Understanding EPC – 1 Click, 100 Clicks or 1000 Clicks?

With so many terms and variations used in performance marketing there continues to be confusion in the space. With metrics measuring ROAS, CRM, CTR, CPC, PPC and so many more, the terms used to describe EPC in affiliate marketing, or Earnings Per Click, is no exception.

EPC is one of the most important metrics both for affiliates and affiliate managers alike . It helps EPC - Earnings Per Clickunderstand the success rate of an affiliate program over a particular timeframe compared to other programs, helps affiliates understand how much they may earn and if a program is well managed, and helps merchants understand how well their affiliates are performing and what they may potentially be doing to drive sales.

Variables that affect EPC are things like cookie days, website conversion rates, commission payouts, the quality and quantity of affiliates driving clicks to a program, how they are driving those clicks and more.

But the confusion comes in more so by the variances in EPC definition. Some networks, such as Google Affiliate Network, use a 100 click EPC benchmark to describe the average earnings, and others, such as Commission Junction, describe it as the average earnings for every 1000 clicks.

Further, some affiliates break it down themselves to understand what they might earn per one click. This is generally the case with PPC affiliates who have to measure true EPC to determine Net Earnings Per Click which are calculated, not on gross sales, but on RPC (Revenue Per Click) minus CPC (Cost Per Click).

eFax.com has an interesting description of EPC to clarify further:

“Your EPC (Average Earnings Per One Hundred Clicks) is a relative rating that illustrates the ability to convert clicks into commissions. Your EPC is calculated in an “apples to apples” comparison with all publishers by taking each publisher’s total commissions earned (regardless of currency) and then converting that total (if necessary) to US dollars.”

Commission Junction also breaks it down well based on their internal processes:

Three month EPC values are calculated and updated daily, using data beginning five months previous through three months previous. On the first of each month the “five months previous through three months previous” timeframe changes to accommodate the month change. For example, an EPC rating in June is calculated using data from January, February, and March. It is necessary to use data beginning five months previous to give accurate EPC ratings that may include extended or reversed transactions.

There must be at least 1000 clicks for the 3-month period to calculate your EPC. If less than 1000 clicks occurred, N/A will display for the EPC.

7 day EPC is a calculation made by taking data from yesterday counting back seven days. We take the sum of all commissions for the 7 days and divide it by the sum of all clicks for the same 7 days then multiplying this by 100. If today’s date = N, the date range used is N-8 to N-2. NOTE: There must be at least 100 clicks for the 7-day period to calculate your EPC.

In the words of Carolyn Kmet, the point of this exercise is to understand that EPC should be used to determine if a merchant is converting or not and how it’s performing in relation to other programs.

If an affiliate is calculating their own EPC, they need to use whichever calculation makes the most sense for them.  For many, EPC is more of a standardized approach to gauging whether or not a program converts over time, rather than an end-all-be-all in determining exact financial earnings.

Affiliate Marketing Terms, Definitions and Abbreviations – Part 4: Functionality and Tools

Over the last two weeks I have been defining many of the commonly used terms in  performance marketing. It can be overwhelming and confusing at times, so understanding the key terms will help ease your experience and effectiveness in this industry.

In part one we looked at the key players in performance marketing, in part two we looked at common affiliate program models, in part three we looked at metrics and KPIs and this section will take a closer look at the terms used in overall functionality and “tools” used in affiliate marketing.

 

Functionality and Tools

Creatives

This is a term used to describe the tools that affiliates use to promote your products or brand. They usually come in the form of banners, widgets, datafeeds, landing pages, storefronts and videos.

 

Hyperlink

This is a term used to describe when a link of any sort can be clicked on and leads the “clicker” from one page to the next.

 

Tracking Link

A tracking link is a term used to describe any hyperlink that has a specific identifier attached to it, such as an affiliate ID. In affiliate marketing it’s the link that tracks which affiliate gets credit when a sale or lead takes place. These tracking links usual come from an affiliate network, in house affiliate program software, or e-commerce platform add on.

 

Landing Page

This is a term used to reference any page the customer lands on. A “landing page” could be your homepage, a particular product page, a sales page and so on.

