Say you have invested $500 in a PPC engine. How much of it would you expect to spend before you get one customer? $10 per customer? $20? $50?

By the way, I'm talking about shared hosting, not dedicated or reseller.

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Don't forget that the answer to this question relies on how much you're bidding per click. If you typically have a 1% conversion ratio and are bidding $2.00 per click, you won't see a customer until you spend $200. If you're bidding $1.00 per click, you'll see a customer at $100.

May I also ask those who voted in the <$1 - $10 range what your secret is and, at risk of helping our competitors, which pay-per-click engines get you this kind of cost-per-acquisition?

I'm astounded that about 50% of the respondents expect to pay ten dollars or less for a customer. We've spoken with scores of hosting company marketing managers, and none (that's 0%) has realized cost-per-acquisitions that are that low.

I'm looking again at the poll numbers -- 25% voted less than $5!!! Are we really to take those votes seriously?

I would not use pay per click. I have not seen results from it yet anywhere!

I am doing just dandy without it!

Well lets think about this...

Since we're talking about shared hosting customers. Lets set a reasonable cost of a low cost plan around $10 per month and a high cost plan around $25 per month, I know many are cheaper than that but this is just an example.

so if we used your 1% sign up ratio to money spent we would get this...

To get the $10 customer if you are paying $2 per click it would cost you $200. This would then take you 20 months or almost two years to realize your money back on that customer. If you paid $1 per click and spent $100 it would take you 10 months to realize your money back.

Frankly that is way to long. Considering that the customer may not spend the full 10 months with you and the odds are much lower for them spending 20 months with you. I know that some may argue that but it is true. We offer great support and service and have had some customers for years others leave for greener pastures when the next best thing comes along.

So this type of deficit spending does not fit our budget for shared hosting or for that matter even low cost reseller hosting.

Of course that one signup would have to be Yahoo or Google or Ebay or someone of that size......

Originally posted by Everyday
Well lets think about this...

Since we're talking about shared hosting customers. Lets set a reasonable cost of a low cost plan around $10 per month and a high cost plan around $25 per month, I know many are cheaper than that but this is just an example.

so if we used your 1% sign up ratio to money spent we would get this...

To get the $10 customer if you are paying $2 per click it would cost you $200. This would then take you 20 months or almost two years to realize your money back on that customer. If you paid $1 per click and spent $100 it would take you 10 months to realize your money back.

Frankly that is way to long. Considering that the customer may not spend the full 10 months with you and the odds are much lower for them spending 20 months with you. I know that some may argue that but it is true. We offer great support and service and have had some customers for years others leave for greener pastures when the next best thing comes along.

So this type of deficit spending does not fit our budget for shared hosting or for that matter even low cost reseller hosting.

Just to clarify, I wasn't suggesting that $200 or $100 is the appropriate cost-per-acquisition for a $10/mo. customer. I was just using hypothetical numbers to illustrate the importance of incorporating the cost-per-click when answering the original poster's question.

I understand.

Lets attack this from a different perspective...PPCHosts. If you owned a hosting company that did shared hosting what would you pay for each customer?

Originally posted by digitalb
I would not use pay per click. I have not seen results from it yet anywhere!

I am doing just dandy without it!
Nor would I! The only person making money is the PPC site. If it costs you more then 3 months of hosting (i.e. $30 for a $10/month plan), it's not worth it. To be honest, I would never waste a penny on a PPC program.

Personally I wouldn't spend more than 1 month's worth of cost for small customers, though I would go as high as 6 months for self-managed dedicated customers. As others have mentioned it's just a matter of economics.

Low-ball customers are our bread and butter, but they tend to be fickle. I can't spend more than a couple of months worth of profit per customer as they may just leave.

Originally posted by Everyday
I understand.

Lets attack this from a different perspective...PPCHosts. If you owned a hosting company that did shared hosting what would you pay for each customer?

In our talks with marketing managers, these are the main factors that determine the target cost-per-acquisition:
1. average monthly subscription fee
2. average customer retention rate
3. referral rate (how many referrals gained per customer)
4. projected resale value of client (in case of buy-out)
5. average monthly support cost per customer

It would be impossible to determine a sustainable cost-per-acquisition without knowing all of the above variables. Obviously, the higher 1, 2, 3, or 4, the more a hosting company can afford to pay per additional client. In particular, if a hosting company's customer satisfaction is through the roof, and #2 and #3 are accordingly huge, the host can afford quite a significant cost per acquisition, even if #1 is fairly low.

PPCforhosts, conversion ratio is much higher than 1:100. Its more like 1:30.

Its no good asking how much people will pay for a signup and then using "hyperthetical numbers" for the conversion rate, why dont you just ask someone how big a conversion rate they have and you decide "the hyperthetical" cost? It would work just aswell.

Hope you get my point as you have made this thread totally worthless.

I am not sure if I should even reply to this as we have never done any type of paid advertising with the exception of sponsoring a couple big sites and adding banners but I would say I would be willing to pay 2x the monthly fee so for 10 a mo. hosting I would pay $20 for a signup.. but thats just me and again I could be WAY off..

Although I'm still small, I have yet to spend much in online advertising. I live in a HUGE market for shared-hosting. In fact, my only competitor in the valley (besides ISP's :rolleyes: ) charges $35.00/month for 90 megs of space and 2 gigs of transfer. To say the least, signups locally are 3-4x that of online signups.


Guess I should have mentioned that I spend about $3-$5 locally per customer, however, my local customer signup ratio is 10x that of my "online" signup ratio.

Ok, so it sounds like a lot of people simply don't use PPC engines or they don't work. What then are these people doing to get new customers? Where are you advertising? What are you paying?

We get most of our signups from word of mouth and search engines. When we first started out we got most of the signups from the local area. Now we get very few from the surrounding area but a lot more from search engines etc. Word of mouth is by far the best marketing tool, however to make it work you have to build up a reputable brand.

Word of mouth, search engines and articles all staff write for sites and magazines :)