Paid marketing—Google Ads in particular—comes with its own vocabulary of terms and concepts. Here’s a glossary you can reference if you encounter a term you’re unsure of:
Paid marketing terms to learn
- Impressions: The number of times an ad is viewed.
- Cost: The amount of money a campaign spends on paid advertising.
- Clicks: The number of times your ad was clicked on by a user.
- Conversion: The specific goal you are tracking (a sale, a view of a high-value page, an email sign up, etc.).
- CPM (cost per thousand impressions): The ad buyer’s cost to have their ad seen 1,000 times.
- CPC (cost per click): The ad buyer’s cost per click. CPC can be as low as a few cents or as high as a few hundred dollars, depending on competition, your industry, and audience relevance.
- Cost per conversion: The ad buyer’s cost per purchase, order, acquired customer, or another conversion goal you’ve set.
- CTR (click-through rate): The percentage of users who clicked on your ad out of the total number of impressions it received. Your click-through rate is the most significant signal of relevancy in Google’s search auctions.
- Conversion rate: The number of conversions divided by the number of clicks, expressed as a percentage.
- Budget: The total amount of money allocated to an ad campaign.
- Revenue: The total value, in dollars, generated by an ad.
- Profit: The total value, in dollars, generated by an ad after subtracting expenses, such as advertising costs and cost of goods.
- ROAS (return on ad spend): Revenue generated from an ad divided by the advertising cost to show the return on that ad. For example, $5 made for every $1 spent yields a ROAS of 5:1.
- AOV(average order value ): The average dollar amount a customer spends on a site. AOV is calculated by dividing the total revenue by the number of orders.
- CLV (Customer Lifetime value ): The predicted total value of a single customer (sometimes called LTV) for the entirety of their relationship with a company, including future purchases.