How To Calculate If Your Campaigns Will Make Money
CTR! CVR! CPM! CPC! CPA! EPC!
Affiliate marketing is a game of thrones – you win or you die.
No, wait, that’s wrong. Thankfully.
Affiliate marketing is a game of numbers.
If the numbers don’t work, you don’t make money.
Most of us understand what each of the individual metrics for affiliate marketing mean: CTR means Clickthrough Rate, CVR means Conversion Rate, and so on.
But the hidden stumbling block can be putting them all together.
That’s what this article is here to do – give you clear-cut relationships between common metrics that you can use in spreadsheets to understand what it will take to make your campaign profitable.
Note: this article just focuses on ads, offers and financials. I’ll look at landing pages and how they factor in in a follow-up article.
Most traffic sources will either charge in CPC or CPM. You wouldn’t bother recalcuating those, but it can be useful to be able to calculate your CPC from a CPM traffic source, or your CPM from a CPC traffic source.
CPM (Cost Per Mille) is the cost to display an ad 1,000 times to website visitors.
CPM=CPC x CTR x 10
If your CPC is $0.50 and your CTR is 1%, your CPM=
=$0.5 x 1 x 10
CPC (Cost Per Click) is the cost to get a single visitor to click on an ad.
CPC=CPM / ( CTR *10 )
If your CPM is $5 and your CTR is 1%, your CPC=
=$5 / (1*10)
=$5 / 10
CTR (Clickthrough Rate) is the number of website visitors who click on an ad, expressed as a percentage.
CTR=100 x number of clicks / number of views.
If you had 10 clicks and 10,000 views, your CTR
=100 x10 /10,000
=1000 / 10,000
CTR=CPM / ( CPC*10 )
If your CPM is $5 and your CPC is $0.5, your CTR
=$5 / ($.5