Edwin

12-18-2001, 08:39 AM

(Warning: this is LONG - but if you use Commission Junction extensively you owe it to yourself to understand this!)

I like Commission Junction for a lot of reasons, notably its relatively simple interface (once you get used to it) and the range of merchants it offers, as well as the super one-cheque policy!

However, there is one really fundamental problem with CJ that I don't see people discussing much: the reliance on EPC numbers.

Now CJ defines EPC as "Earnings per 100 clicks" and presents those numbers over the last 3 months, and over 7 days, for people to select the advertisers and ad creatives that will perform best... or NOT!

Here's an example that illustrates the absurdity of this metric being used as the "fundamental unit" for comparing programs:-

Program A pays $100 per purchase of an oil-fired heater (this is a fictitious example by the way). About 0.5% of visitors clicking through the ad will become buyers so CJ measures an EPC of $50 (1 in every 200 click-throughs signs up, generating $100 commission, so the commission per 100 clicks is half that, i.e. $50) On the face of things, this looks VERY exciting! Wow, $50 per 100 clicks... (hold that thought for a moment!)

Program B pays $0.05 per free signup to a newsletter. About 20% of visitors clicking through the ad will sign up, so CJ measures an EPC of $1. (1 in 5 click-throughs sign up which means that 100 clicks will produce 20 signups and $1) Doesn't look so hot, right?

WRONG!

If you just worked through the logic (and this is the type of logic CJ *encourages* by the way it presents the global advertiser stats) you might have arrived at completely the wrong answer.

Why? Because EPC (earnings per 100 CLICKS) takes NO ACCOUNT WHATSOEVER of the "pulling power" of the ad itself i.e. how effective the ad is at getting people to click through!

Going back to our two examples, in Program A an average webmaster has to show 2,000 banners to get a click-through (hey, the purchase of an oil-fired heater isn't exactly top of many peoples' minds...)

Now remember, 100 clicks are worth $50 (we saw that earlier) so each click is worth $0.50. Now you can see that 1,000 banner displays are worth just $0.25 i.e. the program has a CPM equivalent of $0.25! Not looking so hot...

Let's look at program 2. A single click was worth $0.01 since it took 5 clicks to earn a measly $0.05. HOWEVER, people are being asked to sign up for a fun free newsletter, and the ad is pulling a 5% clickthrough rate. Suddenly, for every 1,000 banners being shown, there are 50 clicks... which means $0.50 CPM!

Frankly, these examples are just scratching the tip of the iceberg as in practice CJ spits up much more extreme cases.

Let me close by illustrating the above with some real stats from my site (of course, your mileage will vary but the PRINCIPLE remains the same!)

I ran the Half.com promotion and it pulled a $5.70 EPC (meaning for every 100 clicks I would generate $5.70). However, after showing 607,042 banners, I generated just *263* clicks (less than 0.05% clickthrough rate), netting me $15. This is a CPM equivalent of $0.02 (that's TWO CENTS CPM)

I ran a promotion for Streamload.com and it pulled a $0.09 EPC (meaning that for every 100 clicks I would generate just $0.09!!). However, after 5,542 impressions I generated 1,685 clicks (a 30.4% clickthrough rate) netting me $1.48 for a CPM equivalent of $0.27.

So the "headline numbers" ($5.70 EPC vs $0.09 EPC) - which is all CJ would give me to compare the two programs were it not for the fact that I ran both for a while to get more data - conceal the ALL-IMPORTANT DETAIL: Streamload outperforms Half.com on my site by close to 14x. That's 1400% better performance, to put it another way.

Until CJ decides to release EPM data for its campaigns, the stats it offers are frankly only useful for ONE very small thing: to see if the merchant is improving their program over time. If the 7-day EPC is higher than the 3-month EPC, then the merchant must have fine-tuned either the ads, the back-end sales process on their own site, or both.

