Affiliate marketing is a data-driven industry filled with metrics designed to measure the success of your campaigns. However, not all metrics are created equal. Some, known as "vanity metrics," might look impressive but don't necessarily tell the whole story. On the other hand, "growth metrics" provide valuable insights into the true performance and potential of your campaigns.
In this article, we’ll explore the difference between these two types of metrics, focusing on two crucial growth metrics: Cost Per View (CPV) and Earnings Per View (EPV).
What are vanity metrics?
Vanity metrics are performance indicators that seem impressive at first glance but do not necessarily reflect the overall success or profitability of a campaign. They might stroke your ego and sound impressive to report, but making optimization decisions based on vanity metrics alone is a recipe for losing money.
Some common examples of vanity metrics include:
- Landing page Click-Through Rate (CTR): The percentage of visitors who click through from your landing page.
- Earnings Per Click (EPC): The average amount of money earned per click.
- Return on Investment (ROI): The percentage of profit made from your investment.
- Conversion rate: The percentage of visitors who complete a desired action.
- Banner CTR: The percentage of people who click on your banner ads.
Now, hitting strong numbers for metrics like CTR, EPC, ROAS, and conversion rates is generally a good thing. The problem is, none of these metrics in isolation give you the full picture of your campaign's performance and profitability.
For instance, you could have a landing page with an amazing 55% CTR. But if your offer conversion rate is 0%, then all that traffic you're paying for amounts to nothing. An extremely high CTR is meaningless if no one is actually buying the offer on the other end.
Similarly, an EPC of $0.75 sounds great by itself. However, it doesn't tell you if your campaign is profitable overall. If your cost-per-click (or cost-per-view) exceeds $0.75, then you're still losing money on each click even with that high EPC.
A 125% ROAS might look incredible on a report. But it lacks context around other important factors like your click costs, landing page performance, and the full conversion funnel. You can't make intelligent optimization decisions from the ROAS percentage alone.
Even a 13% conversion rate, while excellent in most contexts, is a vanity metric when viewed by itself. It doesn't reveal crucial insights like how much you can afford to bid for traffic, where there are leaks and opportunities for improvement in your funnel, or what your profit margins actually are.
The fundamental flaw with vanity metrics is that they only provide one isolated data point. But affiliate marketing campaigns are complex with many different variables. You need to analyze the entire picture to understand what's really going on and where to focus your optimization efforts.
Why EPC is the biggest trap
One of the most common vanity metrics that affiliate marketers fixate on is EPC (earnings-per-click). On the surface, it makes sense - the higher your EPC, the more money you're making per click. Therefore, the goal should be to get the highest EPC possible, right?
Not necessarily. As we touched on before, a high EPC viewed in isolation can be very misleading. To illustrate this, let's break down an example:
EPC calculation example
Imagine you're running a campaign with the following stats:
- 100,000 ad impressions at a $2 CPM (cost-per-mille, or cost per 1000 impressions) = $200 in ad spend
- Banner has a 1% CTR = 1,000 clicks
- Landing page has a 50% CTR = 500 clicks to the offer
- Offer has a 10% conversion rate on a $5 payout = 50 conversions and $250 in revenue
In this case, the EPC would be $0.50, calculated as:
$250 revenue / 500 offer clicks = $0.50 EPC
The limitations of EPC
While an EPC of $0.50 might seem attractive, it doesn’t provide a complete picture of the campaign’s profitability. In the example above, the total profit is only $50 ($250 revenue - $200 ad cost).
Now, consider the same scenario without a landing page:
- 100,000 ad impressions at $2 CPM = $200 in ad spend
- Banner has 1% CTR = 1,000 clicks
- Offer has a 6% conversion rate on the same $5 payout = 60 conversions and $300 in revenue
Now the EPC is only $0.30, calculated as:
$300 revenue / 1,000 offer clicks = $0.30 EPC
So in this second scenario, the EPC is actually much lower at $0.30. But here's the key - the campaign is more profitable overall, generating $300 in revenue versus $250 in the first example.
If you were only optimizing based on the vanity metric of EPC, you would choose the first campaign structure. But you'd be leaving money on the table compared to the second campaign with the lower EPC.
This illustrates perfectly how chasing a high EPC number can lead you astray. Oftentimes a lower EPC campaign can be more profitable overall if your click costs are also significantly lower by streamlining your funnel.
Affiliate networks will often pitch their high EPC offers. But you have to be very careful about falling for this trap as an affiliate. The listed EPCs on affiliate networks can be skewed by other affiliates using pre-landers or running high volume/low margin campaigns.
An offer with a lower EPC could still be more profitable for your particular traffic source and funnel setup. The only way to know for sure is to test it yourself. Never pick offers solely based on the network-reported EPCs.
At the end of the day, the EPC number in your reports is a vanity metric because it doesn't tell you how to scale and optimize your campaigns. It lacks context around your costs and overall funnel metrics. Blindly chasing high EPCs is not an effective strategy.
