The formula outlined in the previous two articles on EPC looks a little scary but whether we like it or not it is THE formula upon which a huge amount of the domain investor community swings. Understanding how it can impact your business actually isn’t rocket science but requires a little intuition. Here is the EPC formula in its entirety.

The formula now incorporates the advertisement clicks and also the Monetisation company filter in the denominator. What it does clearly show is the closer you can get to an advertiser the higher the payouts.....no surprises there! The goal is to effectively eliminate many of the margins on the top line and potentially remove one of the multipliers in the denominator.

There are two problems with managing direct advertising relationships:

1. There’s a large hidden downside cost associated with the relationship management.

]]>This is the second article in the series that unpacks Earnings Per Click (EPC). Click here if you wish to reach Part 1. The previous article covered the basics in how EPC is calculated while this one goes in depth into what actually lays at the heart of EPC.

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So now we have an approximation for the EPC and the formula will look like.

EPC = (Total Revenue Over a Period of Time) / (No. Clicks x Parking Company Filter)

This is great but we have forgotten the other side of the whole equation. An Earnings Per Click for the domain owner is a Cost Per Click (CPC) for the advertiser. How much they will pay for each click will be dependent upon their business models and ultimately conversion rates.

]]>One of the most misunderstood metrics that is bandied around by domain owners is the term Earnings Per Click (EPC). Everyone assumes they understand what it is but very few people have come to grips with how it’s calculated. In this short series of articles, I will pull apart EPC and show how it’s calculated so you can be in the know.

I was inspired to dive into this topic largely because I read a thread on a forum recently and it was clear that there were a lot of misconceptions about EPC that needed to be cleaned up.

I need to apologise for some of the maths in this series. The domain monetisation industry lives and dies by numbers and there's just no getting away from them. I should also say that domain parking is very much alive and well. The main reason for this is advertisers want our extremely valuable traffic.

So let's get too it! We need to define Earnings Per Click in terms of a mathematical formula….it’s initially not that complicated so don’t panic.

EPC = Revenue / No. of Clicks

]]>I’ve been asked a lot of questions by readers on the topic of traffic optimisation and I thought that it would be worthwhile diving a little deeper into some of the metrics that underpin all our traffic monetisation earnings.

To fully understand click through rate (CTR) we need to take a look at the formula.

CTR = (total number of clicks) / (total views) x 100%

Both of the measurements used in the CTR formula are subject to various levels of filtering. For example, is the “total number of clicks” the actual number of clicks on advertisements or the number of clicks on advertisements within a specified time frame? Or is it actually the number of clicks within a specified time frame for a particular IP address? Or is it the number of clicks within a specified time frame for an IP Address/Cookie combination?

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