There are some metrics that don’t often change from being meaningful to being useless. However, some are so flawed and were created by software providers and technology solutions to make Marketers feel they are doing a good job, when in reality they are not. Other times it may take a new metric coming out or someone explaining it to show why the metric is not a legit one and should not be a major decision factor to make a decision. You can find them in numerous channels like PR in SEO or Amazon’s average conversion rate (I’ll explain this in the bottom of the post), and you may even believe them because you don’t know better. Some of them have relevance and some don’t, some you just may be confused on. Here are 5 metrics that I believe are flawed and should be ignored or used as warning signs instead of good things.
1. EPC – Affiliate Marketing
I always drop my head to my desk when someone on a panel or an Affiliate Manager or Network tries to use EPC (earnings per click) as a metric. They go on about high EPCs and how it’s a good thing. The reality is that if you have trademark bidders, adware companies, coupon poachers, etc… you could have a huge EPC. If you run a content based program where a legit Affiliate who is not stealing from a merchant will tend to have a lower EPC. That one is the one you want to join because your cookies may be safe because they aren’t working with sites that are poaching sales. You may find out that you do not want the program with the high EPC because if they are bragging about it and have it, they are very likely to have an anything goes program where your sales can be stolen. You can ignore the TOS (terms of service as well) because most of the time if the program is on one of the big 4 Affiliate networks, they are being ignored by the managers, Affiliates and exceptions are made because the managers don’t know better or the Network is managing the program and taking advantage of the Merchant’s on their network. Here are three examples of why EPC is a bad metric and one that you should ignore.
1. A large newsletter drops. If an Affiliate adds you to their newsletter and their list is a few hundred thousands, or even 40K+ subscribers, this high click volume low conversion volume is going to destroy your EPC. It will drop low, but there will be no public explanation. The program could be a great fit for you, not work with coupon sites, adware and trademark poachers and you may pass it up because of a low EPC when there was nothing but a newsletter drop.
2. Trademark bidders and coupon sites. If the merchant has a coupon code box and there are coupon sites showing up in Google, Yahoo, etc… for store name or url +coupon and/or if they have people bidding on trademarks and extensions like url + coupons or store name + coupon codes, the EPC is going to be high because of the high conversion rates when these Affiliates are taking credit for sales they didn’t earn. Although this would look appealing to you, you have a very good chance of having your cookies and sales over written instead of being protected because of the coupon sites and trademark bidders are going to be the last click in which means you lose money and they get it for doing no work.
3. Self shoppers – A self shopper may click the link once and start making purchases. These single click to purchases are going to up the EPC a ridiculous amount. If they click and buy something, their EPC is going to be huge. If they make two or three purchases off of one click their conversion rate is in the multiple 100% range and their EPC can be in the thousands and higher. This offsets everything. The high EPC would actually be misleading and mean that you could send as much traffic as you want but never make a sale because of leaks, non commissionable products, etc… It’s the self shoppers that are ruining it and making it look misleading with a high conversion rate.
2. View Through Conversions – Media Buying, Re-Targeting, Re-Marketing, PPC
This is one of my favorite to be shown. A view through conversion is a fake number you should ignore. All it means is that at some point a user hit a page where an ad was served. They could have bounced, the ad could have been below the fold and was never seen because the person clicked through to a new page, etc… There is no guarantee the ad was seen, the ad was definitely not clicked and the company using this as a mertic should not be given credit for a sale. There is zero evidence, proof or any way to show their ad was ever seen, let alone helped drive a sale. This is a fake metric and one that you should never look at, follow or take as legit. Imagine if you had to pay for all Affiliate view through conversions, media buys, etc… It’s like saying anyone that walked within 1 mile of times square counts because they may have been exposed to your ad. It is a fake metric and one you should never use to make a decision.
