I watched a sales pitch video where the marketer showed his results for advertizing a Chicken Coup eBook (try not to laugh too hard) product via Google PPC.
It confirmed my suspicions that there is a fine line between profit and loss for affiliate marketing using PPC.
To make it work, they displayed image Ads on the content network to get maximum CTR and lowest CPC.
There conclusion was that image Ads produce better results than the text Ads on the content network.
Their initial CPC was $0.11 and after their quality score was improved by split testing many variants of Ads, it was reduced to $0.07 CPC.
Unfortunately, they didn't mention anything about their landing page. Direct linking is not allowed with AdWords due to the difference in display URL to landing page URL.
Once their campaign was optimized, they got 1.84% CTR and had around 125,000 clicks with 788 sales. So the click to sale ratio was like 0.6%
They spent $9,257 on clicks and made around $17K in sales. So it looks like a healthy return.
But if their CPC had remained at $0.11 it would have still been profitable but with a much reduced profit margin.
Disclaimer: I was scribbling down notes whilst listening so may have made an error here or there.
Hopefully this provides some insight into the realities of PPC marketing (such as the need to risk relatively large amounts of money on campaigns, get lots of clicks and optimize) and maybe some of you guys could post examples.