June 22, 2020

What is EPC in Affiliate Marketing & Why Is it Crucial To Calculate It?

What is EPC in affiliate marketing? Why does it help boost your commission rates? Should you choose products based on their EPC? Let us help you answer all of these questions through this article.

What is EPC in affiliate marketing?

EPC is an industry-wide metric that stands for Earnings Per Click. While it is defined as such, it actually does not represent the amount earned from each click to an affiliate site. It is more a representation of the average affiliate earnings per 100 clicks.

The formula for calculating EPC is (Commission Earned/No. of Clicks) x 100.

For example, if you earned $100 from a total of 10,000 clicks, your EPC will be ($100/10,000) x 100, which is equivalent to $1. This actually means that for every 100 clicks on your affiliate link, you earn $1.

Earnings per click is widely used by pay per click (PPC) and even pay per action (PPA) affiliate networks, who pay affiliates for each click-through they generate.

This metric can be used company-wise, in other words, to calculate the earnings per click of all affiliates in a particular merchant's program. EPC affiliate programs usually already have this data (which may be collected over a week, a month, or otherwise) handy and share them with their affiliates, as it gives you a very rough idea of how much you could possibly earn.

It can also be used personally, by affiliates, to calculate their own earnings per click or per 100 clicks if you like.

It's important to note that while it is referred to as earning per click, you will not necessarily earn from every single click.

Some clicks may lead to sign ups, purchases, or any other action that is relevant to the product you're promoting, while some clicks may lead nowhere. So it's important to find out how much the company you're looking to promote offers for each different actions performed by your referrals.

How is EPC Relevant to You?

While EPC affiliate programs provide their EPC across all their affiliates, your EPC is the most important metric to you as an affiliate marketer, and for good reason. What is EPC in affiliate marketing and how it is relevant to you is a commonly asked question.

EPC allows you to understand how well your individual links and affiliate partners (if you are a marketer for more than one network) are performing, and whether your efforts are duly paying off.

EPC allows you to see where you're getting it right and where you're getting it wrong and adjust your strategies accordingly.

Here are a few ways EPC can help you compare and boost your affiliate marketing offers:

1. Affiliate Overview

Your EPC across the various affiliate campaigns and schemes whose products you market gives you an overview of how much you earn per click.

2. Affiliate Comparison

Not only does EPC show you how much you earn, it also allows you to compare different affiliate schemes and campaigns side by side to see which of them earns the most. It also shows you how your links perform against each other.

With your EPC, you can also find out which of your advertising strategies yields the most income.

3. Implementation and Monitoring

With your EPC data, you can make a lot of informed and targeted decisions, rather than rely on "trying your luck."

For example, with an affiliate scheme that pays for both sign ups and sales, you can work out whether you'll earn more from promoting easier to achieve, lower cost sign ups or not so easy, higher cost sign ups or even sales.

If you're running paid advertising, you can judge whether it's worth the money by comparing how much you spend on ads—which we can refer to as part of your Cost Per Action (CPA)—to how much you earn from them. In this case, you want your EPC to always be higher than your CPA.

You can also pinpoint problems like invalid and broken links and high bounce rate as well as work to correct them.

Not only that, you can also compare your recent data (data after implementation) with historical data to see if your strategies are improving your campaigns or slowing them down, and adjust accordingly.

These are just some of the many different ways calculating and comparing your EPC for a single campaign, and across various campaigns, can help you see how much money you're earning. It can also help you assess which of your strategies work best, and adopt and promote your best practices.

Should You Promote a Product with a Higher EPC?

As we've already established, your EPC is the most important metric to you as an affiliate marketer.

However, before you become a marketer for an affiliate network, you need to find out its earning potential. A good metric you can use to measure this is the network's EPC.

An affiliate campaign's EPC measures the earnings per click of all its affiliate marketers. It's important to note that this is a very rough estimate that represents an average of so many links and clicks (both meaningful and not so meaningful) over a period of time.

So, with all that has been said about EPC, should you promote a product with a higher EPC over one with lower?

Simple answer, yes and no.

