What is more profitable to track, the return on investment in advertising or to focus on the cost per CPA? What KPIs to set to understand if your affiliate business is effective? Let’s try to figure it out together.
KPI – what to focus on when determining?
At the very beginning, we recall that KPI (Key Performance Indicator) is a set of key indicators, tracking which helps to understand how effective your affiliate marketing is.
Now let’s figure out what exactly to count.
Let’s agree at the start that KPIs will differ for each participant in affiliate marketing.
An online platform hosting affiliate programs, for example, will track the number of attracted clients and webmasters over a period, the life cycle of one client, and the average bill.
The product owner (advertiser) is interested in such parameters as the number of active webmasters, the number of conversions for each webmaster, the total number of offers sold, etc.
A partner is interested in ad conversions in advertising campaigns, the number of attracted leads, conversions and sales made by him personally.
To what extent and to whom in this chain will the price for CPA be relevant in order to make it one of the key performance indicators of affiliate marketing?
Partners, advertisers, CPA networks. Who cares about CPA price?
Relevance of the price for CPA for the partner
Obviously, CPA cost is a key performance indicator for an affiliate. The only problem is that in rare cases it can affect this parameter.
For example, if a partner provides an advertiser with quality traffic and a high percentage of conversions, he can ask the advertiser to increase his personal payouts.
At the same time, any partner still puts such KPI as return on investment in advertising at the forefront.
No one will work with an offer whose ROI is less than 100%, as this is not economically justified. But sometimes raising the price for CPA helps a partner to get a profit, all other things being equal.
Price per CPA relevance for the product owner
The product owner determines the price for CPA. Moreover, he has the ability to adjust this parameter, unlike geography.
For example, the price for CPA can be different for USA, Europe, EU countries. Depending on the demand and the number of purchases of a particular offer. Plus, as mentioned above, the advertiser can take this parameter into account when determining the return on their investment in advertising in order to increase the efficiency of the affiliate business.
Conclusion: for an advertiser, the cost per CPA is an important key parameter, adjusting which can influence the return on investment in advertising.
Relevance of price per CPA for online affiliate marketing platform
Owners of online affiliate marketing services should hardly focus on KPIs such as cost per CPA, because, as a rule, they use a slightly different customer acquisition strategy.
For example, the online platform Alanbase, for example, attracts its advertisers with the organization of advertising campaigns in external sources and a consistent long-term content marketing strategy.
In order to get new clients on a long-term basis, we must tell how exactly we differ from dozens of similar platforms created for affiliate business, explain how easy it is for a client to organize their affiliate program on our platform, show a wide range of our unique tools and give the opportunity for the client to try them.
This whole process, from the first acquaintance with the platform to the creation or integration by the client of his affiliate program with our resource, takes a certain amount of time, so it is unlikely that such a KPI as the price for CPA will be relevant in our particular case. Although we fully admit that other partner business platforms can work on this model.
KPI in 2022. What to focus on?
The main question is: should you use cost per CPA as key indicators or should you still focus on the return on investment in advertising?
We have discussed this issue in detail above. To sum up, it all depends on what role you play in affiliate marketing.
If you provide your platform to advertisers and partners, then such an indicator as the cost per CPA is unlikely to be relevant for you.
If you are an advertiser, it is worth considering the CPA price, but it is up to you to decide whether to make it a key indicator.
It also makes sense for affiliates to use the cost per CPA as a benchmark, for example, to select profitable offers, all other things being equal, but it is still better to focus on the return on investment in advertising campaigns.
We must not forget that any key performance indicator is just an online tool, and not some kind of constant mandatory value.
Therefore, in the final one more advice. Choose those KPIs that actually make sense for your business and are meaningful to your business processes. Do not chase the number of KPIs, but focus on their quality and whether they give you an objective picture of what is happening in real time or in the short term? Can you, relying on them, make decisions about the expediency of certain actions?
If so, congratulations – you’re tracking and evaluating exactly what you need.