Here is the complete guide to help you figure out whether your affiliate marketing campaign is reaping the wanted results!
As an affiliate marketer, you are bound to run into the term return on investment (commonly referred to as ROI) quite a bit in your career. Your ROI is an indicator of how well your campaigns are doing. A high ROI means you have managed to cover the original amount you invested in the campaign. On the other hand, a low ROI means you brought in less money than you have managed to spend on it.
The tricky question is how much ROI justifies keeping a campaign going – and when it is better to shut it down.
Find out how much ROI is needed for your next campaign below!
How to calculate Your ROI
Calculating your return on investment is easy. To calculate your affiliate campaigns’ ROI, you will first need to know how much you spent on the campaign, link, or promotion you have been using. Then subtract this number from the total earnings you have yielded during the same window of time.
That means, for example, that if you had spent $10 on a single campaign and made $20. That would translate into your having $10 after deducting the cost from your total profit.
Then, you all have to do is divide that amount by the amount you spent, and you will see that your ROI stands at 100%. Had you made a $20 profit after deductions, that would have been a 200%, and so forth.
ROAS refers to return on advertising spending, which may sound like the same thing, but it gives a ratio between the two amounts. If you invest $20 but made $100 off a campaign, then you divide the total profit by the amount spent. This means the ratio is 5:1 (or 500%).
ROI Calculations for Affiliate Marketing
To make it as an affiliate, you need to stay on top of your affiliate campaigns and your partnerships. This directly translates into the amount you spend on a specific platform or traffic source versus the amount you earn. The ROI is an indicator of which areas in your strategy are doing better than others and where you may want to change direction.
You can use ROI and ROAS calculations to improve the different aspects of your business:
- Work which paid ads platforms are doing a better job. If one platform gives you an ROAS of 430% and the other gives you 750%, then it is an obvious choice.
- Shifting your focus between your partners. If one advertiser offers a better service compared to another, it may be best to allocate more of your efforts to them.
- Finding the best payment model. While CPA and CPL seem to be the most popular payment models, it is still fundamental that you learn which one works better for your traffic source.
Carefully read the search engine’s policy handbook to avoid such mishaps and end up in Google prison.
“The tricky question is how much ROI justifies keeping a
campaign going – and when it is better to shut it down”
How to increase Your ROI
As an affiliate marketer, you probably know how tough the competition is in your chosen verticals. More often than not, you will be fighting over the same GEOs and age groups – not to mention that the offers do not tend to differ by much from one another. Becoming a successful affiliate does not just land in your lap one day, so you need to choose the proper tools to ensure your business’ success.
Here are some aspects you should consider in order to improve your ROI and ROAS:
- Quality Content. Provide your leads with high-quality content that educates them on your service and niche market for higher value players.
- Keep It 100. Only give easily verifiable information. Otherwise, your potential clients might write you off as a scammer.
- Get Your Analytics in Check. Some of the more promising tools include Sprout Social, Hootsuite, and BrandWatch, but some apps are dedicated specifically to affiliate marketing, if you prefer.
- Combine Data and Creativity. While creativity can go a long way, it is essential to present your campaigns with at least some data to convince your leads better that your services are something that could benefit them.
Giving your affiliate marketing platforms a much-needed push in the right direction will require that you dedicate your attention to each of the different aspects mentioned in the list above.
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