Here's hoping you're now better equipped to make sense of CJ's soft-as-quicksand EPC reporting feature!

Edwin

I like Commission Junction for a lot of reasons, notably its relatively simple interface (once you get used to it) and the range of merchants it offers, as well as the super one-cheque policy!

However, there is one really fundamental problem with CJ that I don't see people discussing much: the reliance on EPC numbers.

Now CJ defines EPC as "Earnings per 100 clicks" and presents those numbers over the last 3 months, and over 7 days, for people to select the advertisers and ad creatives that will perform best... or NOT!

Here's an example that illustrates the absurdity of this metric being used as the "fundamental unit" for comparing programs:-

Program A pays $100 per purchase of an oil-fired heater (this is a fictitious example by the way). About 0.5% of visitors clicking through the ad will become buyers so CJ measures an EPC of $50 (1 in every 200 click-throughs signs up, generating $100 commission, so the commission per 100 clicks is half that, i.e. $50) On the face of things, this looks VERY exciting! Wow, $50 per 100 clicks... (hold that thought for a moment!)

Program B pays $0.05 per free signup to a newsletter. About 20% of visitors clicking through the ad will sign up, so CJ measures an EPC of $1. (1 in 5 click-throughs sign up which means that 100 clicks will produce 20 signups and $1) Doesn't look so hot, right?

WRONG!

If you just worked through the logic (and this is the type of logic CJ *encourages* by the way it presents the global advertiser stats) you might have arrived at completely the wrong answer.

Why? Because EPC (earnings per 100 CLICKS) takes NO ACCOUNT WHATSOEVER of the "pulling power" of the ad itself i.e. how effective the ad is at getting people to click through!

Going back to our two examples, in Program A an average webmaster has to show 2,000 banners to get a click-through (hey, the purchase of an oil-fired heater isn't exactly top of many peoples' minds...)

Now remember, 100 clicks are worth $50 (we saw that earlier) so each click is worth $0.50. Now you can see that 1,000 banner displays are worth just $0.25 i.e. the program has a CPM equivalent of $0.25! Not looking so hot...

Let's look at program 2. A single click was worth $0.01 since it took 5 clicks to earn a measly $0.05. HOWEVER, people are being asked to sign up for a fun free newsletter, and the ad is pulling a 5% clickthrough rate. Suddenly, for every 1,000 banners being shown, there are 50 clicks... which means $0.50 CPM!

Frankly, these examples are just scratching the tip of the iceberg as in practice CJ spits up much more extreme cases.

Let me close by illustrating the above with some real stats from my site (of course, your mileage will vary but the PRINCIPLE remains the same!)

I ran the Half.com promotion and it pulled a $5.70 EPC (meaning for every 100 clicks I would generate $5.70). However, after showing 607,042 banners, I generated just *263* clicks (less than 0.05% clickthrough rate), netting me $15. This is a CPM equivalent of $0.02 (that's TWO CENTS CPM)

I ran a promotion for Streamload.com and it pulled a $0.09 EPC (meaning that for every 100 clicks I would generate just $0.09!!). However, after 5,542 impressions I generated 1,685 clicks (a 30.4% clickthrough rate) netting me $1.48 for a CPM equivalent of $0.27.

So the "headline numbers" ($5.70 EPC vs $0.09 EPC) - which is all CJ would give me to compare the two programs were it not for the fact that I ran both for a while to get more data - conceal the ALL-IMPORTANT DETAIL: Streamload outperforms Half.com on my site by close to 14x. That's 1400% better performance, to put it another way.

Until CJ decides to release EPM data for its campaigns, the stats it offers are frankly only useful for ONE very small thing: to see if the merchant is improving their program over time. If the 7-day EPC is higher than the 3-month EPC, then the merchant must have fine-tuned either the ads, the back-end sales process on their own site, or both.

Here's hoping you're now better equipped to make sense of CJ's soft-as-quicksand EPC reporting feature!

Edwin