What justifies assuming a 1% conversion rate?
How many people do you run into walking around town, what would justify a 1% conversion rate in selling products to them? Just because 1% seems small does not mean it's a guaranteed conversion rate.
How many people do you run into walking around town, what would justify a 1% conversion rate in selling products to them? Just because 1% seems small does not mean it's a guaranteed conversion rate.
This company promises 1:300 rate. subscriptions. 1 out of 300 unique visitors will join. I had 1200 unique visitors and no joiners.
http://www.upiu.com/articles/pornography-business-is-booming
She the conversion rate from viewers to paying members is about one in 200
How traffic converts from one site to another is a matter governed by a very large number of factors, typically if you sell balsa wood aircraft advertising on a site for knitting supplies is not going to net you a lot of customers.
I've been 'helping out' a fellow HN'er with a bunch of traffic and to date we've yet to see a single conversion. That doesn't mean that his product is bad or that the traffic is lousy, it simply means there is an impedance mismatch.
So you can only determine what works and what doesn't by trying it. But once you are spending money on clicks then that 1% is a good ballpark figure because that's what you'll need to make money on your traffic buys unless there is a scam involved.
On 'junk' traffic (exit consoles and other bad tricks) conversion rates can be as low as 0.01% or worse, on good or great (matching) traffic it can be substantially in excess of that 1%. Audience match is key, and that goes for any form of traffic buying, adult or non-adult makes no difference, if the user lands in something they didn't expect on the 'far' side of that click it had better be a positive surprise or you've just effectively made your precious domain worth less.
The big problem is probably defining what people call 'conversion rate', typically that's 'virgin traffic' divided by actual sales.
The problem with that particular definition is to track accurately how many people have never seen your site before.
For a site that is growing steadily the number of 'new' visitors that will eventually convert over the life cycle of their account is a number that always relates all of todays 'new' traffic to the total sales of today, but the sales of today were not typically caused just by people that visited today for the first time.
So accurately tracking conversion rate is not as simple as it may seem at first glance.
Also, and this is a completely different issue, conversion rate is not the most important figure at all, and I find the thread we're discussing this in amusing because even though the first poster in the thread accurately identifies recurring billing as an excellent revenue driver it completely misses out on the life-cycle aspect of an account, and typically accounts do not last forever.
Industry standard is 3 months, so if your subscription site has a 1% conversion of free traffic to paying members then you will still only make 3 times your monthly charge on them.
To do better than that you'd have to work really hard on tweaking that 3 month figure, retention is almost as important (if not more important) as initial sign-ups.
That's where the real money is.
I guess people looking for sex are quicker to pull out their wallet but also quicker to be satisfied.
With a retention like that you could drop your conversion rate even further (so market more aggressively) and still come out on top.
Don't bother optimizing the conversion, the retention or any simple formula but instead focus on optimizing the one number that matters: net profits.
Edit: Costs are already so low that the only way to increase net profits would be to increase revenue per user, perhaps with added micropayments, but it seems to me that with so few paying users <1200, I should be trying to get a larger user base and then later increase revenue per user?
- increase your price (see: http://news.ycombinator.com/item?id=1639712).
- consider partnering with sites that you select to send you traffic and give them a kickback of for instance $20 / signup.
Or set up an affiliate program paying about $1 per free signup.
I get people via Adwords at less than 20 cents a click. According to Facebook, the minimum bid for people who like online games or mmorpgs, or other categories I've tried is currently well over a dollar. I did get some clicks from Facebook when their ads were fairly new and the minimum bids weren't so high, but conversion rates were much lower than those from Adwords.