 

Deep Link

A deep link is a hyperlink that goes to a particular page or image deeper into the website than the homepage or other usual landing page. For retailers this could be a specific product page as an example.

 

Datafeed

This is a file used to communicate important information about each of the products you sell. It usually comes in the form of an excel or csv file which outlines your products name, description, price, image URL, availability, etc.

 

API

API stands for Application Programming Interface which basically works as a dynamic and real time feed to something like a data feed, a price list, inventory system or even checkout from one device to another. It helps speed things up and automate information integration.

 

Widget

The word widget is a term used to describe self-contained code that displays select information, usually a smaller piece of a larger puzzle, like a sampling, to allow people to get an idea of what something is about. A widget can contain banners, text, videos, forms and more. In affiliate marketing widgets are generally used on product pages or content pages to give samples of more products that the buyer might be interested in.

 

Cookie

A cookie is a tracking mechanism used as “memory” to identify that a person has done something specific. For example, if a customer goes on an affiliate website and clicks on a link that includes their affiliate tracking code, a cookie is automatically placed on the customer’s computer to remember that the affiliate referred them there. In this case, if the customer then buys something from the merchant the affiliate referred, the cookie will “remember” and credit them accordingly.

 

Return Days / Cookie Duration

Return days and cookie duration basically refer to the same thing – how many days after an affiliate tracking link is set by cookies will the affiliate have the opportunity to earn before it expires. If you have a 60 day cookie, for example, it means the customer who clicks the affiliate link has 60 days to buy something for the affiliate to earn commission off it. If the customer comes back and buys something later than 60 days, the affiliate will not earn a commission on the sale.

 

Text Link

Text links are used by affiliates in the content of their work, such as in a blog post, a static website page, in a newsletter or in a review. It’s is simply text that is hyper-linked and can be clicked through from one page to another.

 

TM Bids

Some affiliates try to “bid” on a company’s trade mark terms because it produces easy sales and conversions. Generally if someone does a search in google for “Brandname Coupons” or “Brandname producename” they already know what they want to buy. This is a strategy used frequently by PPC and coupon affiliates and is a strategy that is not allowed in many affiliate marketing programs.

 

TOS

This simply stands for Terms of Service. It’s the legal notice to affiliates of what they are and are not allowed to do with an affiliate program they join.

 

Compliance

Compliance is a term used to discuss and enforce a program’s Terms of Service. How well are affiliates complying by your rules? What do you do when they break those rules? These are all questions and considerations when discussing “Compliance”.

There are many more terms used within the affiliate marketing space and online in general, though these are some of the most commonly used terms to help you get through.

What are some of the key industry terms, slang and abbreviations you see in your day to day operations in the performance marketing space?

Affiliate Marketing Terms, Definitions and Abbreviations – Part 3: Metrics and Key Performance Indicators (KPIs)

Affiliate Marketing Terms, Metrics and KPIsAffiliate Marketing is a complicated industry and the various terms used don’t make it easier. In part one of our Affiliate Marketing Terms, Definitions and Abbreviations we talked about key players in the performance marketing space. In part two, we define the various affiliate marketing models that exist. This next section takes a look at the terms used when discussing common key performance indicators and affiliate marketing metrics.

 

Metrics and Key Performance Indicators

AOV / AOS – Average Order Value / Average Order Size

There are two general references to AOV or AOS. These are the overall Average Order Value of all purchases made on a website. If you look at your Google Analytics, for example, and go to your Conversions > Ecommerce > Overview section, this is the one called “Average Value”.

The other is specific to the affiliate marketing channel and shows you the AOV that affiliates are brining in. You can then compare the Average Value from your overall site performance to your affiliate partners to determine how they are performing compared to other channels. If it’s much higher, they may be doing a better job of up selling, cross selling or featuring more high value products from your site. If it’s lower, you may need to help them understand your products, services and value propositions better so they can help drive higher sales.

 

ROAS – Return on Advertising Spend

This is a term commonly used with search affiliates or internal search departments (mainly your PPC channel). The reason it’s important is search affiliates will speak with you about how well their campaigns may be converting and discuss keywords with you which will produce a higher Return on Advertising Spend.

If you have your own PPC efforts running, you will need to be strategic about your allowances with search affiliates, however there are solid win-win situations that will result in mutually beneficial relationships and dual profits for both parties involved.

