EPC not a good metric?

April 16, 2008 on 3:23 pm | In Questions and Comments | 1 Comment

Hi Tony,

I just finished reading your book and I’m looking for my first campaign.  There is one point in your book which just I can’t get past.  On page 77, referring to EPC, you mention ”there is no way of knowing how much these clicks cost to generate“.  I’m having trouble understanding this because, as I understand it, I can specify my bid price per click when signing up with search engines like Google. 

Example: If I bid 5 cents per click, 7 day EPC is $20.00, and my add gets 200 clicks in one week.  I would think my cost is $10 (200 clicks * .05 per click), gross earnings would be $40 (EPC = $20 per 100 clicks), and profit for that week would be $40 – $10 = $30

I would appreciate if you could explain this a bit further.  By the way, your book is great!  I read it a few times and I’m very excited to begin my first campaign.  Thank you, Tom.

 

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  1. Tom,

    I love it when I get a question like this, because it highlights a place in my book where I need to do a better job of commuicating, and I’ll be sure to make this correction when my publisher asks for a revised edition.

    What I was trying to say is that we dont know what everyone else  is paying to generate the clicks that went into that average EPC figure. Some people may have great natural search placement for their site, good cheap content bringing back lots of repeat traffic (i.e. free traffic) and the cost of the clicks they sent may have been pretty close to zero. Other people may be new to the business of search marketing, and paying way more than they should per click.

    The most important reason I minimize the importance of that reported EPC, however, is that it represents the results of – primarily – website clicks, and only a small percentage of the total clicks most of these programs get come from direct search.  As a direct search marketer, my EPCs are usually nowhere near the average, and I can sometimes beat the average EPC substantally, but still be unable to make a campaign profitable because in some markets, search marketing can be an expensive way to generate clicks.  In other markets, search marketing might be such a cheap source of traffic that I can be wildly profitable even if I can’t match the average EPC.  The bottom line is that you have to calculate your own EPC, and compare it to your own CPC and the averages aren’t generally much use, at least for search marketers.

    Now… if you are using a website to generate traffic, that EPC becomes a little more relevant, but only as a baseline to determine if the quality of traffic you are sending is higher or lower than the average of the other sites promoting that same advertiser. If your website generates lower EPCs than other website, there is clearly room for improvement.

    Tony

    Comment by Administrator — April 19, 2008 #

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