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I run a lot of reports, especially this time of year. I watch various metrics including my own site’s traffic (and where it is coming from), where the traffic is going, and how much money I am making. But sometimes using raw data without digging in deep enough can actually cause you to lose money. I have 2 great examples from this week.
The Merchant Taking Advantage of Me
2 data points that affiliate marketers look at are the AOV (average order value) and the conversion rate (the percentage of traffic you send that actually buys anything).
I have a merchant that is doing REALLY well in those two areas for the month of December:
- AOV: $102.73
- Conversion Rate: 21%
Those are pretty great numbers for just about any program. I should be pushing them like crazy, right?
WRONG!
A number that is even more important is the actual commission rate. This isn’t the top line number that they advertise for the program. This is what you are being paid after you take into consideration sale prices, non-commisionable items, etc.
- Total Sales: $2568.17
- Total Commissions: $2.91
That’s not a typo. That’s $2.91 in commissions on $2568.17 in sales. Thanks to Eric Nagel for doing the math on this one for me, that’s a 0.11% commission rate. As in— 1/10 of 1 percent commission rate.
I would say that is essentially free traffic. What they are paying me versus what I am sending them amounts to pretty much free traffic for them. Sure, $2500 in sales is small potatoes for them. But $3 in commissions is a grain of salt in exchange for those small potatoes.
Conversely, check out this data….
The Merchant Performing Better Than I Thought
Comparing conversion rates like I did above, I have 2 merchants in the same niche with the following conversion rates:
- Merchant A: 10%
- Merchant B: 7.5%
You would assume that I should be promoting Merchant A over Merchant B, right?
WRONG!
Look at the EPCs for each (earning per 100 clicks):
- Merchant A: $195
- Merchant B: $626
That’s almost 3 times the earnings for Merchant B. Put it this way…if I send 1000 clicks to each this month, I’ll make $1950 from Merchant A but $6260 from Merchant B. In this case, the EPCs tell a better story because they take into account higher commission rates, bonuses, higher AOVs, etc.
Using data and analytics to your advantage is extremely important as an affiliate marketer. Be sure that you are looking at the RIGHT numbers to ensure you are making good business decisions.
What data do you use? What do you think about the merchants above?
Correct , Your article about Shocking Affiliate Stats is really nice.
Thanks, please one more example of how data can be manipulated and misinterpreted if you are not looking at the right numbers.
Thanks, Todd! You are right. Comparing the stats between different tracking platforms introduces its own issues. Just one more example of how data can be manipulated and misinterpreted if you are not looking at the right numbers.
Great read and very useful information.
Any affiliate must follow rule number 1, know the business.
Do your research and make sure you know what you’re getting yourself into. Know and understand the commission rates and all the advantages you should expect from your new partnership.
Make sure you know exactly how the brand you’ve chosen works and whether or not they pay you what you want to be paid. For example, you don’t want to find out in the end that your brand pays you with a gift voucher when you expected commission percentage of sales.
So it is absolutely crucial you know who you’re getting in bed with.
Have a lovely day.
wow.. its point to point information…thank you so much for sharing this huge important information….keep it….
I am a numbers person, and I love how you get into the weeds and show what numbers affiliates should be focusing on to increase sales and commissions.
With commissions like that I’m feeling ‘Share-a-sale’ and ‘Commission Junction’…
Great post Tricia! I am a firm believer in measuring performance in an “apples to apples” manner. I have found one of the best way to analyze the performance of partnerships is to use as few metrics as possible to make it easy for comparisons. An effective CPC (eCPC) rate (earnings/clicks) essentially incorporates conversion rate, AOV, and commission rate/earnings all in one number.
One thing I would like to point out is some networks report raw clicks instead of unique clicks (IAB standard) which can skew your eCPC data for comparison purposes across platforms/networks. The IAB defines a unique click as the same user within 30 minutes. So if the same user clicks an ad twice within 5 minutes, it only counts as one click and the 30 minute window is reset. Today all analytics solutions report unique clicks by default. Most of the older networks still count every click (even when someone double-clicks a link). I have done analysis and as a benchmark for every 100 unique clicks there are usually 125-130 raw clicks. This means your eCPC for raw clicks could be 25%-30% lower than if measured on unique clicks. Conversely if you compare eCPCs for an advertiser reporting unique clicks their eCPC could be 25%-30% lower compared to an advertiser with raw clicks.
Lastly, my 25%-30% benchmark is an average for the advertiser. I have seem some individual publishers generate higher or lower raw to unique click ratios – some as high as 80% and some as low as 5%. So if possible ask for and use unique clicks for calculating eCPCs to get “apples to apples” data.
Food for thought!
Thanks, Todd! You are right. Comparing the stats between different tracking platforms introduces its own issues. Just one more example of how data can be manipulated and misinterpreted if you are not looking at the right numbers.
Correct – I forgot to mention that the raw vs unique clicks issue will also skew your conversion rates.