 

ROI – Return on Investment

This one may be a bit simple to define here, but possibly THE most important abbreviation on this entire blog. Return on Investment tells you whether you are producing a positive return, a negative return or breaking even on your spend. I won’t go into detail about this one since it’s the basis of all business efforts – a positive ROI.

 

EPC – Earnings Per Click

Earning Per Click is a way for affiliates to understand what their earning potential will be if they join your program. EPC represents the average earnings of all affiliates in your program based on the number of sales (conversions) and clicks they send. To an affiliate it means “If I send 100 clicks your way, how much am I going to earn back?” If you have a $20 EPC, it means they will earn $20 from those 100 clicks. If you have a $0 EPC it means none of your affiliates are selling anything, which is not an encouraging figure for an affiliate to look at when considering joining your program. They would be taking a very big risk.

Alternatively, if you see a program with a $1200 EPC, either that program has an incredibly high AOV or there is something fishy going on. I tend to find the most common EPC range for e-commerce programs is usually between $12 – $45 EPC. Generally affiliates look for the programs that have an EPC of $15-20 or higher.

 

Reversal Rate 

This is a term used when a sale or affiliate commission is reversed from previously affiliate credited transitions. For example, if you have a 10% reversal rate, this means that 10 of 100 orders previously credited to affiliates were “cancelled”. It’s normal for businesses to have some small reversal rate since there are sometimes cancellations or returns by consumers, however, very high reversal rates (say 30-50%) are a big red flag for affiliates and they will be very wary to join your program – if they ever do.

 

Conversion Rate

Aside from ROI, this is likely the other most important metric used online.  Conversion rate measures how successful you are capturing the sale or lead. If you have a 2% conversion rate, that means 2 out of every 100 people coming to your website are completing a sale or lead generation form. (Note – there are other actions one can take to “convert” however these are the most common two).

There are a ton of ways to break conversion rate up to help you understand your strengths, weaknesses and opportunities. For example, you could measure your entire site conversion rate, a landing page’s conversion rate, an affiliate’s conversion rate and so on.

Very high conversion rates from affiliates could mean they are either fabulous marketers or are doing something that could be hurting you. Very low conversion rates from affiliates could mean they are not sending you targeted traffic, there is something wrong with their landing pages, another affiliate is getting credit for their sales or they may need more training about your product or brand.

 

Click Through

This is a term used to describe when a user clicks on an ad or link (whether it be a banner, text link, product image, widget, etc) and leaves the page to land on another page. They are “clicking through” from one place to another using one of your ads or creatives.

 

Impression

This is simply a term used to explain how many times your links are showing. For example, if in your affiliate program you have 100,000 impressions, it means the combination of all your creatives (banners, text links, product images, etc) that have an affiliate tracking link attached to them have been “seen” that many times across all your affiliate’s touch points.

You can also track each individual banner, text link and such to see which ones are showing the most, which are being used the most and so on.

 

Attribution

Attribution is a term used to describe which chain of affiliates or marketing channels were used to complete a transaction. With attribution tracking you can better understand the values different touch points bring to your sales cycle. You can read more about attribution here.

There are various other terms used to describe key performance indicators in affiliate marketing, especially when cross referencing other marketing channels such as in search, social or mobile marketing, however this gives you a solid place to start.

My final section of affiliate marketing definitions and abbreviations will take a look at the terms used to describe tools and overall functionally of an affiliate marketing program.

Affiliate Marketing Terms, Definitions and Abbreviations – Part 2: Common Affiliate Program Models

As a continuation from Part 1 of Affiliate Marketing Terms, Definitions and Abbreviations today we look at what the most common affiliate program models are.

Affiliate marketing program model

Common Affiliate Program Models

CPA – Cost Per Acquisition

This is a term used to describe the action of acquiring a new customer. CPA can be used to describe a type of network (such as CPA network) or a $ or % payout to an affiliate for a particular action taking place.


CPC – Cost Per Click

This is a term used to either describe an affiliate marketing model where the affiliate earns on every click they send to a merchant or advertiser, exactly how Google AdSense works.

