Page 2 - Example 1 ? www.ebay.com

I often buy and sell items on eBay. While on their site, I noticed that eBay.com offers $5 per registration to their affiliates, and $.05 for any bid coming from your affiliate link.

In other words, an affiliate earns a $5 commission when someone fills out a free registration form. That sounded great!

I next conducted a search with the free Overture Keyword Suggestion Tool. This tool tells you how many times a keyword or phrase was searched for on Overture?s Search Engines during the previous month. This is useful in determining the popularity of particular keywords and particular markets.

Google does not have this tool. Therefore Overture?s estimates can be applied to searches, for the same keyword, on Google?s Search Engines fairly accurately.

I searched for the keyword: ebay. See the partial results below:



According to Overture, the keyword: ebay was searched for: 8,080,961 times during March 2006 on Overture?s and their partner?s search engines.

There are rumors on the Net that Overture slightly inflates its numbers because Overture wants advertisers to bid on their search terms. Even if that number is not 100 percent accurate, it is probably a good estimate as to the number of times a particular keyword is searched for on all search engines. Next I used Overture?s Maxbid Tool to see how much money advertisers are willing to pay, per click, through their ad for the keyword: ebay.

There were many ads, with the top three putting in a bid of 37, 37 and 36 cents per click. See the screen shot on the following page:



With prices as high as 37 cents a click, I concluded that the keyword ebay had too much competition to be profitable. The next step confirmed this.

I went to www.google.com and typed in the keyword: ebay ?

There were several AdWords for the keyword ebay (A total of six ads at the time). As you can see from these ads, all are from affiliates. This is indicated by ?Affiliate? or ?Affil? or ?aff.? after the ad text and is underlined in red in my example above.

None of these Affiliates have their own website. They simply place AdWord Ads and put their Affiliate ID in the URL. When someone clicks on the ad, it sends them straight to eBay, where the affiliate?s ID is recorded on the server. When the user registers with eBay, the Affiliate receives $5 in commissions.

As indicated, the market is already saturated for the keyword ebay, thus the Cost Per Click (CPC) rate would be high. Therefore, I did not consider it profitable to create an ad for the keyword: ebay.

Note:
With Google AdWords, you place small text ads for specific keywords. You determine how much you are willing to pay per click through. The more you pay, the higher up on the screen of results your ad is displayed. With all things equal, if several competitors are willing to pay 35 cents a click and you are only willing to pay 5 cents a click, then you will be at the bottom.

Fortunately, few advertisers do thorough keyword research. This means, that you can usually find many keywords that still have few or no bids.

The CPC is not the only factor that determines your ad?s rank. The rank is also based on a proprietary formula that weighs Cost Per Click against Click Through Rate. So a lower bidder could potentially get a higher position, if they had a better ad that received a higher CTR. Google uses this system so that the most relevant results are the most prominently displayed.