Performance Metrics are a key determinant for gauging the effectiveness of affiliate programs. So, if you want to know the average revenue that you are generating for every click that you are driving to an offer, you have to take the help of Performance Metrics. EPC or Earnings per Click is one such Performance Metrics that helps you in a big way.
Most of the affiliates and internet marketing professionals are not aware of this important performance metrics – EPC (Earnings per Click) – so we thought it right to come up with a post describing each and every aspect of Earnings per Click.
Definition of EPC (Earnings per Click)
It is described as a performance metrics which gives the average earnings generated as a result of every click you get on your website, product page or affiliate offer. So, EPC gives the average revenue for each click that you are driving to an offer.
It is the amount that you can expect to earn for every 100 clicks to an affiliate link. It is usually displayed by affiliate marketing networks and help publishers compare the earning potential of different merchants.
The formula for calculating EPC is as follows:
Earnings / Number of Clicks
For example, if you received a commission of $250 by sending 100 clicks to an offer, then EPC would be $2.50.
250/100 = $2.5 EPC
EPC meaning in Affiliate Marketing
It is a perfect way to determine which offer performs better with different payouts.
Suppose an affiliate is running two offers, one with a payout of $36 and another with a payout of $40. It is easy to presume that the $40 payout is a better offer. However, let us see how EPC helps to determine which offer is better.
The offer A with $36 payout received 100 leads with a total of 700 clicks. The affiliate earns $3600, and the EPC comes out to be $5.14.
The offer B with $40 payout received 70 leads with a total of 700 clicks. So, the affiliate earns $2800 and the EPC for the offer comes out to be $4.00.
So, in the above example, offer A has an EPC of $5.14 whereas offer B has an EPC of $4.00. It shows that an offer with a higher payout is not always a better option.
In the above example, the affiliate earns $1.14 per click more in Offer A when compared to Offer B with an extra revenue of $800.
EPC helps affiliate to find high earning offers which are converting better.
Thus, the percentage of clicks that are converted to completed transactions (such as the purchase of an item or opening up an account) has a major effect on the EPC realized by an affiliate.
However, earnings per click cannot alone figure out the actual profit for the affiliates. You also have to consider the cost per click for knowing the actual money you are making with your affiliate campaigns.
Here’s how to figure out the net profit per click:
Net profit per click = earnings per click – cost per click
So, if your EPC is more than the cost per click, you are making money.
Finding Affiliate Offers
When it comes to finding which Affiliate Offers have higher ROI, the EPC is the number that matters the most. You may have a high paying offer, but it does not mean that the offer is performing well. It’s actually the EPC that determines the effectiveness of an offer.
Suppose, an offer has a payout of $80 generates 50 leads with a click of 100 in a month. Its EPC turns out to be $40 per click. Another offer with $100 payout generates 25 leads with a total click of 100 in a month. So, its EPC is $25 per click.
So, in the above case, it is obvious that you would promote $80 payout offer instead of $100 payout offer.
Thus, EPC helps in finding Affiliate offers.
PPC vs. EPC
PPC is the pay-per-click advertising model wherein advertisers pay the publisher each time their ads is clicked. Search Engine Advertising is one of the most important forms of PPC.
So, if a PPC advertiser is offering $2 per click, it means that an advertiser pays $2 to a publisher whenever their ads get clicked.
The PPC price is not fixed it depends on advertiser how much he is willing to pay, and also a lot of other things are considered.
Whereas, EPC is concerned with the total commission that is generated and how many clicks it has used to do it.
Suppose, the total commission generated is $300 and the clicks triggered are 100, then the EPC comes out to be $3 per click. It is calculated whenever a specific action is completed by the user which generates commission for the publisher.
We can use EPC in PPC model too. Say a Google AdSense publisher earned $300 in a month, and total clicks on ads were 200 now the EPC will be $300/200 = $1.5.
This helps the publisher to know his expected income from AdSense and how he can increase his income.
So, we see that Earnings per Click (EPC) is an important performance metrics that helps you to calculate the earnings on an internet marketing campaign.