20/03/2024
Decoding Digital Marketing: A Beginner’s Guide to Key Terms and Metrics
CPM (Cost per Mile):
The cost to show an ad to 1,000 people. If a website charges $5 CPM, that means you pay $5 for every 1,000 views of your ad.
CPC (Cost per Click):
The amount you pay each time someone clicks on your ad. For example, if you pay $1 CPC, and 100 people click your ad, you’ll spend $100.
CTR (Click-Through Rate):
The percentage of people who click on your ad after seeing it. If 100 people see your ad and 5 click on it, that’s a 5% CTR.
CPA (Cost per Action):
The average amount spent to get someone to take a specific action, like signing up for a newsletter. If you spend $200 and get 10 sign-ups, your CPA is $20.
LTV (Lifetime Value):
The total amount of money a customer is expected to spend on your products during their lifetime. If a customer typically buys $100 worth of products every year for 10 years, their LTV is $1,000.
CAC (Customer Acquisition Cost):
The cost of convincing a potential customer to buy a product. If you spend $1,000 on marketing and get 10 customers, your CAC is $100 per customer.
AOV (Average Order Value):
The average amount spent each time a customer places an order. If 5 orders total $500, the AOV is $100.
CPV (Cost Per View):
The cost for each view of a video ad. If you pay $0.10 per view and your ad is viewed 1,000 times, you’ll spend $100.
Call to Action (CTA):
A prompt on a website that tells the user to take some specified action, like “Sign Up Now” or “Buy Today”.
LCTR (Link Click Through Rate):
Similar to CTR, but specifically for the rate at which people click on a link.
TOF (Top of Funnel): The initial stage of the buying process where potential customers are just becoming aware of a product.
BOF (Bottom of Funnel):
The final stage of the buying process where potential customers are ready to make a purchase.
M*F (Middle of Funnel):
The stage between TOF and BOF where potential customers are considering whether or not to buy a product.
VC (View Content):
When someone views a specific page on your website, like a product page.
ATC (Add to Cart):
When a customer adds a product to their shopping cart on an e-commerce site.
IC (Initiate Checkout):
When a customer starts the checkout process after adding products to their cart.
LLA/LA (Lookalike Audience):
A group of people who are similar to your existing customers, used in advertising to find new potential customers.
ROAS (Return on Ad Spend):
The amount of revenue you earn for every dollar spent on advertising. If you spend $100 on ads and make $300 in sales, your ROAS is 3x.
ROI (Return on Investment):
The profit or loss generated on an investment relative to the amount of money invested. If you invest $100 and make $150, your ROI is 50%.
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image credit: Tayyab Jamil