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  1. #1
    Moderator leeann's Avatar
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    EPC - Why Does it Matter?
    Could someone explain why the EPC is such a big deal? Who cares if it goes up or down? If I understand it right... it goes down if mega clicks come through without sales, right? Or is it impressions? So if I get a ton of traffic on a site who like to window shop - it's going to mess up a merchants EPC, right? But who cares? The site still gets exposure. I guess I just don't get it
    leeann


    Shoppers determine what has value and they like coupons. Stop manipulating who set the cookie just because you do not like coupon and promotional sites.

  2. #2
    Affiliate Manager Alan Hamilton's Avatar
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    EPC to be or not to be
    From what I've learned thus far, EPC is one of the considerations affiliates use to evaluate a products conversion rate. In some ways it can be helpful. However, it is not truly an accurate barometer.

    There are a substantial number of "curious" and "I want to see my ad work" clicks, as well as competitor clicks, test clicks, network clicks etc etc that are not bonefide shopper clicks. As I understand it, this affects epc - so I am sure experienced affiliates here consider other factors when evaluating a programs desireability. Perhaps the best barometer is experience. In many cases, a seasoned affiliate knows from experience what types of products and services do well with their marketing model - so epc is not an end all.
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  3. #3
    AM Navigator Geno Prussakov's Avatar
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    Quote Originally Posted by leeann
    Could someone explain why the EPC is such a big deal? Who cares if it goes up or down? If I understand it right... it goes down if mega clicks come through without sales, right? Or is it impressions?...
    EPC = "average earnings per click". It is bacially a metrics used by affiliates to see how attractive (read: well-converting) a program is for joining and promoting. It is worked out by dividing the total number of clicks by the total earnings. This obviously results in earnings per click...

    Geno

  4. #4
    Merchant & ABW Ambassador
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    Quote Originally Posted by leeann
    Could someone explain why the EPC is such a big deal? Who cares if it goes up or down? If I understand it right... it goes down if mega clicks come through without sales, right? Or is it impressions? So if I get a ton of traffic on a site who like to window shop - it's going to mess up a merchants EPC, right? But who cares? The site still gets exposure. I guess I just don't get it
    It matters most to affiliates as if you have 2 companies, take for example, target and walmart. Target has an EPC of $15 while walmart is only $9. What would you promote if everything else remains equal?

    As a merchant, I do my EPC daily and try to identify why EPC is up or down. Daily EPC for merchants would often give a early warning of what you might expect for the month

  5. #5
    Moderator leeann's Avatar
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    Quote Originally Posted by FairFieldGetaway-EricEwe
    It matters most to affiliates as if you have 2 companies, take for example, target and walmart. Target has an EPC of $15 while walmart is only $9. What would you promote if everything else remains equal?

    As a merchant, I do my EPC daily and try to identify why EPC is up or down. Daily EPC for merchants would often give a early warning of what you might expect for the month
    Merchants will drop affiliates who send a ton of traffic to their site but who do not produce sales, though, correct?
    leeann


    Shoppers determine what has value and they like coupons. Stop manipulating who set the cookie just because you do not like coupon and promotional sites.

  6. #6
    Merchant & ABW Ambassador
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    Quote Originally Posted by leeann
    Merchants will drop affiliates who send a ton of traffic to their site but who do not produce sales, though, correct?
    depends on the merchant.

    some will.

    I try to convert those high traffic non sales affiliates to performing affilaites. Currently combating that...

  7. #7
    Moderator MichaelColey's Avatar
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    For those trying to analyze changes in EPC, I've found a more revealing way to look at it.

    The normal way to calculate it is 100 * Earnings / Clicks. For instance, 100 * $208.65 / 919 = $23 EPC if you earned $208.65 on 919 clicks.

    I've found it to be much more revealing if you calculate it as 100 * Avg. Order Size * Conversion Ratio * Commission Percent. For instance, 100 * $133.70 * 0.025 * 0.068 = $23 EPC if your average order size is $133.70, your conversion ratio is 2.5%, and your commission rate is 6.8%.

