So I'm going to apply for a SBA for my webhosting company. I'm a 7 year veteran of web design and graphics, and know a bit about servers and webhosting. When presenting a business plan to either my bank or the SBA, I would like to show them the breakdown of advertising vs. % of customers.

So say my goal within 1 year is 1,000 clients.

How much money will it take to obtain those 1,000 clients?

My plans are to advertise on on all 3 of the major search engines, along with smaller search engines. I plan to within the first 3 months see which search engine yields the highest % of clicks over impressions, and then see how many clients I actually capture through those clicks...

So pretty much, on average what is the following percentages?

Impressions (we'll say 100,000 impressions) > Clicks (% of clicks from imps), Clients (how many clicks I receive from clicks).

When presenting this to a bank it will help me greatly as one of their questions will likely be "well how do you plan to repay your loan?"

I can simply say "well if I spend $$$ amount, I get this many clicks, and out of this many clicks I receive this many clients...

I want to just know what is the industry average?

100,000 > 1.8% > 40%?

Hmm?

Thanks all!

So I'm going to apply for a SBA for my webhosting company. I'm a 7 year veteran of web design and graphics, and know a bit about servers and webhosting. When presenting a business plan to either my bank or the SBA, I would like to show them the breakdown of advertising vs. % of customers.

So say my goal within 1 year is 1,000 clients.

How much money will it take to obtain those 1,000 clients?

My plans are to advertise on on all 3 of the major search engines, along with smaller search engines. I plan to within the first 3 months see which search engine yields the highest % of clicks over impressions, and then see how many clients I actually capture through those clicks...

So pretty much, on average what is the following percentages?

Impressions (we'll say 100,000 impressions) > Clicks (% of clicks from imps), Clients (how many clicks I receive from clicks).

When presenting this to a bank it will help me greatly as one of their questions will likely be "well how do you plan to repay your loan?"

I can simply say "well if I spend $$$ amount, I get this many clicks, and out of this many clicks I receive this many clients...

I want to just know what is the industry average?

100,000 > 1.8% > 40%?

Hmm?

Thanks all!

It all depends on how much revenue the client is generating, the frequency they pay(monthly, yearly, etc.) and how long they end up staying with you. The last I saw, you can expect to pay around 10-18 months gross to obtain a client, depending on the terms. So if you wanted 1,000 clients and they all had the same $10/mth package it would cost you roughly $100k-180k to acquire the clients.



Regards,

So if you wanted 1,000 clients and they all had the same $10/mth package it would cost you roughly $100k-180k to acquire the clients.



Regards,

That sounds about right. Also, I believe sales converted on "click-throughs" is approximately .001%.

Banner ads is NOT a way to gain new customers, it should really only be used to get your brand out there in conjunction with other marketing and ad campaigns.

--Tina

So pretty much I'm being told this is an industry of no hope for new people such as myself :-)

So pretty much I'm being told this is an industry of no hope for new people such as myself :-)

We are just giving you the facts - if that's what it looks like to you, then so be it. :)



Kind Regards,

Every time I ever advertised I'd get nothing but riff raff. Maybe others have better luck but it seems I spend $1000 and get $800 in orders. Of that, $600 is fraudulent, spammers or script kiddies. If you are taking out a loan you might want to check into just buying an established company with good customers. And the purchase ratio does seem to be about 1000 impressions -> 10 click throughs > 1 purchase (at least for me).

Karl, I understand your reply, but Tina replied to both this thread, and another thread of mine. She pretty much said if I do not know what I'm doing, stay out.

How else do you learn other then trying and/or asking on the forums? :-)

True, zone...

Isn't there any method of avoiding script kiddies and fake clicks???

I know, from being living proof, that if people on MY SITE click ads waaaaaaay too much and do not convert well, MY SITE gets banned, and possibly my account, which it did on Yahoo.

I'm sure I can request some type of investigation to receive my advertising funds back if this is proven? Perhaps IP logging?

I also have 97 current clients who I have setup on webhosting companies like iPower and IX... So if I (over time) switch them over to my services, I instantly have 100 loyal customers that have been with me for (some of them) as long as 7+ years.

