Profitability is a major motivation for affiliate marketers. There is always the question of whether to drop a campaign or optimize it to make it more profitable.
This is where Earnings Per Click (EPC) and Conversion Rate (CR) comes in.
EPC and CR serve as metrics to gauge how well an offer is performing.
These terms are affiliate marketing terms and they clearly state whether the traffic generated in a campaign is of very good quality or otherwise.
What is EPC?EPC stands for Earnings Per Click and is calculated as the ratio of the amount of earnings in a campaign to the number of clicks. In short, the commission earned divided by the number of clicks.
EPC is more of a formula that helps you determine the mean average value of all the clicks you achieve. Not all clicks would lead to a sale. Thus, EPC helps you determine, on the whole, the average value of the clicks.
Some clicks or individual actions don’t translate into earnings. There could be a high bounce rate, or a lot of clicks might not evolve into sales or sign-ups. Thus, you don’t look at clicks individually but as a whole in the campaign.
For instance, if you’ve got a 1000 clicks and your total earnings is $1800, your EPC would be 1800/1000. That would give you 1.8 as your EPC. That’s $1.8 per individual click.
It appears many prefer to calculate EPC per 100 clicks. To do this, you just have to divide the affiliate earnings by the number of clicks and multiply the result by 100.
The higher your EPC, the bigger the earnings on your traffic.
But you need to remember that the EPC only shows the level of income; it doesn’t depict the expenses or your investment. That is for you to calculate and determine if it is a profitable campaign.
Why EPC is importantEPC is very important. It helps you to determine whether you should go through with an offer or not. Some offers may bring you loss if you don’t put in a lot of work or push harder than the competition.
It helps you see how much money you earn for the clicks in the campaign - both high and low-value clicks. Was all the effort worth it? EPC would help you decide.
With EPC, you can get to know if there is an issue with the links or landing page and see what needs to be optimized for better performance.
Internet users can be very fickle and indecisive. They can change their minds at the slightest obstacle. Why should it be the case that a second delay would see a 7% drop in conversion rate? This is according to statistics provided by Aberdeen Group Research.
EPC in Affiliate MarketingTo make it easy for affiliate marketers, per-click earning sites use EPC to give a cost-per-click formula that allows affiliate marketers to see their earnings at a glance across the board. They save them the stress of punching the calculator to get actual figures.
A lot of good affiliate schemes provide EPC information as part of their wider analytic tools for affiliates. This helps them track their numbers in real-time. It also helps them identify which campaign or promotion is profitable and what is working or otherwise.
Affiliate schemes or programs can offer different levels of commissions. It may depend on the action achieved from each click on the same link.
What is CR?CR stands for Conversion Rate. This is the ratio or percentage of the number of conversion to the number of clicks.
In other words, CR is the number of times an offer converts divided by the number of times it was clicked.
If you’ve got a 1000 visits to your affiliate site and made 200 sales. Your CR is 200/1000, which is 20%.
The conversion rate would depict the percentage of visitors that went from an ad or affiliate link to a landing page and completed the target action.
The higher the conversion rate, the bigger your earnings on current traffic.
CR indicators can be very helpful in evaluating an advertising campaign. You can use it to compare the effectiveness of different traffic sources; you can see what segment of your audience is responding better to the offer. You can also use this to know if your landing page is of good quality.
With the provided affiliate program data, you can focus on CR to compare how effective your work has been with the average results of other partners working with the same offer or affiliate program.
The Benefits of EPC and CRThese two metrics are very useful in gauging the performance of a campaign. The two can tell you how good an offer is going to perform based on the payout and conversion rate.
If one of the two metrics is low, but the other is higher, the overall performance can still be great.
Knowing the metrics well enough helps you avoid the pitfall of focusing on the wrong numbers and points out the weak link in your sales process.
Final WordsThe good thing about data is that it tells you where you stand. With EPC and CR, you know where you stand and you can make decisions with this.
Without data, you may be unaware that something is wrong somewhere and your investment may just keep draining through the sink.
These metrics, if carefully followed, would help you decide which offer is good for you and otherwise.