    That's a real example above, but feel free to try it with some of your own numbers.

    With just earnings and clicks, you don't have any idea what is changing. Looking at average order size, conversion ratio, and commission percent, you can see exactly where the changes or differences are. All three of these things directly impact EPC (and earnings).

    Another useful thing once you realize that EPC can be calculated like this: Most merchants are reluctant to give out their EPC numbers. (Besides, a network-wide average EPC isn't all that useful to me.) I don't even bother asking any more. But I do like to know what EPC I can expect. So I get it indirectly. I'll ask what their average order size is. Then I'll ask what conversion ratio sites similar to mine are seeing. I already know the commission rate that they're offering. All I have to do now is multiple the three numbers together (and multiply by 100) and I have the EPC.
    Michael Coley
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  8. #8
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Any merchant can just take the unique visitors per day figure and divide it by the number of orders booked that day. Simple too is the average order size/day/week/month. No BS or spin necessary. Then the merchant is armed to do some trial and error to easily identify junk traffic sources and whack them as a ROI killer.

    All merchants need to know their sites average conversion ratio from all traffic sources. Then identify the traffic sources who perform better then the average, and invest promotion money there, or find similar sources. The moment affiliate whitenoise and spammy traffic gets placed in the mix both the merchants and networks put up statistical smoke screens like the EPC figures.

    No way would any scumbag non-converting merchnats regardless of brand want their site's real conversion ratio published. It would show rampent network fraud once revealed that general traffic shows 4 times higher conversion ratios then reported in the affiliate sales reports. I've never seen any affiliate traffic converting worse then furnished by natural SERPs or PPCSE campaigns at Overture. Google does better as does advertising on targeted traffic related sites.

    Basically smart affiliates like Michael Cooley blow away the smoke and leverage the un-level affiliate playing field to their advantage.
    Webmaster's... Mike and Charlie

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  9. #9
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by MichaelColey
    I've found it to be much more revealing if you calculate it as 100 * Avg. Order Size * Conversion Ratio * Commission Percent. For instance, 100 * $133.70 * 0.025 * 0.068 = $23 EPC if your average order size is $133.70, your conversion ratio is 2.5%, and your commission rate is 6.8%.
    Yepper, I've been doing exactly this for some time. Places like SAS publish X, Z is known, so you can calculate Y (average across network). Once you understand the relationship between EPC, Avg Order, CR and Comm%, there's lots of guesstimating that can be done that's useful for traffic source trend tracking and analysis, preliminary ppc break even cost projections, merchant screening, merchant's proclivity to give raises, campaign (and sub-campaign (ad group)) effectiveness and much more.

    I also like to look at dualies and try and figure out why there can often be drastic stats differences for the exact same consumer shopping experience but tracked on dual platforms. I have one merchant I recently studied that showed a 1.1% CR on SAS and a .2% CR on CJ... for number crunching types, that's a statistically significant difference worthy of further pondering.

    Also fun to not only see how your EPC stats break down against the average, but also your Avg. Order, CR and even Comm%.

    Good stuff Coley!

  10. #10
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Here's a recent discussion about EPC that I thought was a good back and forth here at ABW:

    "Using EPC to make decisions"
    http://forum.abestweb.com/showthread.php?t=76133

  11. #11
    OPM and Moderator Chuck Hamrick's Avatar
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    Hey Leann,

    If an affiliate is sending a lot of traffic without clicks it drives me nuts until I figure out how to help them convert. I put out my EPC whenever possible and proudly publish is to show how well a program is doing. I will also share conversion (good or bad) privately with affiliates and return rates.

    As an AM I compare my EPC with a competitors to see how I measure up!!

  12. #12
    AM Navigator Geno Prussakov's Avatar
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    Quote Originally Posted by Chuck Hamrick
    As an AM I compare my EPC with a competitors to see how I measure up!!
    Yep. We do the same too...