 

CPL – Cost Per Lead

This terms is used to describe an affiliate program model where an affiliate or publisher is rewarded once a “lead” is completed through a form or other means, such as a newsletter sign up. CPL programs can pay anywhere from $0.10 per lead to $150 per lead or more. These models are most common with programs in insurance, finance and education as examples.


PPS / CPS – Pay Per Sale or Cost Per Sale

This is a term used to describe an affiliate marketing model that pays out (generally) a percentage on a sale that took place for a tangible product. Depending on the product, an average PPS or CPS payout usually looks anywhere from 1-4% to 15-30%. The average CPS commission payout is usually between 8-10%.


CPM – Cost Per Thousand Impressions

The model of paying on impressions is most common in display networks, in international affiliate programs such as in China, and in ad buys. However it’s important to be mentioned here because it is in fact an option for an affiliate program and because the term is used within the industry.

 

MLM – Multi Level Marketing (Not Affiliate Marketing!)

Personally, not my favorite thing in the world, and not one that many people in this industry consider affiliate marketing, however, multi-level-marketing (also known as a “pyramid scheme” or “network marketing”) is very popular with some types of products and term is sometimes used in the industry so it’s important to mention it here.  It is NOT affiliate marketing. See this post here for more.

Stay tuned for Part 3 of our Affiliate Marketing Terms, Definitions and Abbreviations when we define commonly used terms related to reporting metrics and key performance indicators.

Affiliate Marketing Terms, Definitions and Abbreviations – Part 1: Key Players

Affiliate marketing can be incredibly complicated, especially when throwing around various industry terms, slang and abbreviations. Here are a few of the most commonly used / seen terms and expressions used in the affiliate marketing space.

 

Key Players

Before we get into defining commonly used terms, it’s important to point out who the key players are in the affiliate marketing / performance marketing space.

 

Merchant / Advertiser

This is the company or person selling and distributing the good or service to the end user. They are also known as internet retailers, e-commerce stores, service providers and a few other terms. However the two most commonly used are “merchant” or “advertiser”. It’s the affiliate’s job to promote the merchant in order to drive traffic that will ultimately generate a sale (or other desired action).

 

Affiliate / Publisher / Associate

These are the guys who promote the merchant in the hopes of earning a commission or “payout” on the sale. There are many terms for affiliates, such as “internet marketer”, “publisher”, “advertising partner”, “performance marketer” or “associate”. The two most commonly used terms to describe the person who works on a performance based model to drive traffic to the advertiser’s site are “affiliate” and “publisher”.

 

Super Affiliate

This is a term that’s very subjective and there are different definitions of what a “super affiliate” is depending on who you ask. Some people will define a super affiliate as the top performing affiliate in one specific program. Others will define super affiliates as those who earn more than $100,000 per year. Others, those who generate over $1,000,000 per year in affiliate commissions. I’m not sure there is a solid answer to this question other than, a super affiliate is always one who has potential to drive a significant amount of traffic and sales for your particular program.

 

Affiliate Network

An affiliate network is just a fancy term for “affiliate tracking platform”. The job of the affiliate network is to help track affiliate sales and performance, assist with technical issues as needed, connect affiliates to merchants through exposure and support, help with payouts and at times compliance. There are options to get your own internal tracking so you don’t have to work with a network, however if you’re serious about making your affiliate program work, you will need to decide on a network at some point. The four biggest affiliate networks in the retail space are Commission Junction, Linkshare, Google Affiliate Network and ShareASale.

 

OPM / AM – Outsourced Program Manager / Affiliate Manager

In order for your affiliate program to be successful it needs a proper affiliate manager. You can either hire an affiliate manager in house (I strongly recommend this person is experienced and knows what they are doing) or you can outsource your affiliate program management to what we call an “OPM”or outsourced program management company, such as All Inclusive Marketing.

Affiliate Managers and OPMs are responsible for the day to day operations, planning and execution of your affiliate marketing efforts such as recruitment, activation, training, optimization, reporting and compliance.

 

Buyer / Customer / Consumer

Probably THE key player in the affiliate marketing game is the end user, also known as the buyer, the consumer or your customer. Without the buyer, the merchants would have no need to work with affiliates, and affiliates would have no one to drive traffic to their merchant partner’s sites.

Stay tuned for part 2 when we talk about common affiliate program models.

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