When it comes to numbers, as an affiliate marketer, EPC is king and generally speaking, higher is better. However, there are a number of other factors that should be taken into consideration alongside it. One of such factors is the type of offers available on the affiliate network.

There are three main types of payment options that merchant sites offer:

1. Pay Per Sale

With a pay per sale arrangement, the merchant site only pays you when your referral purchases something from their sales page. They may pay you a certain percentage or amount per sale.

2. Pay Per Click

With this type of arrangement, you are paid based on the volume of traffic you drive to the site; in other words, the number of your referrals who simply click your link and go to the site. They don't need to make any purchases or extra clicks before you earn.

3. Pay Per Lead

Companies who operate with this type of arrangement will pay you based on the number of your referrals who sign up for something—an email list, a free product, or any other kind of promotion. These companies actually use these people as “leads” to potentially drive more sales.

Businesses can create affiliate offers for any of these arrangements that aligns with their business goals. Therefore, when you choose to become an affiliate, it is crucial that you understand their rules, expectations, and payment options. We have chosen Amazon as our primary affiliate program due to it's insane conversion rates, as outlined in our affiliate marketing guide.

Why is this important when choosing the EPC affiliate program’s product to promote?

Say an affiliate scheme offers multiple commission levels depending on the action taken by each of your referrals when they click on your link—for example, $1 per sign up and $2 per sale (just to keep things simple).

From this example, it’s quite obvious that the latter has a higher EPC than the former; therefore, it’s more lucrative and you should focus on that, right? Maybe. However, if you consider the fact that it’s much easier to convince three people to sign up (earning you $3) with your link than one person to purchase a product (earning you $2), the former becomes more lucrative.

Also, a company’s EPC is a collective so it does not tell how well the offers will work for you, as there are many variables that affect this, such as the type of product, your audience and methods of promoting offers, your location, and much more.

In summary, if there are no obvious contraindications, the higher the EPC, the better.

So much has been said about company and individual EPCs. Before joining a program, we know that the former should be your focus, along with other factors. However, once you join a program, we know that you should be focused on your EPC, and we’ve seen its importance. How then can you improve it?

How Can You Improve Your EPC?

1. Add Affiliate Links to Your Web and Email Copies

A good way to improve your EPC is to reevaluate your content strategy. Drive organic traffic to your site by creating quality content—blog posts and video blogs (vlogs) on product reviews, comparative articles, product roundups, and resource pages featuring top picks or favorite products.

Each of these article types provides you with enough options to easily add your affiliate links; and if your content provides real value to your audience, this will work even better.

It's also a good idea to inform your readers that you use affiliate links. If anything, it'll instill some sense of trust in your site and offers.

You can also add affiliate links to your emails; but you must be very careful not to spam your audience or you risk getting banned by your email service provider.

Imagine losing all the hard work put into building your list only to get shut down—and you can't blame them. Spam emails means less opening rates, which is bad for business.

Create high value content as you would on your blog posts, and include affiliate links every now and then. You could include one to two affiliate links for every three to five emails. Make sure your email provider allows affiliate links - Mailchimp doesn't.

2. Test and Tweak Your Strategy Where Needed

There are a lot of methods you can employ in your content strategy but you can't exactly tell which works best.

This is where A/B testing comes in. You need to A/B test, whether you're adding your affiliate links to your web copies or emails.

Create solid A/B tests for your campaign methods and analyze your results to determine which better achieves your goals, in this case, earns you more. Tweak accordingly.

3. Track Your Metrics!

You are trying to increase your EPC and decrease your CPC, you're running A/B tests, and you're experimenting with your web and email campaign strategies.

How do you know if you're making progress? By tracking the metrics (if you want to succeed, that is).

With your EPC (your earnings per 100 clicks) and your CPC (whatever costs you incur, for the same 100 clicks), you can adjust your general affiliate marketing approach to ensure you never spend more than you earn.

With A/B testing your content strategies, you can fine tune your copies to better target your audience.

Pay Attention to EPC While Formulating Strategies

You're now armed with enough information, to not only answer that question, but also apply it to your affiliate marketing strategies.

Understand the types of EPC, what they mean to you as an affiliate marketer, and how you can go about improving your EPC, and you’ll see increased revenue in no time.