    Geno

  13. #13
    Moderator leeann's Avatar
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    I get a ton of window shoppers so I guess I never paid a lot of attention to the EPC... I always expect to be 'off' from the average. Are there certain categories that usually show a lower EPC, such as electronics? I know the big nationally known merchants tend to have a lower EPC on my sites..esp. the one with the window shoppers. (Tons of traffic.. good sales..but a low EPC for many of the merchants.) Maybe I've become to complacent with the low EPC and should aim higher
    leeann


    Shoppers determine what has value and they like coupons. Stop manipulating who set the cookie just because you do not like coupon and promotional sites.

  14. #14
    Outsourced Program Manager Rick - Bitcom's Avatar
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    I wonder how important EPC really is to affiliates or if the average affiliate understands it. From my still greenhorn perspective I would think it could be a very good judge of a program. Unfortunately you have to look closer to understand it's value.

    IMHO not all clicks are equal. Some clicks are very qualified, presold and ready to buy. Some are interested but just kicking tires and some are totally useless. The quality of the click is the responsibility of the affiliate. They either provide good clicks or they don't, so you could say that they are responsible for this part of the EPC equation. This may be why AMs are reluctant to provide EPC data. Given the 80/20 equation many affiliates just bring down overall EPC.

    I know in our program our EPC in the last four months for our top 100 affiliates is about 30 times higher than all other affiliates. Of course we pay our best affiliates a higher commission so that would increase EPC but "30 times?"

    It makes it pretty clear that an overall program EPC may not be a fair respresentation for a merchant. You have to consider the affiliates role and the quality of the clicks they send. The better the click the better the EPC.

    Sure part of the equation is the merchants responsibility...the conversion and the commission. But for an affiliate to judge their POTENTIAL EPC they should evaluate the quality of the clicks they will be sending as well.

    Ask the AM what the top affiliates in their category average for EPC.

  15. #15
    Comfortably Numb John Powell's Avatar
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    The quality of the click is the responsibility of the affiliate.
    I don't know if this is exactly true. There is a lot outside the control of the affiliate. I have one merchant where shoppers keep hitting the back button to check my site and then click into the merchant again. I have seen quite a few go back and forth many times. This reduces EPC but what does it really tell you?

    The same merchant which is on SAS would sometimes show as high as 70 clicks to my credit without in evidence in my server logs. I called them and they said not to worry that it just happens sometimes.

  16. #16
    Outsourced Program Manager Rick - Bitcom's Avatar
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    Bumpaw, I'm sure you're right. Some percentage of clicks can always be "superfluous", but what I'm talking about are sites with no presell or any attempt to qualify the customer in some way. Some sites are not targeted to the niche and may display links for all kinds of merchants without any regard to relevance to the visitor. Link farms come to mind.

    As Affiliate Manager I try and review every affiliate that applies to our program (200-300 per week) and I see sites that you would not believe. I still approve many of these affiliates because I want to give them the benefit of the doubt and as Greg and Eric suggest, offer help to get them on track. We all have to start somewhere.

    My point is that the EPC for these affiliates will be low until they learn how to presell and add value to that click (as Ecom Mike evangelizes). Point being if you want to judge a program by its EPC try to find out what the EPC is for an affiliate at your level. I think Michael Coley brought this up in one of his earlier posts here.

  17. #17
    Action Jackson - King of the World
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    I would think also it depends on how they get to the merchants site. Natural search vs PPC would prolly be very different resluts, especially if the ad goes direct to the merchant site.

  18. #18
    Newbie dealplumber's Avatar
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    We have thought about this as well at dealplumber and the whole idea was really that a merchant's EPC may be a broad indication but we will most likely do our own EPC calculations and share with the dealplumber community, as EPC is really eventually driven by how relevant the ads are and how they are placed for a user who clicks on them. Conversion is all about being in-context with the user's requirement when she/he on a particular page.

  19. #19
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    It also depends on whether you promote a lot of coupons, allow tm bidding, allow direct-to-merchant ppc, whether you do private deals (with private tracking) with selected affiliates, whether your policies forbid autosurf and other junk traffic, how your network and links track email marketing, whether you encourage newbies to give it a go or not and many, many other factors.

