Clicks, leads and so on
Clicks are generated when the consumer clicks through to another website, for example if they want more information or are planning to purchase the product or service. If the purchase process is completed, then it means that a sale is measured. Besides sales, there are advertisers who are interested in leads. Consider an insurance company that collects data from potential customers (lead). This enables the insurance company to approach the customer. Despite the fact that zanox and other affiliate networks work with a performance-based model, there are several ways in which publishers are rewarded for their services:
Advertiser's point of view
- Cost per Sale (CPS): This variable is purely performance-based and is also known as Cost Per Action (CPA). This means that only a percentage / fixed amount to the publisher will be paid once the sale is made. So the advertiser pays only when revenue is generated;
- Cost per Lead (CPL): This means that a fixed amount is paid, when a lead is generated. For example in the insurance industry it is valuable to generate leads, so that the insurance company can contact the potential customer;
- Cost per Click (CPC): This indicates that there is being paid per click by the advertiser and that there is no guarantee of generated revenue. In these cases it is important to make an estimate on the number of clicks or sometimes to do a test run in order to protect yourself and the advertiser from costly surprises;
- Cost per Mille (CPM): This is used to count the cost per 1000 views and is also used in the newspaper or television business. In the publisher marketing business this variable is often used for email marketing or display campaigns.
Publisher's point of view
In addition to the "cost per..." calculation it is also possible to use a "pay per..." bases. This method is mostly viewed from the publishers point of view. So the publisher gets a pay per...
- Pay Per Click (PPC): With PPC a fee is paid per click on the promotional material (e.g. a banner or text link) of the advertiser. The variant eCPC represents the effective Cost Per Click. The eCPC will be calculated on the basis of the average revenue or expenditure per visitor delivered or received.
- Pay Per Lead (PPL): When the commission model is based on the Pay Per Lead principle, a publisher gets commission paid when the advertiser gained a lead through the publishers’ website or platform. The PPL structure is mostly applied in case of promotion of a certain service (e.g. a mover) instead of a direct sale (e.g. electronics product in a web shop).
- Pay Per Sale (PPS): A compensation based on the Pay Per Sale structure is paid when a visitor clicks on promotion material that’s displayed on the publishers’ site and subsequently buys a product of the advertiser. The publisher is paid a commission – which is usually a percentage of the sale amount – for his part in getting the visitor to the website and eventually the sale.
- Pay Per View (PPV): The Pay Per View model has a simpler structure than the other models mentioned above. In case of PPV the publisher gets paid a commission every time the ad (e.g. a banner or video ad) is viewed by the visitor.
Analyzing performance indicators
In order to be able to analyze the program, various performance indicators are used. The different performance indicators are explained below and also an example is given of an analysis on the basis of the statistics of a random program.
- Conversion Rate (CR): The CR indicates the ratio between the number of clicks and the number of sales. Publishers send traffic to a website of an advertiser, in the hope that the consumers then proceed to make a purchase. If the website of the advertiser does not function properly (for example is not very user friendly) and loses a lot of consumers during the ordering process, then conversion rates on that website are not good. There will be many clicks compared to the number of sales resulting in a low conversion rate. The publisher gets paid on the basis of sales, so this is not a good source of income for him.
Calculation: Number of sales / number of clicks * 100 = ...% Concluding: 256 sales / clicks 5189 * 100 = 4.93%
- Click Through Rate (CTR): The CTR shows the relationship between the number of views and number of clicks. This indicates how often an ad seen by consumers is clicked on. This example is useful in email marketing to see how effective the mailings are.
Calculation: Number of clicks / number of views * 100% = ... Concluding: 5,189 clicks / 1,515,923 views * 100 = 0.34%
- Effective Cost Per Click (eCPC): The eCPC is an important and widely used indicator within the publisher marketing industry and is mainly used by the publisher to determine the attractiveness of a program. The eCPC indicates how much commission is earned by the publishers per click. It may be that one advertiser’s eCPC is higher than of other advertisers, because they give a higher fee to the publishers. But it is also possible that the fee is lower but the site converts so well that on average that many consumers make a purchase after clicking. In other words, according to this indicator you may have several different recommendations to ensure that the program is attractive.
Calculation: publisher compensation / number of clicks = € ... Concluding: € 1990.17 / 5,189 clicks = € 0.38
- Effective Cost Per Mille (eCPM): This performance indicator is mainly used in email and display marketing to see if the email or display campaign has been successful. So when the publisher has a display campaign at € 1, - per click, and it gets viewed by 2000 visitors, of which 10 have clicked, you will see the calculation as follows: (€ 10 -/2000) * 1000 = eCPM of € 5,-.