One of the important things to know before you start promoting another person’s product (or looking for people to promote your product) is to understand the lingo used in affiliate marketing and CPA Networks. Below is a list of the most common terms associated with the CPA industry…
Advertiser - Can also be called a merchant, [...]
One of the important things to know before you start promoting another person’s product (or looking for people to promote your product) is to understand the lingo used in affiliate marketing and CPA Networks. Below is a list of the most common terms associated with the CPA industry…
Advertiser - Can also be called a merchant, retailer, e-retailer, online retailer, etc. This is the website that SELLS the product or service. They will also process the payment and fulfill the order.
Publisher - Can also be called the affiliate, partner, associate, or reseller. This is the third party who PROMOTES the product or service in exchange for a commission or other type of compensation.
Pay-Per-Lead - The commission structure where the affiliate is paid a flat fee for each qualified lead (this is usually achieved by a visitor entering their personal information on an advertiser’s website).
Cost-Per-Lead (CPL) - The amount of money paid per qualified lead.
Pay-Per-Sale - This commission structure can be either a flat fee or a percentage of the revenue generated on the advertiser’s site which was referred by a publisher.
Cost-Per-Sale (CPS) - The amount or percentage paid per each sale.
Pay-Per-Click (PPC) - The amount or percentage paid for each click that is made on a link, banner or product on an publisher’s website. Many people use search engine pay-per-click, such as Google Adwords, are called PPC Advertisers. When you use Google Adsense on your website to generate revenue, you are PPC Publisher.
Cost-Per-Click (CPC) - The amount or percentage paid for each click.
Impression - Occurs when a banner, link or product is viewed on a website. The visitor does NOTneed to take action (i.e. click the link or banner) for an impression to be registered.
Click-Through-Rate (CTR) - The percentage of clicks made for each impression.
Formula: CTR = 100% x (Clicks/Impressions)
Lead - When a visitor registers, signs up or downloads something from an advertiser’s site. This is usually accomplished by a visitor filling out a form on the advertiser’s website.
Cost-Per-Action (CPA) - This is the rate/fee that is set for every action that is taken by on visitor which is promoted by an affiliate. This usually refers to, by not limited to, Pay-Per-Lead and Pay-Per-Sale transactions. CPA, as Cost-Per-Action usually corresponds to Pay-Per-Lead while CPA, as Cost-Per-Acquisition usually corresponds to Pay-Per-Sale.
Cost-Per-Thousand-Impressions (CPM) - This can also be called “Pay-Per-Impression”. Here, the advertisers pay based on the impressions their link, banner or product is displayed per 1000 views on the publisher’s website. The “M” refers to the Roman Numeral for 1000. Old Google Adwords Site Targeting used to be based on CPM metrics.
Earnings-Per-Click (EPC) - This is a metric to measure the effectiveness of being able to turn a click into commissions.
Formula: EPC = (Clicks/$Commissions Earned)
* Note, come companies, like Commission Junction (CJ’s) change the definition slightly. In CJ’s case, EPC refers to earning per 100 clicks.
Formula: Commission Junction EPC = (1/100)*(Clicks/$Commissions Earned)
Effective Earnings-Per-Click (eEPC) - This is very similar to the EPC definition but in this case, if it referring to the effectiveness of being about to turn 1000 clicks into commissions. (Where CJ is 100 clicks/$, eEPC is 1000 clicks/$)
Formula: eEPC = (1/1000)*(Clicks/$Commissions Earned)
As you can see, EPC is an important figure of merit which can predict the effectiveness of selling a certain product but its definition varies by the network. Be sure to read your network’s definitions to understand this further.
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This is a just a start to some of the important figures and lingo associated with CPA networks (and online marketing, in general).
Do you have a term that I don’t discuss here or would like further description and details of??? Let me know in the comments…I’ll be sure to add it!
cheers…matt
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