Now let's go over a very simple scenario.

Joe is going to sell "hair pills" on the Internet and he buys a small inventory for $5 a piece. They are not the best hair pills and competition is steep.

Joe decides he's going to sell his hair pills for $30 a bottle.

Joe creates a website. It's his first attempt. It's not too bad but it didn't cost him anything. He starts buying visitors to his website by advertising in e-zines. E-zines are electronic newsletters distributed by e-mail. One e-zine in particular costs Joe $100 to get his message in front of 5,000 people. Joe thinks this is a good deal. $100 to 5,000 people is only two cents per impression. (An impression is how many people received his ad -- not how many people actually read his ad.)

Here is how Joe's advertisement reads:

Hair Pills - $30
Buy a bottle today.
www.joes-hair-pills.com

Out of those 5,000 people only 1% of them clicked through to his website from the e-zine. That's 50 people. So it actually cost Joe $2 to get one visitor to his website ($100/50=$2). Out of those 50 people only 2% actually bought his product. That's only one customer! Joe's cost to buy that bottle was $5. So he actually made $25 off that one bottle of hair pills. (There is overhead and shipping to be accounted for too but we're going to keep this simple.)

Joe lost $75 in his first campaign. Poor Joe! Joe should have tested his headline a little bit before he ran that ad. Joe's not worried though because Joe has some more money. So now Joe goes back to the drawing board and writes a new advertisement:

Hey Bald Guys!
Grow a Headful of Hair in only 3 months!
www.joes-hair-pills.com

Joe didn't like that only 2% of the people who clicked through actually bought his product either. So he changed his headline on his web page:

“70-Year Old Man Grows Hair
After Using Joe's Hair Pills for 3 months!”

Joe also puts a "before" and "after" picture of the old man on his website. Joe scans in his signature too and uploads it to the bottom of his website. Joe knows this will add credibility to his sales presentation. People don't like to buy from nameless, faceless companies. They want to buy from a "real person". That way if they're still bald in three months they know whose butt to kick for it.

He then adds this to his order form:

“Buy Two Bottles (2 months) and Get 1 Month Free!”
That's 3 months for only $60. Hurry while supplies last.

Now let's see what happens when Joe runs his ad.

The last time Joe ran his ad nobody knew what "hair pills" actually did, but Joe fixed that. This time they know Joe's Hair Pills is really a growth formula that will give a bald man a whole head of hair in only three months.

Now a few bald guys who didn't see Joe's ad before actually became intrigued and clicked on his ad this time around.

This time 4% of the readers clicked through to Joe's site! That's 200 visitors out of 5000 impressions. Not bad, Joe!

On top of that, 4% of those visitors ordered his product. They were impressed by the old man on the front page who was able to grow a full head of hair in only three months. If a 70 year old man could do it, why couldn't they?

Now out of those eight customers, half of them actually bought 2 bottles (and received three). They were no fools! Joe carefully slipped into his headline that it would take three months to see growth. His smart customers knew they could save $30 in the long run by buying 2 bottles today.

So now let's recap.

5000 impressions
x 4% clicked through to his site
------------------------
= 200 visitors
x 4% who bought his product
------------------------
= 8 customers

Now half of those customers bought two bottles and the other half only bought one. Let's do the math!

If someone buys one bottle then Joe makes $25 profit:
$30 - (1 bottle x $5 cost) = $25 profit.

If someone buys two bottles then Joe makes $45 profit.
$60 - (3 bottles x $5 cost) = $45 profit.

So now Joe has profited $280:
(4 x $25 = $100) + (4 x $45 = $180) = $280.

Joe's cost for the advertisement was $100 and Joe made $180 profit.

Now Joe's return on his investment of $100 is 180%! Joe knows that for every $100 he spends he will make $180 profit and Joe can keep duplicating this process to his heart's content. All he has to do is experiment with different sources of traffic until they all make a profit. He can advertise in other e-zines, advertise in search engines, place banner ads on web sites, or even classifieds in the newspaper. It's all the same to Joe. All he has to do is be able to track every sale right down to the visitor. (But that is the hard part. See Advanced Internet Marketing.)

Now how can Joe make more sales, and thus more money?

He can find a better source of visitors! Instead of advertising in a general e-zine like he did, he can advertise to an e-zine where all the readers are men! Can you imagine if he did that? His click-through percentage should jump from 4% to 8%.

What else?

Joe can advertise to an e-zine for just "bald" men!

What else?

Joe can advertise to an e-zine of just "bald" men who are over 25 and own credit cards.

What else?

Joe can accept checks on his website too.

What else?

Joe can partner with other sites that are similar to Joe's (but not in direct competition.) Sites that sell men's clothing for example. Those sites can send Joe traffic for free (by way of a link or banner) in exchange for Joe sending them traffic for free. When Joe makes a sale off of those customers it's pure profit!

What else?

Joe can offer a free e-book with his hair pills. (This is called sweetening the deal.) For every customer who buys Joe's Hair Pills, they will also get a free copy of "How to Boost your Confidence in 7 days!" in their e-mail box. This book has a $30 value and his customers are getting it for free.

What else?

Joe can offer another free e-book with his hair pills... and another... and another... until his visitors would have to have hair like Don King not to want to buy his hair pills.

Are you getting the picture?

Now read "Internet Marketing 101".

RareHost.com Web Design is a team of Web Designers that understands Search Engine Optimization and the psychology ofSelling Online. Consider consulting with RareHost.com before you create or redesign your next web project.

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