The basic objective of any affiliate marketing website is to make some money out of its traffic. But how do affiliate publishers determine if they are doing a good job? There are plenty of models, systems and methods out on the market, often quite complex. Today I will write about a system that I have created which is simple in approach and easy to use; the “Market value multiplier” model.
What is the MVM?
The basis of the MVM model lies in a basic formula which can be seen below. There are two variables; both based on internal and external forces. The outcome is turnover; an important aspect of any commercial organisation. An extra bonus element is luck; something we can’t control and can’t calculate. That’s where the model falls short.
Prerequisites to use the MVM model:
there are a few basic but important pre-requisites before the MVM model can be used. they apply mainly to strategic business decisions to be made by the publisher and are the following:
Website optimised for click outs:
It’s very important to generate clicks. However; the MVM takes not into account how a website is structured. Therefore; it’s important to ensure that the website used is optimised for click outs. In the end, the percentage does not matter, but in order to keep the MVM model reliable, a stable click out ratio is a prerequisite.
It is important that publishers have a selection of advertisers ready before they use the MVM model. This means publishers need to know what partners they will use in the period the MVM model will be applied.
Explaining the MVM model
Website click outs
The first part of the formula focusses on factors the publisher has an influence on. The number of click outs generated by the website can be influenced by 2 ways:
- Making sure the existing traffic has a higher CTR by changing and tweaking the website. In the MVM model, however, we assume that this is a relatively stable figure that does not deviate more than 7,5% from the average on weekly basis.
- A traffic increase will have an effect on the total number of click out. Traffic can be influenced by a multitude of channels:
- Paid traffic (Social, SEA, Paid e-mail, partnerships, offline promotions, etc)
- Organic traffic (SEO, Social, E-mail, Whatsapp, Direct, Referral)
The traffic quality indicates the quality of the traffic and has an impact on its probability to convert. As a rule of thumb: “The higher the amount of desktop traffic, the higher the traffic quality“. In this perspective, tablet traffic does not negatively influence this figure while a high percentage of mobile traffic definitely has a negative impact. (Especially in travel).
Market value multiplier
Read an elaboration of the Market Value variable here.
The market value multiplier is a combination of various external forces that together define the multiplier. It basically decides the value of the market in which the publisher operates. The higher the MVM, the better a click out will perform. The following factors have a positive or negative influence on the multiplier:
- Weather (Hot days tend to decrease the MVM)
- Public holidays (Public holidays’/bank holidays tend to decrease the MVM)
- Day of the week (Saturday has a negative influence while Sunday usually improves MVM)
- Market sentiment:
- How willing is the “market” to convert on the products of your advertisers?
- Price levels at advertisers (in travel, these fluctuate often and regularly and have an effect)
- Offline promotions of advertisers (Print, radio & tv ads usually improve the MVM)
- Competition of click steals by advertisers (through their newsletters/ads) and direct competitors (other publishers)
Using the MVM on your website
The MVM model is fairly easy to use and can be applied to a plethora of segments although it’s been developed to serve travel affiliates, especially travel deal blogs.
The MVM model is especially useful to determine if an increased spending on marketing can be justified. If you notice that your MVM is rising (attach a figure to every aspect), maybe its time to increase the spending to increase the traffic on the left side of the model.
Needless to say that if you have the abilities to control the amount of organic traffic to your website; a high MVM should be a reason to open up all gates to maximise click outs.