4 Essential Affiliate Marketing Terms You Need to Know
In the affiliate marketing space, the amount of shorthand terminology can be overwhelming at times.
In this video/article I will explore the affiliate marketing glossary, highlighting 4 essential affiliate marketing terms you must know.
1: EPC (Earnings per Click)
Every affiliate marketing offer has an EPC attached to it.
The EPC is basically a judge of how good that offer is, it lets us know 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, which means your EPC is $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 performs in comparison 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.
If, for instance, you send 100 clicks to an affiliate offer, and you get two conversions, your conversion rate is 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 remains high, 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 as well as in CPA 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 better ad creative is probably where you will find room for improvement within the 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 for 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 depending on the vertical used.
Offers with mass appeal (that a lot of people can take action on) should lead to a higher CTR on the ad. If it is a niche-specific offer (that only a small select group of people are interested in), you might see a lower CTR from the ad.
A good benchmark to judge whether you have a very good CTR is in the range of 3-5% on link clicks from your ad.
If 100 people see your ad, you will want at least 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, ideally 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 can 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 per 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, in my opinion, these are the four key affiliate marketing terms that you need to know.
EPC/Earnings Per Click, Conversion Rate, CTR/Click-Through Rate, and CPA.
If you have any questions about this, or if there are any more terms that you want me to cover please don’t hesitate to contact us. I think these are the most important, yet also the most commonly overlooked and misunderstood terms by a lot of new affiliates.
I hope this was helpful, if you like you can 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!