If you are involved in traffic arbitrage, you should know about the EPC metric. Earnings Per Click is a key indicator for evaluating the effectiveness of advertising campaigns and determining their ability to generate profit. This metric reflects the average revenue per click. However, it has its advantages and limitations. Let’s take a closer look at them. Stay tuned!
How to calculate EPC
To determine the EPC, you need to divide the total revenue from the campaign by the number of clicks (EPC = Total revenue / Total number of clicks). The resulting value is the average earnings per click and allows arbitrageurs to measure the effectiveness of their advertising efforts.
The higher the EPC value, the higher the profitability of the campaign. This means that each click on an advertising link or material generates more revenue than the cost of advertising. Arbitrageurs use EPC as a key metric for making decisions on further optimization of campaigns and selecting the most profitable traffic sources.
EPC optimization: main strategies
- One of the main indicators for EPC optimization is the Conversion Rate. It reflects the percentage of visitors who performed the desired action out of the total number of clicks. Increasing the conversion rate increases the EPC, so arbitrageurs test and improve elements of their campaigns to achieve the best results.
- Another important metric for optimizing EPC is the average order value (AOV). An increase in the average order value increases the profitability of each click and, consequently, the EPC. To achieve this, arbitrageurs can encourage customers to add more items to their carts or offer additional products and services to increase the average order value.
- Apart from metrics, arbitrageurs use different strategies to optimize EPC. They choose the most profitable advertising platforms and traffic sources, analyze competitors to identify successful tactics, and conduct experiments and testing to find the most effective approaches to advertising campaigns.
Advertising platforms and traffic sources with high EPC
- One of the most popular platforms with a high EPC is Google Ads, which offers a wide range of ad formats, precise targeting, and access to a large audience. This allows you to optimize your campaigns and achieve high conversion rates, increasing your EPC.
- Facebook Ads is also a powerful platform with high EPC potential. With a large audience reach, accurate targeting, and regular analysis of results, you will achieve high profitability. Advertising formats such as news feed and Instagram feed ads provide many opportunities to achieve high EPC.
- Besides, Native Advertising is a popular source of traffic with a high EPC. This type of advertising is distinguished by the fact that ads are harmoniously integrated into the content of websites and look like a natural part of it. Due to this, users perceive such ads less aggressively, which increases the likelihood of interaction with them and increases conversion rates.
Benefits of using EPC
- Assessment of campaign profitability
EPC allows you to quickly determine how effective each advertising campaign is. Arbitrageurs can compare different campaigns and traffic sources by profitability, which allows them to make an informed choice in favor of the most profitable options. This helps to optimize the budget by directing funds to more efficient channels. - Optimization of advertising costs
Knowledge of EPC allows arbitrageurs to allocate their advertising budget more efficiently. Choosing platforms and traffic sources with a high EPC means that the money invested brings the maximum revenue. This helps to increase the return on investment (ROI). - Identify successful strategies
EPC helps to identify which advertising strategies work best. Arbitrageurs can analyze campaigns with high EPC, study their features, and implement similar approaches in other campaigns. This contributes to the overall performance improvement.
Limitations of EPC
- Limited picture
EPC is average and does not always reflect the full picture. It can vary depending on the target audience, geographic location, and other factors. For example, a campaign with a high EPC in one country may have completely different results in another. - Does not take into account advertising costs
EPC shows only the revenue per click but does not take into account the cost of advertising. To fully assess the profitability of campaigns, it is important to consider other metrics such as CAC (cost per acquisition) and ROI. Without this, EPC can be misleading. - Influence of external factors
EPC can be affected by numerous external factors, such as seasonality, changes in platform algorithms, economic conditions, etc. This means that EPC can be unstable and change over time, making long-term planning difficult.
Conclusions
Despite its limitations, EPC remains an important tool in traffic arbitrage. It provides valuable information about the effectiveness of advertising campaigns and helps arbitrageurs make informed decisions. Optimization of EPC can significantly increase the profitability of campaigns, but it is important to take into account other indicators and external factors to achieve maximum efficiency.
By using EPC in combination with other metrics and approaches, you can take your campaigns to the next level.