3. 3 Bar, 5 stars, Top 100 – Affiliate Marketing
These are all based on algorithms. Some of my best performing programs over the years (before I pulled off the networks) had zero or one bar rankings when I started. The truth is that when you look through the top programs on major networks you’ll find things like adware, trademark bidders, coupon poaching and an almost guarantee that you will be losing sales to these partners who are more than likely not adding value. If a program is new, it may not have had time to build up a higher level as well. If the merchant has a good shopping process, great products and isn’t working with coupons sites, trademark bidders and adware, you should definitely take a closer look, even if they don’t have a high ranking compared to other programs. You could be their first top performer and have an awesome relationship with them for life.
4. High Conversion Rates – Affiliate, Adware, Coupon specific.
High conversion rates are also a huge warning you should be cautious of. Here are two examples.
1. Coupon sites and trademark bidders. Many of these guys are poaching customers from shopping carts and can have conversion rates of 10, 15, 30 and even 70%. That is not normal and almost 100% of the time means they are ripping you off. Then, the merchant has a large partner with tons of low converting traffic to lower the conversion rate from 10% or even 60% to a 4% which means it looks like a solid performing regular program. The reality is you are wasting your time. If they have coupon sites poaching the cart by ranking for trademark or url + coupons and anyone trademark bidding, their conversion rate is not what you will probably make and you can expect to lose sales to these other partners since they will get the last click in.
2. Amazon’s conversion rate – People brag about how high their Amazon conversion rate is. Although it can be extremely high, you have to think about three things. 1. They are going off of products vs. clicks not sales. 10 products (bought by the same person) to 100 clicks is a 10% conversion rate. In a regular program 1 person shopping and buying something after 100 clicks is a 1% conversion rate, even if they bought 10 products. That is the main reason the Amazon conversion rate is actually not as high as you think. 2. In their defense, the person could have shopped from 10 different stores because Amazon is a price comparison engine with a shopping cart. This could technically be a 10% rate because it was 10 products from 10 stores, but I would still count it as a 1% since it is one shopper, not ten different customers. 3. Amazon can have a 200%+ conversion rate if there is one or two clicks and 6 or 8 products sold. I personally love the Amazon program, but hate their low commissions and session long cookie, but seeing a high conversion rate, even though it is fake, is fun.
5. Remarketing cookie life sales
This is one that almost every remarketing firm will try to rip you off with. They ask for cookies that can last 30 and 45 days. Although that sounds like a reasonable request, it is not at all. A person may click a banner from a remarketing company, but then not come back to your site again for 10 days. When they do come back, they do a direct type in, come in from an Affiliate site, a PPC ad on a generic term or trademark and the remarketing firm says they sent a sale. No matter how they try to say it, they did not send a sale.
Remarketing is bringing someone back to the site and getting them to purchase. If they leave again and don’t purchase within that session, the remarketing firm did not do their job and should not get credit. The only time a legit sale occurs with remarketing firms is when the person leaves, does not just go looking for a coupon code or review, and clicks the banner and makes a purchase right them and there. That is when the remarketing firm made a sale. Showing up on a coupon site and having a coupon banner, having any time more than a session long cookie is not adding value in my opinion because the person didn’t shop when the remarketing firm brought them back. The only time a remarketing firm actually earned a sale is when the person leaves for an unrelated site (no coupons, reviews, fanpages, etc…) and then a click happens on the banner and a sale is made within the same session.
Software providers and technology solutions love to make up pretty words and metrics and convince you that they are great ways to measure success. The reality is that they are bad metrics that are easy to fake and can easily hide where the real value and revenue in your company is being driven from. By listening to them you may be investing your money in the wrong channels and your company is not as profitable because you fell for a fake metric. Also, by bragging about and talking about these metrics, you could either attract a ton of other bad players or you could scare off legit partners with your Affiliate program which can hurt you even worse. Either way you need to understand what the metric actually is and if it is actually relevant. A lot of times you’ll find the ones they are pushing the most because they are the best numbers are actually the easiest to fake and only make them look better but can actually be bad for you.