upon their recent activity. Using some advanced last-touch attribution tracking techniques, one of our clients has seen marked improvement in the actual ad click-through and the re-visit rate through direct traffic from brand recognition.

The other successful retargeting technique, and probably the one being successfully implemented to allow a $16 bid on [color printer ink cartridge] is email marketing.

If you have a product that has a finite life cycle, no matter how short or long, email marketing can be a very powerful retargeting win for your website. Everyone needs new printer ink every few months. Why not send them a friendly email reminding them where they bought it last time? Want to sweeten the deal? Give them a coupon code and watch your conversion rates soar.

While not suitable for every market (re targeting wedding dresses may not be so profitable) it’s important to think of your past customers with more than just a thank you note on a shopping cart page. Are you maximizing your customer base as well as you could be?