Key growth metrics for affiliate marketers (CPV and EPV)
So if vanity metrics are misleading, what should affiliate marketers focus on instead to make better optimization decisions and scale their campaigns? The answer lies in two key growth metrics: cost-per-view (CPV) and earnings-per-view (EPV).
What are CPV and EPV?
CPV stands for cost-per-view. It tells you how much you are paying for each "view" or visitor to your affiliate marketing funnel.
To calculate CPV, take your total ad spend and divide it by the total measured clicks into the funnel:
CPV = Total Ad Spend / Total Visits
For example, if you spent $500 on ads and got 10,000 clicks to your landing page, your CPV would be $0.05 ($500 / 10,000).
EPV stands for earnings-per-view. It tells you how much you earn on average from each visitor to your affiliate marketing funnel.
To calculate EPV, take your total revenue and divide it by the total measured clicks into your funnel:
EPV = Total Revenue / Total Visits
For example, if your campaign generated $1,000 in commissions from those same 10,000 visits, your EPV would be $0.10 ($1000 / 10,000).
The key distinction here is that we are looking at total funnel visits, not just clicks or views of one page like an ad or landing page in isolation. CPV and EPV give you a bird's-eye-view of your entire funnel's performance in terms of cost and revenue from the initial entry point.
Here's that previous example again to show how to calculate CPV and EPV:
- 100,000 ad impressions at $2 CPM = $200 in ad spend
- Banner has 1% CTR = 1,000 clicks
- Landing page has 50% CTR = 500 clicks to offer
- Offer has 10% conversion rate on $5 payout = 50 conversions and $250 in revenue
CPV = $200 ad spend / 1,000 total visits = $0.20
EPV = $250 revenue / 1,000 total visits = $0.25
So in this campaign, we are paying $0.20 per visitor and earning $0.25 per visitor on average. This means we have a positive $0.05 margin for every click into our funnel.
Now let's see how knowing these metrics can help us make better decisions and scale our campaigns.
How to Use CPV and EPV
The power of knowing your campaign's CPV and EPV is that it allows you to quickly determine your profitability and make more informed choices about scaling.
Recapping the example above, we have:
CPV = $0.20
EPV = $0.25
Net Margin = $0.05 per click
This tells us that for every visitor we drive to our funnel, we are earning an average profit of $0.05. While a nickel per click might not sound like much, it adds up very quickly as you scale your traffic.
For example, if you drove 100,000 clicks to this campaign, you'd generate $5,000 in net profit ($0.05 margin x 100,000 visits). To make $10,000 per day with this funnel, you'd need to drive 200,000 clicks per day.
Knowing your EPV also tells you how much you can afford to pay for traffic. Any clicks you can buy for less than $0.25 will be profitable for this campaign.
So when you are evaluating new traffic sources, you have a benchmark. If a network is offering clicks for $0.30 each, you know that won't be profitable for this particular campaign setup since your EPV is only $0.25.
You can also use CPV and EPV to help with optimizing your campaigns. Your goal should be to decrease your CPV (cost per click) while increasing your EPV. This widens your profit margin.
For example, if you can get the same 1,000 clicks for $150 instead of $200, your CPV drops to $0.15 and your profit margin increases to $0.10 per click.
Or if you can boost your conversion rate so you are generating $300 in revenue from those 1,000 clicks, your EPV increases to $0.30. Now your margin is $0.10 per click ($0.30 - $0.20). Small improvements in CPV and EPV can 2X, 3X, 5X your profitability.
The key is using these metrics to look at the big picture. Avoid making optimization decisions based on vanity metrics like CTR, EPC, ROAS in isolation. Always try to look at the entire funnel's performance and profitability.
A great exercise is to map out your entire funnel and identify your CPV and EPV at each stage. This will show you very clearly where your biggest opportunities are for lowering costs and increasing revenue.
For example, if your CPV on the front end (traffic cost) is way higher than your first page EPV, you know you need to focus on improving your landing page's performance. If your click costs are low but your EPV on the offer is also low, you know you need to focus on pre-selling and boosting your conversion rate.
Avoid costly mistakes
Understanding CPV and EPV helps you avoid common pitfalls, such as:
- Purchasing traffic at a CPV higher than the campaign’s EPV.
- Overvaluing campaigns with high vanity metrics but low profitability.
- Failing to optimize campaigns based on true performance indicators.
Conclusion
Don't fall for the siren song of vanity metrics in your affiliate marketing reports. Metrics like CTR, EPC, and ROAS can be misleading when viewed in isolation and cause you to make suboptimal decisions.
Instead, train yourself to always look at the big picture of your entire campaign funnel. Use the growth metrics of cost-per-view (CPV) and earnings-per-view (EPV) to truly understand your profitability and identify opportunities for optimization.
Map out your entire funnel and calculate your CPV and EPV at each stage. This will clearly show you where you are overspending or underperforming. Aim to decrease your CPV and increase your EPV at each step to widen your margins and scale up.
By ignoring vanity metrics and focusing on the few key growth metrics that really matter, you'll be able to make smarter decisions, scale your campaigns efficiently, and ultimately become a more profitable affiliate marketer. It's not about having the flashiest numbers, it's about optimizing for maximum net profit.
