In the affiliate marketing space, the amount of terminology can be overwhelming. In this video/article I will go over 4 key terms that every affiliate marketer needs to know.
1: EPC (Earnings per Click)
Every affiliate marketing offer has an EPC attached to it. An EPC is basically a judge of how good that offer is. It means what one click is worth on average for that offer.
Let’s say that you send 100 clicks worth of traffic, and you earn back $200 in revenue on the affiliate offer. That essentially means that your EPC would be $2 per click.
EPC is very important to look at when you compare affiliate offers. If you’re running offers on multiple networks or split-testing different offers within the same vertical, you want to use EPC as a benchmark to tell how one offer is compared to something else (another offer, your traffic costs, etc.)
2: CR (Conversion Rate)
Conversion Rate means how many sales occur after a certain number of clicks.
Let’s say that you send 100 clicks to an affiliate offer, and you get two conversions. That means your conversion rate equals 2%. CR is not as important to look at as EPC, but the two together can be an overall indicator of how good the offer is going to perform based on the payout and the conversion rate. Meaning, if one of these two metrics is low, but the other is higher, the overall performance can still be great, e.g. low CR with high EPC, or the other way around.
3: CTR (Click-Through Rate)
CTR can be applied to a lot of different things in affiliate marketing, but the two biggest areas are your ads and your landing page. Knowing your CTR on your ads is very important.
- If you have an extremely low click-through rate on your ad, then coming up with a better ad creative is probably room for improvement in your campaign.
- On the other hand, if your conversion rate is very low on your landing page, then you know that the biggest room for improvement is actually on the landing page in the campaign.
We make a lot of our optimization decisions based around CTR, especially when it comes to the landing page. CTR on certain ads generally varies per vertical. Offers with a lot of mass appeal (that a lot of people can take action on) might get a higher CTR on the ad. If it’s a niche-specific offer (that only a small select group of people are interested in), you might see a lower CTR on the ad.
A good benchmark for having a very good CTR is in the range of 3-5% on link clicks from your ad. If you got 100 people to see your ad, you want 3-5 people to click on it in order to have an acceptable CTR. Now, the CTR can definitely be lower than that — even 1% or less — as long as the offer EPC is high enough.
4. CPL / CPA
CPL: Cost Per Lead. If you’re doing lead generation, and you’re getting paid to generate leads, you need to know what your cost per lead is. If you’re getting paid $30 a lead, you’re not profitable unless your CPL is below $30, so you want your CPL to be $25 or less to be profitable.
CPA: Cost Per Acquisition. If you’re not promoting lead generation offers, CPA is just a broader terminology that could be applied to any cost model — whether you’re generating leads, sales, Zip Submits, app downloads, phone calls, etc. The same principle also applies to CPA. If you’re getting paid on a sale, and your commission is $50, then you want to make sure that your Cost Per Acquisition for that sale is less than $50.
So, these are the four main terms that you need to know. EPC/Earnings Per Click, Conversion Rate, CTR/Click-Through Rate, and CPA.
Let me know if you have any questions about this or if there are any more terms that you want me to cover. I think these are the most important but also the most commonly overlooked and not really understood terms by a lot of new affiliates.
I hope this was helpful. Go ahead and watch a video that I recorded last week, Seven Successful Traits To Become An Affiliate Marketer
I’ll see you in the next one!