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Is EPC the Key? The Myth of the Absolute Metric

Published by Papa Whale Webmaster

There are a lot of variables to take in to account when analyzing a marketing campaign. EPC is just one of them.

What’s the absolute best way to analyze the performance of a marketing campaign? A lot of people will tell you that EPC is what matters most: Earnings Per Click.

There’s a couple of good reasons for that. It’s simple and very useful if you want to make comparisons: you take the total income in $ that you earned over a particular period of time for a particular offer, and you divide that amount by the number of clicks that were registered for the same offer over the same period of time.

The result you get tells you how much money you made for each visitor that clicked on an offer. For example; if 1000 people clicked on your link to a particular offer and you made $150 in total with that offer, that means you got paid $0.15 per click.

Then, you can compare. If you made more per click with an offer, that means it’s more efficient, more performant. Pretty simple, right?

Not so fast.

Although EPC is a great indicator, there are a lot of factors that can come in to play and influence your campaign’s performance. You should always look at the big picture and make sure you take all variables into account.

CTR

One of the most important variables to look at is the CTR (click-through rate).

To calculate the click-through rate, you divide the number of hits that an offer (or a banner) receives by the number of impressions. This tells you what proportion of your website’s visitors actually click on your ad and go to the offer’s landing page. This has a huge effect on your campaign, because it tells you what percentage of your traffic is interested by the product you’re promoting.

We got a couple of examples to illustrate the importance of the CTR:

Webmasters

The number one goal for a webmaster is to maximize profits with his website’s traffic. For a webmaster, EPC is not necessarily the best metric to analyse his campaign. In order to maximize profits, it’s important to analyze the performance of an offer, or any other component (banners, pops), with E-CPM (Earnings per 1000 impressions). That way the webmaster seeks to make the most out of his traffic.

Example of offers comparison for a webmaster:

Front page spot 300×250 = 900,000 impressions / day

Offer #1
300,000 Imps / 2000 hits / CTR 0.60%
Income : 100$ EPC : 0.05$ E-CPM : 0.33

Offer #2
300,000 Imps / 500 hits / CTR 0.16%
Income: 60$ EPC : 0.12$ E-CPM : 0.20

Offer #3
300,000 Imps / 4000 hits / CTR 1.30%
Income : 150$ EPC : 0.038$ E-CPM : 0.50

Offer #2 clearly has the best EPC, but you would make only 0.20$ per 1000 impressions generated by your website. On the other hand, Offer #3 has the worst EPC but you will make $0.50 per 1000 impressions. If you only look at the EPC you will miss out on bigger profits. In this case, you’re better off promoting a product that has a lower EPC but attracts a bigger proportion of your traffic.

Media Buyer

If you’re running a CPC (Cost Per Click) campaign, EPC is a great way to analyze the performance of a banner or an offer. However, don’t make the mistake of relying on EPC to analyze a CPM campaign.

Example of banners comparison for a mediabuyer:

CPM buy at 0.50$
Test between 3 different banners

Banner #1
100,000 Imps / 1000 hits / CTR 1.00%
Cost : 50$ Income : 80$ EPC : 0.08$

Banner #2
100,000 Imps / 500 hits / CTR 0.50%
Cost : 50$ Income 60$ EPC : 0.12$

Banner #3
100,000 Imps / 2000 hits / CTR 2.00%
Cost : 50$ Income: 100$ EPC : 0.05 $

In this example, it’s obvious that the banner with the best EPC is the banner that generated the least profit.

That’s why it’s important to analyze the right data according to the type of buying you’re working with.

CPC = EPC (Income/ hits)
CPM = E-CPM (Income / Impressions)

In both examples a better EPC is misleading because it doesn’t mean more profits.

EPC Is Not the Absolute Metric

Many things can affect the performance of a campaign. The banners you use, your traffic, the location of your banners, your overall marketing strategy, etc.

EPC is an interesting tool if you want to make comparisons and do an in depth analysis of your campaign. But by no means is it an absolute metric that you should rely on to assess the performance of your campaign.

So what’s the absolute best way to analyze your campaign’s performance? There is none. You have to look at the big picture.

Once Again, CrakRevenue’s Got Your Back

That’s why we test our offers, landing pages, and banners thoroughly before we make them available to our affiliates.

And that’s also why our affiliate managers are available to offer free optimization advice to help you get the most out of your traffic without having to spend countless hours running tests.

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