What does EPC have in common with affiliate marketing? A lot!
EPC is not just another metric you should follow. It is inherently linked to your turnover. Knowing the value of your EPC means knowing how much you can expect to earn. By comparing this value with other indicators, you can get a comprehensive overview of your campaigns. Let’s dive in.
What does EPC mean?
EPC is an acronym for earnings per clicks. In practice, it means how much money you earn every time a customer clicks on your affiliate link. Some say that EPC is one of the most crucial metrics for measuring the success of affiliate marketing. Comparing it with CPC provides you with useful insights that should be analyzed often. Your profits are determined by the equation: profit = EPC – CPC.
We’ll show you how to use EPC in practice later on, and describe what EPC is in affiliate marketing.
What does EPC in affiliate marketing mean?
EPC in affiliate marketing is a popular metric to use, especially on per click earning sites. Along with CPC, it allows you to see how a particular site is doing. With a good affiliate program, analytical tools will give you access to information about EPC. When affiliates track their performance, they can establish which aspects are not working out, and why. This is a significant advantage, especially for those who use a wide range of platforms to promote links.
Have you ever asked the question, “Why do I need EPC?” EPC calculates the average value per 100 clicks. It is a formula that allows you to analyze multiple clicks at once. It is also a popular payment method for affiliate marketing. EPC is also an important metric for analytics. Many clicks plus a high bounce rate do not equate to high earnings. Moreover, there may be a situation where different types of registration bring mixed earnings. With EPC, however, you can have a holistic view of how your business works and how much you are earning.
If you are wondering why the value of EPC should be bigger than CPC, the reason is very simple. If your EPC is higher than your CPC, you will be earning money. This is the basic principle of economics. Of course, if you keep costs, and therefore CPC, as low as possible, then your earnings will increase. Conversely, with reasonably high earnings (per click), you can afford to increase your CPC expenditure and expand your business whilst remaining in profit. However, if you’re not monitoring your EPC, such actions are somewhat risky and may result in losses. This shows the essence of the indicator and explains what EPC in affiliate marketing really means.
How to interpret EPC
To understand what EPC in affiliate marketing is, you need to know how to calculate its value and interpret the numbers you compute. We can help you with that by providing a simple example. Let’s imagine a situation where there was a total of 500 clicks, and the price of the product was $200. The net number of sales after refunds was 20, and the affiliate commission per sale was $10. To calculate EPC, you need to take net commissions earned and divide it by the total number of clicks.
In our example above, EPC was worked out to be $0.40. So, based on this, one would expect to earn an average of $0.40 for every click on one of the affiliate links. For 1,000 clicks one would receive $400 worth of commissions, etc. This shows what EPC in affiliate marketing is in practice.
The most crucial aspect of EPC is that it reflects a product’s ability to convert clicks into conversions. There are no specific benchmarks that indicate whether a particular EPC is “good” or “bad”. It all depends on the industry, product, the time at which the value is considered. The general rule, of course, is that the higher the EPC, the better. You can still gain a lot of valuable info by knowing its value. There may be a situation where you have a high conversion rate, yet EPC is not comparatively high. This should be a red flag for indicating a bottleneck that needs to be eliminated. By monitoring the value of EPC, you’ll be aware of such potential issues. However, if you focused on conversions only, the problems might not be detected right away.
How to improve your EPC
You don’t need to create a long-term strategy to increase your earnings per click. What you should do is follow some simple tips, which are listed below.
- Identify the highest paying merchants. It sounds obvious, but it’s not so easy in practice. You should establish which merchants pay the most and do your best to reach both them and their audience. Good research never hurt anybody. It is well known that EPCs are not standardized, which means that different merchants offer different payments.
- Find the most profitable site. The key here is to understand that different types of sites will generate different amounts of EPCs, but also CPCs. It is entirely understandable. Do the research and decide on which site you should be present on.
- Choose fast hosting. Something that is quite simple to understand is that if people don’t stay on your website, then they won’t click on your affiliate link. Fast hosting can keep visitors on your website longer. Do some research and choose a provider that will suit you best.
- Keep yourself up to date – be seasonal. When it is Christmas time link to some good gift inspirations, and when it is the summer season link to some holiday essentials. Thanks to this kind of work organization you can increase your web traffic and EPC quickly, thus improving the performance of your business.
- Put affiliate links in blog or vlog descriptions. This way, your audience might click on an affiliate link (almost) automatically. And that means higher EPC.
- Track important metrics. By important, we mean EPC, CPC, PPC ads, A/B test results, email campaigns, and affiliate landing pages. EPC and CPC give you valuable insights into your affiliate performance and help adjust your strategy. The other metrics can help you to master your content. You can make some modifications to the methods of communication with your audience depending on the results. In an ideal world, such changes will boost your EPC and decrease your CPC.
To sum up
Now you should know what EPC in affiliate marketing is. As we have said in this article, EPC is an important metric to monitor. Getting to know the value and how it is calculated makes it easy to work on your strategy and deal with any problems. As always, analyzing just one metric at one time doesn’t make much sense. You should look at your performance as a whole, without neglecting any important indicators (including EPC, of course).