What is earnings per click as an affiliate marketing metric? Find out how to calculate your website’s EPC, and how to use it to leverage a higher commission.
Affiliate Marketing Metrics - What is EPC (Earnings Per Click) and How Do I Calculate It?
Earnings per click (EPC) averages the clicks your website directs towards an advertiser or merchant, and how much money you are earning from those clicks. You can calculate your earnings per click by taking the amount of clicks that direct toward the merchant, and then dividing that number by the amount of money you earn from those clicks.
EPC is an important metric that can help you understand the value of your website and the traffic you are generating. It’s important to know both your EPC and how to calculate it, and what to do with that metric.
What Is Earnings Per Click?
Earnings per click (EPC) is a metric that shows how much money you are making every time a person comes to your website and then clicks on a link that directs them to another merchant.
Your EPC can tell you the direct value of the traffic you are generating and can be a way of tracking the ROI of advertisements on your website.
How to Calculate Earnings Per Click
To calculate your EPC, take the average of your overall commission earnings from a merchant, and the clicks you have directed to that merchant. To do this, you divide your commission by the clicks generated.
For example, if you have a merchant that is paying you $1,000, and you are supplying them with 2,000 clicks, you would divide 1,000 by 2,000, which would make your EPC $0.50. That means you are earning fifty cents for each click you are sending to the merchant. Depending on your business model and expectations for your website, this could be good enough, or you might want to aim for a higher EPC.
For some companies, instead of taking a total average, they focus on EPC per 100 clicks, or EPC within a specific time frame, like a month or quarter. This can give a more accurate representation of your EPC, which can tell you if a particular merchant is worth keeping.
EPC helps you compare the merchants you are working with. When you analyze multiple merchants, it can start to look a lot like a math word problem from school. If you have one merchant receiving 300 clicks for $80 and another merchant paying a $500 commission for 1,300 clicks, which is the better merchant to work with?
Calculating the EPC is the fast answer to figure out which merchant is better. The first merchant has an EPC of almost $0.27, and the second has an EPC of roughly $0.38. Rather than looking at random figures when determining to stay or leave a merchant, EPC can give you a metric to better inform your decisions.
Why Is Earnings Per Click Important?
Once you know how to calculate EPC, you are able to create a valuable metric that cuts through all of the other fluff that can sometimes get thrown at you when looking at statistics and metrics. Sometimes people focus on conversion rates, total clicks, or total payout, but those numbers don’t matter as much as the story EPC tells.
Conversion rates focus on how many users do something, like buying a product, clicking a link, or scheduling an appointment. The reason this number isn’t valuable is because it does not show the value of those actions. It might sound impressive to have a 20% conversion rate, but what is the dollar sign attached to that rate? Conversion rates don’t show context or purpose. Total clicks are also a vague metric to consider. They might show website activity, but what good are those clicks achieving?
EPC is a strong metric because it shows the absolute value you are earning with the work being done. It provides you the exact amount of money you can expect to earn for every click you work hard to earn.
Understanding the basics of EPC can cut through some information, but EPC can be developed further to include things like finding your net earnings per click. Your net earnings per click is calculated by taking the cost to get clicks, and then subtracting that cost from your EPC, to show you the actual amount of money you are earning per click.
How to Leverage EPC to Earn Commissions
Having a low EPC can be a sign that you need to either change merchants or negotiate a new contract for a higher commission. It is possible to take your EPC to a merchant and show them that it is not worth your time to continue to funnel customers to them, in hopes of them appreciating and needing the traffic and being willing to increase the amount you receive.
For example, it could be great that you’re generating 200 clicks to a merchant a month, but you’re only earning $10. That gives you an EPC of a nickel. You can compare that EPC of only a nickel per click to other merchants that you are working with that have EPC’s ten or even fifty times more than that. An EPC of $0.05 compared to another merchant that’s giving you an EPC of $2.50 isn’t worth your time.
With your EPC information in hand, you can talk with merchants and show them the value of your website versus the value they are paying you. The merchant has to decide if they’re willing to increase your commission or lose the customer traffic you’re generating for them.
How EPC Is Used in Affiliate Marketing
Affiliate marketing is when you use your own website to sell or advertise for a merchant. In this structure, you earn a commission if people end up buying what you are advertising.
EPC is used in affiliate marketing by measuring the amount of traffic you produce for the company, brand, or product you are advertising on your website, and measures the commission you are earning. Affiliate marketing can become a major source of revenue for some websites, but even then it’s important to see the value of the traffic you create, so you can focus on the efficiency and effectiveness of your website.
Measuring and taking stock of the cash value of the traffic you are generating from your website are just some of the things you can do with EPC. EPC can help you understand the value of advertising campaigns or affiliate marketing, and should not be ignored. LinkTrust can help you customize your affiliate marketing program, which will help you find your EPC and other key performance metrics. You can request a demo to see LinkTrust up close and experience how it can help you, or start your free 14-day trial now.
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