Assessing the value of your web site visitors

All these things are true. Sort of.

Regardless of the contribution to society and the human race through your web site <insert sarcastic laugh here!>, there are two undeniable facts that must be acknowledged.

1. Every visitor costs money.

Hosting, bandwidth (network resources used by the traffic at your site), ISP costs, software and of course the endless hours spent putting together a site, all cost money. Whether or not these costs are immediately visible to you or are in the form of sweat equity and some low priced service providers, you are spending every minute your site is online. One of the biggest arguments against spam (e-junk mail) is the incredible load it puts on the networks that power the Internet. Every e-mail that flows into your inbox uninvited slows down the global network and costs time, money and resources. Multiply that by billions of unwanted e-mail messages and you've got a serious problem. The same goes for every individual web site.

2. Every visitor has the potential become a customer, or contribute to income generation.

Whether your site sells advertising space or a specific product it has the potential to make an income. Even sites not making the effort to generate an income still have the potential to make money if they have traffic. It's just a matter of choice.

We therefore must conclude that every visitor has a value.

And unless you are one of the pioneers of the Internet., or have the most original targeted site topic in the universe you will only be able to generate so much traffic without spending marketing dollars. The truth is, for every site there is a thousand exactly like it and marketing will determine whether you are number 1, or well...not .

Ultimately the question must be asked by every web site owner: How much can I spend to get how much in return? It is the most basic principle of doing business. How much will I make? How much will it cost?

Let us assume for the moment that hosting, network connectivity, domain names, web design, software, computers, etc.. are all free. In other words, our only cost is marketing.

Scenario 1: Your small business site gets 1000 monthly unique visitors. The only promotion you've done so far is a one time listing with the major search engines. You haven't seen too much in the way of sales, but you estimate that about 10 sales averaging at about $50.00 in products are sold monthly as a result of your web site. At that rate:

• Your rate of sales per visitor is 1 in 100 or 1.0%
• Your total sales volume is $500.00 making your average revenue per visitor $0.50
• You profit per sale averages about $20.00 (A standard retail markup of 100% is typical with $10.00 going towards shipping and administrative costs)
• Your profit per unique web site visitor is therefore $0.20.

Scenario 2: Your web based business consists entirely of an information based web site or portal. Your sole source of income is advertising on both the site and in your monthly newsletter. Your site traffic is somewhere in the neighborhood of 5,000 unique users per month, with the average visitor going through 5 pages of the site. Advertising revenue is typically $7.50 cpm (per thousand ad views) and weekly newsletter ad revenue is around $30.00 cpm. You place 1 ad in every newsletter and 1 ad banner on every page within your site. You have about 2000 newsletter subscribers. At that rate:

• 5,000 unique visitors at 5 pages per visit = 25,000 monthly page views.
• 25,000 monthly page views at $7.50 per thousand page views = $187.50 monthly web site ad revenue or $2,250.00 per year
• 2000 newsletter subscribers multiplied by 52 yearly mailings = 104,000 yearly newsletter ad views
• 104,000 yearly newsletter ad views at $30.00 cpm = $3,120.00 newsletter advertising revenue.
• Each visitor to the web site is worth $0.0375 or 3.75 cents
• Each newsletter subscriber is worth $1.56 per year.
• Assuming a subscriber rate of 1 out of 25 visitors, the value per web site visitor rises by $0.0624 or 6.24 cents.
• Our total value per visitor is therefore $.0999 or roughly 10 cents.

Of course this model assumes a static traffic and subscriber base over the course of the year. As web sites grow, depending on their target demographic, advertising space becomes more valuable. Large sites can charge anywhere from $25.00 to $60.00 cpm while smaller sites command a smaller price. In both scenarios though, we can assess a value per visitor. Anything less than that spent to attract new visitors is essentially profit.

Your numbers may vastly differ from our example, but it is important to know what your visitors are worth before you spend money attracting them. Additionally, pure traffic volume may not be an ideal strategy for your site. Targeted marketing can raise your value per visitor and ultimately your profit. While a $0.50 per click campaign may seem expensive, highly targeted clicks can raise your value per visitor substantially. Ultimately though, the decision to market comes with inherent risks. A few test campaigns can give you better idea of how they will work for you and if they are worth it. In the end though, the old adage holds true: It takes money to make money.

For information on online marketing and ecommerce please see our explanations and tutorials.

For a directory of marketing resources please see our resources for do-it-yourselfers.

For a directory of Professionals that can help you build your online community please see our directory of professionals.