If you count on earning significant profits on affiliate sales and making it your full-time job, you need to keep a finger on the pulse, i. e. always be aware of how successful your campaign is. Of course, you can simply evaluate your total earnings and see if it is enough to meet your needs. Or, you can just listen to your hunch. But more successful – and potentially super affiliates are much savvier when it comes to evaluating costs and profits.
There are a few metrics used to measure the success of an affiliate campaign in cold numbers rather than crude guesses and speculations. These are the return on investment (ROI), click-through (CTR) and conversion rates (CR). Although quite simple in calculation, they can give you a pretty good idea of how well you are doing, as well as suggest areas for improvement. Let’s take a closer look at each of them.
Return on investment (ROI)
Being a rather general index, ROI is extremely useful for evaluation of your affiliate campaign success. Aiming to step away from the general nature of this index, its more specific variant has been created, called Return on Marketing Investment (ROMI). There are no differences in calculation, though, only in the name.
To calculate ROI for a certain campaign, you need to know its revenues and costs. The general idea is to divide your total profit (total revenues minus total costs) by total costs and then multiply it by 100%.
For example, if you were able to sell 10 free trials of our Raspberry Ketone CPA Offer and make $500 commission having spent $125 on PPC advertising, your ROI is a whopping 75% (Note the numbers are given only as an example and vary significantly for every affiliate).
Naturally, to receive a valid number you will need to calculate revenues and costs for the same period of time. Using the ROI index, you can easily identify which campaigns perform better than others, as well as see if something changes in terms of the campaign profitability.
For more advanced ROI calculation, you’d also have to include more general costs such as what you spend on your software, website hosting, office rent, etc. ROI can also be calculated for individual promotional efforts within your campaign – provided that you can identify how much was spent on each of them individually and how much revenue they have brought you.
Click-through rate (CTR)
We’ve talked about click-through rates multiple times on our blog. The click through itself means that a customer clicked on a link to leave one page and proceeded to another. For example, it can be by clicking on a link in your blog post, in an email with a sales offer you’ve sent, etc.
The click-through rate is an important and universal metric, yet it measures only a part of your success: clicking on your affiliate link doesn’t mean that the customer will do the expected action – order a free trial in the case of our health and beauty CPA offers.
To calculate your click-through rate, you need to divide the amount of clicks you received by the number of impressions (e. g. the number of times the corresponding link/ad/etc. was shown) and multiply the received decimal by 100%. For example, if you are promoting our Pure Asian Garcinia CPA offer using an email campaign and 9 out of 100 recipients not only opened the letter but also followed the link to the product website contained therein, your CTR is 9% – not bad at all!
The acceptable CTR differs depending on the type of advertising you are using – banners, email campaigns, etc. It is generally believed that banners are doing well if they have a 0.10-0.13% CTR, email campaigns should have a 2.8-5.9% rate and paid search ads – around 2%.
Unfortunately, the CTR of your campaign (or its part) does not define its success – at least not all of it. For the sake of decency we won’t mention any fraudulent methods of making people click, but even if you played by the rules there is still a solid chance your traffic won’t convert, i. e. take the next required step. Increasing your CTR will only increase your profit if you take simultaneous measures to boost your CR – the next point of our list.
Conversion rate (CR)
Probably the most important metric of all, the conversion rate measures how many of those who followed your affiliate link converted into paying customers (or did another required action that triggers commission payout – such as ordered a free trial for our CPA offers or generated a lead).
To calculate your CR, you only have to divide the number of approved sales by the number of clicks on your affiliate link and multiply it by 100%. For example, if you are promoting our CurvyBust breast enlargement CPA offer and 8 out of 30 website visitors that arrived following your link decided to try this amazing product, your conversion rate is: 8/30*100% = 26%
Basically, all the efforts you make to get more profit from a certain CPA offer are aimed at improving your conversion rate, as a higher conversion ALWAYS means a higher profit.
Stay up to date concerning the effectiveness of your campaign and never fail to experiment and improve! Meanwhile, check the New CPA Offers page at Bizprofits.com – you might just find another promising offer to promote!