Many people often wish to make money doing AFFILIATE MARKETING but most of them lose their money because of a lack of knowledge or proper guidance.
It’s a genuine method to make money however you can’t achieve success overnight. I already created a post on “How to start affiliate marketing?” to help you start.
Today, I am going to share the best affiliate marketing ROI formula for you to calculate and plan your move. Some of the best things you will learn here-
- What is the ROI?
- Why ROI Matters?
- How to calculate ROI?
- How can you save your ads spend?
- How to choose the right affiliate product or niche?
These things are really genuine and need for every affiliate marketer to save a lot of the cost and start making some money from it.
Q1: What is the affiliate marketing ROI formula?
Well, if you start affiliate marketing, it is really important to know how much return you get from the money you spent on ads and other related things. ROI simply means “Returns on investment”.
Yes, its is the minimum return that you earned form the marketing of a particular product after all deduction. let’s learn how?
There is another term called EPC (Earning per click) mean, how much on average you earn from each affiliate ads click. The more will be EPC the more you earn on average.
Let’s say you sold a product of $50 after 20 ads click and got a commission of $10 then the EPC for the product would be-
EPC = Commission earned / Min. Numbers of clicks need for that sale and eatrning comission.
So, EPC = 10/20= 0.5$ (You earned an average of 0.5/click)
That means, when you run ads for that product, you can’t spend more than $0.5 per click. If you spend more than that, you will be in losses. Thus, Your ads CPC must be less than $0.5 to make you profit.
Q2. Why ROI Matters?
Well, there are many best reasons for knowing ROI than we think-
- We can estimate our profit and loss.
- We can optimize and grow ROI.
- It helps to decide the profitably of the product.
- You may compare affiliate products.
- You may take better decisions.
Let’s say, EPC is good and you can expect a sale in every 20 clicks but what if your ads later could perform better. If still ADS CPC is the same but EPC will go down than at that CPC you will experience a huge loss.
That is why we calculate ROI. If your ads don’t perform better and EPC goes down the CPC than you should stop running paid ads for those products.
Q3. How to calculate ROI?
ROI FORMULA- Total Amount Invested any ways / Net Profit*
Net profit*= Total sales value – Total ads and other expenditure on it.
Yes, the Above affiliate marketing ROI formula is easy to use for ROI calculation. However, most of the time you may have to spend some money on ads and other things before you can calculate ROI.
Q4. How can you save your ads spend?
Honestly, I love saying that the affiliate marketing can make you $10000+ every month but if your ads fail miserably, you may also lose a lot of the money.
I have discussed you two formulas above to help you estimate the proper CPC for paid ads and how you can save your ads cost. Please read the first three questions above.
Q5. How to choose the right affiliate product or niche?
Yes, I know you want to know “How to choose the right affiliate product or niche?” and it’s really very important. Let’s learn how?
- There should be a higher EPC for the products you want to promote so that you can get the best CPC for your ads and get more traffic easily. ** There more will be EPC the more you can pay as CPS for paid ads.
- It should solve the customer’s problem in any way.
- It must be trending and known to the people, never target the wrong audiences.
- The cost should not be very high, select a medium-range product always.
**EPC must be higher than CPC to make you profit as per Affilaite Markering ROI formula and EPC formula, as obvious.
Well, I have covered almost all the best things needed for a successful affiliate marketing business. One more thing you should know-
Q4.2. How to know the number of clicks required using EPC-
*Number of clicks needed for a sale or conversion of any offer you promote = Net Profit/ Earning Per Click (EPC)
Wow, now you know many things know to start your successful affiliate marketing business and earn a lot of the money online.
if you have any questions, please feel free to comment below. You can also chat with me on Instagram @Mani.Adviser.