    You can hardly judge a program by it's EPC, it's a very gross measurement that I would say should be viewed similarly to Alexa rankings... a ballpark representation that's an overall indicator, but not anywhere close to being a precise metric.

  20. #20
    Outsourced Program Manager Rick - Bitcom's Avatar
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    Donuts...I think you just said it all.

    Not to get off thread but to the degree that affiliates do use EPC, what would be considered "good"? I'm sure the niche makes a difference, but can we name numbers perhaps based on niche. Is that fair or am I missing the point?

  21. #21
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by GigaGolf
    Is that fair or am I missing the point?
    Nope, you're not missing it at all. :-)

    But you have brought up another aspect that I forgot to comment on... EPC is not a good absolute indicator either, but might be better served for comparison purposes only, and only in similar niches and circumstances. As an absolute measurement, I argue it's totally useless because it disregards the cost of traffic - which can be widely different in different product and service areas.

    I have many profitable programs in my biz and the published EPC's do not correlate, relatively or absolutely, to my revenue or profits.

    I use EPC more like a weather forecast... if it looks like rain, I grab an umbrella, but I still go out...

  22. #22
    Outsourced Program Manager Rick - Bitcom's Avatar
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    Thanks Donuts for your always helpful and insightful comments. You make ABW a better place.

  23. #23
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Smile
    Rick your smart to recognize Donuts red flags to what variables skew EPC figures in favor of certain types of affiliates. You already claimed knowledge of how your top 100 affiliates earn their high EPC figures. You enable those top earners, I'm sure, to smother the traffic sent by the others making them into EPC victims. It all has to do with where in the buying process the last affiliate cookie gets injected into the process. You should know your sites overall conversion ratio from all traffic sources. (Ave # of clicks to produce 1 sale)

    Forget for a moment EPC. Eliminate your top 100 affiliates from your figures and then take the rest and calculate an average affiliate conversion ratio. Compare that figure to your sites general conversion ratio from all traffic sources. Your in great shape if this affiliate traffic figure exceeds your normal conversion ratio. If not, eliminate the known junk traffic sources, and provide better customer facing creatives and high conversion landing pages for your entire affiliate sales force.

    I have no deviation within my small affiliate sales force since 1998. All convert on an average of 1 sale per 20 targeted clicks using supplied creatives. That's called playing on a level playing field without any advantages towards those injecting cookies further into the sales process. Merchant takes full responsibility for closing targeted traffic in this senerio.... giving every affiliate a equal opportunity to get rewarded. That is not acceptable in many circles within the ABW community.
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  24. #24
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    Someone wrote: "It matters most to affiliates as if you have 2 companies, take for example, target and walmart. Target has an EPC of $15 while walmart is only $9. What would you promote if everything else remains equal?"

    The problem with this is that "everything else" is rarely equal.

    One of my clients believed that their EPC figures were actually pushed down by competitors' actions -- that is, company A believed that competitor B was actually driving "garbage traffic" through affiliate links to A, knowing that none of that traffic would generate sales but the clicks would be counted and thus depress the EPC. I'm not sure the client's belief was well-founded, but it's plausible. Likewise, some firms terminate affiliates with low EPC -- that is, they remove affiliates who send traffic that is not "highly prequalified" to buy -- so that the merchant's EPC is not lowered by this.

    One idea would be to "throw out the extremes" when computing EPC -- remove the affiliates with the top 3 and bottom 10 EPC figures before computing the average.

    As an affiliate, I know I do look at the EPC figures -- certainly, if I see a three-month EPC of zero, it discourages me from doing any work with that merchant, and if there are two competing programs and one lists 3-month EPC of $7.12 and the other is at $0.58, I am probably going to lean toward the first merchant. (I certainly try to ignore sort-term EPC numbers, as they are very easily skewed, but it looks like merchants are sorted by 7-day EPC by default in some networks.)

  25. #25
    ABW Ambassador
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    >>>If not, eliminate the known junk traffic sources

    That is blatant manipulation of EPC by a merchant or AM

    A waste of time since EPC is not to be trusted.

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