DV Shirts Pay per Click Report

DV Shirts are vendors of ‘high quality clothing for business people’. Although a credible reputation has been gained from the production of reliable clothing, David and Victoria aim to increase sales further through online advertising. This rise in sales will be engineered through ‘pay per click advertising’.
What is ‘pay per click advertising’? Pay per click advertising is a system of internet marketing whereby advertisers, i.e. DV shirts, pay a fee every time their advert is clicked. Inevitably, visits to the website are bought instead of attempting to “earn” those visits organically. (Wordstream.com, 2013).
This report aims to analyse the practicality of pay per click advertising for ‘DV Shirts’ by utilising the information collated by David and Victoria on the twenty day experiment with the model.

How possible is the ‘perfect scenario’? (2)
Figure 6 Histogram of cost per click
Figure 6 Histogram of cost per click
Information on the cost per click was then scrutinised.
The main frequency to examine is the ‘over £2.25 to £2.50’ which has the same frequency value as other lower costs. This shows that 3 out of 20 of the days investigated lead to a cost of £2.25 to £2.50. As calculated earlier, this correlates directly with the amount of clicks, implying that the targets would only be achieved 15% of the time. This result will not be helpful in producing profits similar to the ‘perfect scenario’.
Demographics
Figure [ 7 ]: Ofcom survey results on internet use in Q1, 2013

Figure [ 7 ]: Ofcom survey results on internet use in Q1, 2013

DV Shirts’ target audience is business people. Internet users could be split up into two social grades: ABC1 and C2DE. ABC1 refers to the ‘white collar’ persons while C2DE refers to the ‘blue collar’, working class. This means that DV Shirts’ produce is aimed at the ABC1 group.
The figure above shows the demographic distribution of internet users. The main focal point is the 90% of ABC1 respondents that use the internet. This percentage is encouraging and implies that internet advertising is a perfect avenue to appeal to this group of people. In addition, individuals between ages 16-34 have the highest rates of internet use (95%), some of which will be business people and potential customers. The sample size included 3750 people over the age of 16. As this is a mere 0.0058% of the overall UK population, it could be said that the information is unreliable; however, it provides a fair idea of the proportion of middle and upper class that are internet users. (Internet Citizens 2013: Use of selected citizen-related online content and services, 2013, pp. 6-7)

Conclusion
Having deciphered the information from the 20 day trial, it is advisable for DV Shirts not to continue on with pay per click advertising. There was an obvious positive correlation between the cost per click and number of clicks. This made the target of 250 clicks at £2.50 each seem probable. However, by calculating the profits and proportioning them to an annual figure it was revealed that a loss would be made with a conversion rate of 2%.
To increase this conversation rate to the optimum of 3%, a sum of £10,000 for a website redesign would be required. Further calculation showed that even with a 3% conversion rate, the annual profit would be a mere £1158.85 which is not worth the total expenditure of £168,532.28.
The idea of the ‘perfect scenario’ was coined. This included the conversion rate of 3% as well as 250 clicks at £.2.41 each. This would produce a yearly profit of £2775, 1.2% of the amount paid. A profit of 1.2% is woeful compared to the capital invested and certainly not what DV Shirts stands for.
Furthermore, demographic research indicated that DV Shirts were already reaching out to 90% of ABC1 internet users during this 20 day experiment. This was the target social grade as the goods sold are chiefly for business people. This suggests that the number of clicks would not suddenly shoot up as most ABC1’s were already online.
DV Shirts must look for an alternative to appeal to these internet users at a better price. A suggestion is eBay which provides an option to register as a private seller while paying a small amount out of profits made. EBay is straightforward to grasp, does not require website fees and has over 14 million active users. Inevitably, this will push DV Shirts’ profit margin wider than pay-per-click advertising could.

Reference
Internet Citizens 2013: Use of selected citizen-related online content and services. 2013. [e-book] Ofcom. pp. 6-7. Available through: Ofcom http://stakeholders.ofcom.org.uk/binaries/research/telecoms-research/Internet-Citizens-Report.pdf [Accessed: 30 Nov 2013].
Wordstream.com. 2013. Learn PPC in three guided courses with WordStream. Knowledge is power!. [online] Available at: http://www.wordstream.com/ppc [Accessed: 25 Nov 2013].