In affiliate marketing, as in other professional activities, there are its
own slang and specific terms. They should be known in order to correctly
understand articles on traffic arbitrage or affiliate
marketing. Several important CPA terms are described
below, the understanding of which determines the successful choice of offers,
the correct understanding of statistics on traffic drain and profitability
control when working with affiliate programs.
What is EPC and its Importance for affiliate marketing
This is an indicator of the average income from a single click. EPC stands for Earnings Per Click and is calculated as the ratio of the amount of earnings in the affiliate program to the number of clicks. The higher this figure, the greater the earnings on your traffic. But we must remember that EPC shows only the level of income, and expenses are not taken in the calculation and you must predict the profit only by yourself.
EPC = (Revenue / Clicks)
Calculation example:
- Arbitrator got 1000 clicks;
- Got 4 sales, with a commission of 350$;
- Total earnings: 350 x 4 = 1400$;
- EPC = 1400 / 1000 = 1.4.
EPC is an important indicator, but not an absolute one. You can focus on it when choosing offers. But it should be stuck in mind that the EPC value in the catalog of the CPA network is the average figure calculated from the results of the traffic from all webmasters and affiliate partners. Some CPA networks can show EPCs for different GEOs, landing pages or traffic sources separately, but it still might not be enough.
How can I use EPC when dealing with traffic
This figure can be used to select an offer and evaluate the estimated effectiveness of your promotional campaign:
- Always check your traffic, compare the EPC and the cost per click. If a click is more expensive than revenue from it, it means a loss and you need at least big changes to your campaign or maybe even refuse to work with this offer.
What is CR in affiliate marketing?
This is the ratio of the number of conversions to the number of clicks. CR stands for conversion rate. May be indicated as a percentage or as a simple ratio.
CR = (Conversions / Clicks)
Calculation example:
- Arbitrator got 100 visitors to affiliate site;
- Got 8 sales;
- CR = 8 / 100 = 8% or 1:12.5.
CR is taken in general by offer or for individual landings, GEO and traffic sources.
This figure shows how many users who went from ad to your landing page or affiliate link completed the target action. The higher the conversion, the greater the earnings on current traffic.
Own CR indicators can be used to evaluate an advertising campaign, to compare the effectiveness of different traffic sources, segments of the target audience and the quality of landing pages.
Always remember that only the average indicator is shown in the CPA network offer catalog. If the master achieves a high conversion, and the beginner merges the entire budget and does not receive a single sale, then the average figure will hide it.
According to the affiliate program’s data, you can focus on CR to compare your own effectiveness with the average result of other partners working with this offer or affiliate program.
ROI in CPA marketing
ROI stands for return on investment. ROI illustrating the level of profitability or loss-making of an advertising campaign. ROI is the ratio of the amount of profit minus investments to the amount of investments. ROI is usually expressed as a percentage. In the form of a formula, it looks like this:
ROI = (Income – Costs) / Costs × 100
Calculation example:
- Arbitrator spent 200$ on an advertisement;
- Got 5 sales and reward for all of them 245$;
- ROI = (245-200)/200*100 = 22.5%.
Some webmasters are quite happy with an ROI of 20-30%, while someone prefers to work only with an ROI of 100% or more. The devil is in volumes. At low volume, working with a small ROI is boring(always, at some point) and dangerous, because earnings are small, and any significant change in the quality of traffic can make ROI negative.
With a large budget, on the contrary, you can afford the luxury of redirecting traffic on a “just to be a plus” basis, and stop companies at just above zero and of course subzero.
Basic CPA Terms
- CPA (Cost Per Action) – a model for paying remuneration to partners with pay-per-action. This means that attracting a potential buyer to the advertiser’s website is not enough. The webmaster will earn a commission only if the user performs the desired advertiser action. For example, he will fill out a survey form, buy goods, order a service,, subscribe to the service or newsletter, install the app or game, register on the site or watch a video, etc;
- Arbitrage – buying traffic and redirecting it to an affiliate program or offer in a CPA network in order to earn more than spent;
- Traffic – users on the Internet whom you attract by advertising and redirects to the advertiser’s website using his affiliate link;
- An advertiser is a seller of goods or services who needs customers and is willing to pay you a commission for attracting them. These people publish an offer in the CPA network;
- Offer – an advertiser’s offer to partners about finding customers. The offer describes the product or service that needs to be advertised, the requirements for potential buyers, the permitted advertising methods, the amount of the partner’s remuneration for the single sale, all limits, the goal is the action that the client must perform;
- Partner – webmaster who finds potential customers according to the rules of the offer and sends them to the partner link.