True, zone...

Isn't there any method of avoiding script kiddies and fake clicks???

I know, from being living proof, that if people on MY SITE click ads waaaaaaay too much and do not convert well, MY SITE gets banned, and possibly my account, which it did on Yahoo.

I'm sure I can request some type of investigation to receive my advertising funds back if this is proven? Perhaps IP logging?

Not as far as I can tell. I concluded they are lazy and when you put your site out there at the top of the page, where they are looking for "targets", you get them.

There's another company around these parts (gator...something :) ) that has, or had (don't really know) a $100 affiliate program, and I think passed the bulk of that cost on to the end user in setup fees. That seemed to work for them. I could be totally wrong about that though. I'm just working on old memory of a passing glance at their operation.

Yes, I'm thinking of the same thing, but instead of signing them up for 1-year, I may give them 2 months FREE with a PAID IN FULL 2 year subscription...

This would more then likely help with startup costs.

I would still offer them a 1-year and 6-month plan, but I do not believe in a month-by-month plan. It's too stupid, especially if someone cancels their site or doesn't renew... But then if they do not pay, by accident, I charge a rate of $50 to re-activate... There are a number of ways to make money and prevent negative costs...

I've done fairly well with preventing negative numbers over the years, and have had a steady increase... I rather have a steady increasing income compared to an up down up down up down income.

Karl, I understand your reply, but Tina replied to both this thread, and another thread of mine. She pretty much said if I do not know what I'm doing, stay out.

How else do you learn other then trying and/or asking on the forums? :-)

You already know the answer - you start by trying. Trying does not mean that you, however, should be careless and risk your client's data. Set up servers just for yourself, get used to the technology. This will take you a few years.

I also have 97 current clients who I have setup on webhosting companies like iPower and IX... So if I (over time) switch them over to my services, I instantly have 100 loyal customers that have been with me for (some of them) as long as 7+ years.

Just get a reseller account. Good businessmen delegate tasks. Why do you want to take on all the headaches involved with hosting????

Yes, I'm thinking of the same thing, but instead of signing them up for 1-year, I may give them 2 months FREE with a PAID IN FULL 2 year subscription...



To use pre-paid revenue to cover current costs is not wise. You're counting on getting new customers to pay for costs related to existing customers...and then counting on new customers to pay for the new customers that are paying for your existing pre-paid customers...and so on, and so on.

Basically, you'll always be playing catch-up.

--Tina

Don't touch pre-paid unless you are selling planned or vaccant capacity. If you target niche markets and focus more ad dollars local to you you may yield better conversion rates however the numbers above are about right.

Karl, I understand your reply, but Tina replied to both this thread, and another thread of mine. She pretty much said if I do not know what I'm doing, stay out.

How else do you learn other then trying and/or asking on the forums? :-)

I hate to tell people that there is no hope. It is, however, going to be a lot harder than you think. Therefore, I think the worst thing you can do is to take out an SBA loan. If it doesn't work out, there goes your credit. Not worth the risk.

You can eliminate the risk if you take the 100 clients you already have, and work up to the next level. One step at a time. In this way, you build a solid foundation. Not only financially, but your technical knowledge, your system of doing things, etc. all become refined in tune with one another.

If you take out a loan, you'll be yet another hosting company who has no choice but to offer gimics and overload servers in order to stay afloat.

My advice, for what its worth, is not to climb the ladder so fast that you fall off. Just take it one rung at a time. You obviously have taken good care of your customers and are capable. Keep doing what you are doing. Work up to a dedicated server. By the time you get there, you'll probably be really happy you didn't take out that loan.

The most important thing to learn about running an internet business or a business that does the majority of its business online is that ppc is a very small percentage of business.

There are so many tremendously important ways to online market that have nothing to do with PPC or banner ads.

Unless you are an experienced pro at ppc you will loose money, the learning curve is steep. If you are trying to start your business by depending on sales from ppc you will likely pay for ads ten times faster than you make sales.

There are ways of obtaining customers that cost you very very little and take none of your time. Focus on those ways.