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What is EPC: an important metric in advertising

What is EPC: an important metric in advertising

In the world of traffic arbitrage, there are many metrics to evaluate the success of advertising campaigns. One of the most important metrics is EPC. It reflects the average profit from each click on an advertising link. Let's take a closer look at what EPC is, how to calculate it, why it is needed and why it is so important for arbitrageurs.

What is EPC

EPC (Earnings Per Click) is a special metric that calculates the average revenue from each click on a particular ad or offer. Simply put, EPC is the ratio of total revenue to the number of clicks on an ad.

A high EPC indicates that all link clicks are generating a good return on investment that exceeds the advertising spend. Correspondingly, a low EPC indicates an ineffective advertising campaign where the cost of attracting traffic exceeds the revenue from clicks.

How to calculate EPC

The formula for calculating EPC is simple: you need to divide the total revenue from an advertising campaign by the total number of clicks for the same period. Mathematically, it looks as follows:

EPC = Total revenue / Total number of clicks

For example, if your campaign brought 30,000 rubles in revenue and the number of clicks amounted to 2,000, the EPC will be equal to 15 rubles (30,000 / 2,000 = 15).

It is important to understand that when calculating EPC, only actual earnings are taken into account, not potential accruals. In addition, all clicks are taken into account, including non-unique transitions.

Peculiarities of EPC calculation in trackers

If you work with affiliate programs via API, affiliate statistics will take into account only confirmed leads, but not traffic. To correctly calculate EPC in the tracker, you need to set up postbacks from the affiliate so that the tracker sees all registered leads.

Why count EPC

EPC has several important applications in traffic arbitrage:

  1. Determining the marginal bid per click in an RTB auction. Knowing his EPC, an arbitrageur can set the maximum bid per click at which the campaign remains profitable.
  2. Evaluating the effectiveness of advertising flows. EPC allows comparing the profitability of different advertising campaigns and traffic sources, as well as A/B testing for optimization.
  3. Analyzing the short-term prospects of a campaign. A high EPC at the initial stage can indicate the potential profitability of a campaign in the short term.

But it's important to remember that this metric doesn't fully reflect the profit of advertising, taking into account spend and associated costs. Do not take the value of the metric as the main indicator of effectiveness.

Mistakes when interpreting EPC

Often affiliate programs indicate the average EPC for the whole system in the offer card. However, this indicator can be artificially high or low depending on the traffic sources and promotion methods used.

It is wrong to focus on the EPC from an affiliate program, as each arbitrageur uses his own unique approaches and traffic sources. The real EPC may be significantly different from the one specified in the offer card.

Why it matters

Traffic arbitrage is 95% about constantly testing different advertising strategies and optimizing campaigns. In order to track successes and failures and make timely changes, you need to use certain metrics such as EPC.

Although EPC does not reflect your actual profile, it is important for:

  • Interim analysis of campaign performance. EPC allows you to quickly assess how well a particular ad is performing over a short period of time.
  • Comparative analysis of different tests. By comparing EPCs for different traffic sources, creatives, lendings and other elements, you can identify the most promising areas for further optimization.
  • Planning the bidding strategy at the auction. Knowing his EPC, an arbitrageur can set optimal bids per click, ensuring the profitability of the campaign.

However, when analyzing EPC, other important factors should be taken into account, such as conversion, cost per lead, advertising costs and other expenses. Only an integrated approach will maximize the effectiveness of advertising campaigns.

The dynamism of the EPC

It's important to realize that EPC is a dynamic metric that can change depending on various factors. For example, some clicks may be lost in the calculation, especially if you work with a large volume. In such cases, the real EPC value will be slightly lower than the calculated one.

In addition, the EPC metric can change depending on the stage of advertising, traffic sources used, seasonality and other external factors. Therefore, it is important to constantly monitor the dynamics of this indicator and make the necessary adjustments to the promotion strategy.

In conclusion, it is worth noting that EPC is a valuable tool for arbitrageurs, allowing them to assess the effectiveness of the bay and make rational decisions on their optimization. However, it should be considered in conjunction with other metrics and factors to get the full picture and maximize profitability.

 

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