Should you focus on profits or some other metric when developing internet marketing campaigns?

Mike Moran has a great feature today talking about optimizing profits in internet marketing campaigns. Alan Rimm-Kaufman notes in the piece, “Discounts are an addictive drug.” I’m continually amazed by the number of otherwise smart marketers I know who immediately think in terms of discounts to drive traffic/sales/what-have-you. Lowering a price is easy, no matter what it does to profits. It’s also short-sighted. Here’s one example why.

I have worked for the last several years selling hotel rooms online for a number of hotel brands. A colleague at a competitor listed his company’s hotels in their search results by price, low-to-high. The result: his hotels started lowering their prices to get “premium placement.” The hotels higher on the page often got more reservations, but all lost profits from the reduced rates. Some even failed to make a profit on some sales. Oh, and he lost his job. Um, oops.

Anyone can sell a dollar for eighty cents and try to make it up in volume. The really smart folks figure out how to find customers who are willing to buy your products for the right price, not just a cheap one.