One of affiliate marketing’s most attractive qualities lies in its inherent pay-for-performance model. Meaning partners are only paid commissions on intended or agreed upon outcomes or conversions. When it comes to measuring the effectiveness of affiliate marketing programs, the calculation is typically limited to the gross value of conversions generated divided by the aggregate fees paid to achieve those conversions.
This return on ad spend (ROAS) metric is a critical calculation to measure the profitability of your affiliate program, but it ignores the significant benefits attributed to the brand impressions achieved in absence of an impression-based fee or cost per thousand impressions (CPM).
Earned media value (EMV) is the metric most often utilized by marketers to measure the value of unpaid brand impressions on third-party content (think blogs, social media posts, product reviews). The calculation for EMV is based upon the number of impressions received multiplied by an imputed cost per thousand impressions (CPM).
For example, if a high traffic blog posted a recommendation for a cashmere sweater from a fast growing, sustainable DTC brand and 1 million impressions of that post were measured, the EMV of that post would be:
(1,000,000/1000) x Market Rate CPM for a Paid Media Impression
CPM rates for content blogs range from $1.00 to over $30.00 depending upon the dynamic of the programmatic auction (supply and demand) at any given time.
To illustrate the EMV for the affiliate marketer, let’s use a median CPM of $15.50. If a content blogger displays 1M impressions of an affiliate program creative, the EMV of those impressions would be $15,500.00.
For reference, if you add that back to your original ROAS calculation as a net adjustment to fees paid, your actual ROAS formula looks something like this:
Value of Conversions / (Fees Paid – Earned Media Value)
As we see the continued convergence of brand and performance, optimizing your measurement methodologies will provide you with a competitive advantage and when combined with the right attribution solution and commissioning capabilities, your affiliate marketing channel will deliver the subsidy you require to offset the higher cost of your primary sales and marketing channels.
