This metric typically refers to the amount of revenue that can be expected to be earned for every 100 clicks through to an affiliate link.
This metric is often displayed by affiliate marketing networks to help publishers evaluate and compare the earnings potential of different merchants. Below is an example from the CJ Affiliate dashboard:
The formula for determining EPC is:
Affiliate earnings / Number of clicks from affiliates x 100
However, there are many reasons why the EPC indicated on an affiliate marketing platform may be much higher or lower than what a site will actually realize if the ads are run.
This is primarily due to variance in the conversion rate between sites. Under an affiliate marketing model, the click from a publisher’s site through to the advertiser doesn’t actually generate any revenue. Instead, the referring site earns a commission only when a certain action is completed (such as the purchase of an item or opening of an account).
As such, the percentage of clicks that convert to completed transactions has a major impact on the EPC realized by an affiliate. In general:
While the EPC can be a useful metric for comparing affiliate marketing offers, it shouldn’t be the only number that publishers consider. To illustrate this point, suppose you run a blog about old cars and are evaluating two different merchants. Here’s merchant number one:
And here’s merchant number two:
The first hypothetical merchant (AT&T) has a very impressive EPC; for every 100 clicks, affiliates earn almost $350. That’s more than 10x what the second merchant offers.
But the relevancy of the second potential merchant is much higher. As a result, the click rate would likely be much higher for the second. Moreover, the conversion rate would also be generally higher for relevant merchants.
Put another way, the earnings from an affiliate marketing campaign can be expressed as:
Pageviews x click rate x conversion rate x commission
The EPC metric considers only the final two variables in that equation (and those two only on average, not for a specific site). The click rate that can be expected is very important as well. The link in the resources below contains more suggestions for properly evaluating different affiliate marketing offers.