With various channels, ad types, targeting abilities, and performance metrics, Paid Media can be confusing. So if you are a novice who is just starting out or a pro who needs a refresher, here is a cheat sheet of some of the most used definitions in paid media today. Note that many of these definitions apply to all media types as well.
Search Engine Marketing or SEM
Search engine marketing is a broad marketing strategy term that includes search engine optimization, content marketing, as well as paid ads.
Social Media Marketing or SMM
Social media marketing is limited to social media channels and includes organic and paid traffic.
A conversion is the desired action you want someone to take on your website or funnel. A conversion event typically includes a time or money commitment on behalf of the customer.
This is the percentage of prospects landing on your page or taking you up on your offer.
Cost Per Click or CPC
Cost per click means that your ad campaign is billed each time someone clicks a button, link, or directly on your ad.
Cost Per Thousand or CPM
Cost per thousand is charged for every 1,000 impressions. An impression happens anytime someone lands on the page where your ad is placed. (Don’t ask us why it’s CPM…it’s just weird.)
Click Through Rate or CTR
Click through rate is the percentage of potential customers who saw an ad and clicked on it. This metric is a good indicator of the quality of your ad copy and media.
Cost Per Acquisition or CPA
Cost per acquisition is the expense incurred to acquire a new customer.
Return On Ad Spend or ROAS
Return on ad spend is the amount of revenue earned per dollar of ad spend.
Return On Investment or ROI
Return on investment describes how much you get back after calculating the entire cost of the ad campaign. When calculating the ROI, costs can include agency fees, copywriting, graphic design, video production, call tracking, etc.
Lifetime Value or LTV
Lifetime value is the long-term value of a customer.
Urchin Tracking Module or UTM
The Google Analytics we know and love started out as Urchin Software Corporation. The term just stuck around after Google bought Urchin in 2005. The term Urchin tracking module (not universal tracking mechanism or Uncle Tom’s marmalade) is a piece of code that is tacked onto the end of the URL. The code is pushed to the search engine whenever someone clicks through the ad.
Use this list of common terms to impress your friends at a dinner party, or to share with your paid advertising clients. It’ll get everyone on the same page and avoid confusion down the road.