What is PPC and what are the most important terms to know when you’re starting out?

Many business owners who have set up their products, site, and shop are faced with the same dilemma: “How do I find customers?” Customers come in the form of site traffic and there are a multitude of ways to drive traffic. You can put posters and flyers up around town, try to spread the word on free community forums, build up content and try to rank for keywords, or have some digital advertising set up. 

If you’ve heard anything about digital marketing in the past, chances are, you’ve heard some of these terms float around either in conversation or while browsing blogs just like this one. Advertisers LOVE their jargon. If you want to learn more about the world of PPC (pay per click) advertising but don’t know where to start, this list is a good place to get your feet wet.

Here is an introduction to some of the most common terms used by digital advertisers and marketing agencies. You’ll need to know these before you request for proposal (RFP) to anyone, to ensure no one is trying to speak over your head with fancy “industry speak” and jargon.

These are the key terms you’ll need to know about digital marketing:

• PPC stands for pay-per-click, which is the most common term for a paid media advertising.

• Paid Media is simply advertising, otherwise known as marketing that you pay for. Whether the cost model is by the click or impression, both are considered paid media. Examples of common paid media are social media ads, search ads, display ads, retargeting ads, programmatic ads, paid content promotion, and even paid influencer promotions. ANY content you paid to put out there is paid media.

• Owned Media is any content you produced on your own that is accessible to the public and doesn’t need to be paid for (outside of hosting and domain charges). 

• Earned Media can come in the form of written or video material about you or your business that you haven’t paid for. These include reviews on public sites, social media mentions or shares, or even reposts. This is arguably the best kind of content because it’s 100% free and you didn’t have to make it yourself.

• SEO is short for search engine optimization and encompasses a wide array of technical and content strategies meant to increase quality organic traffic to your website. The technical side of SEO makes sure your site plays nicely with the search engines while the content strategy ensures that you have things on the site that people would want to see. No one visits a site that provides them with no value or entertainment!

• KPI stands for key performance indicator, which refers to any metric whose movement has a direct impact (or at least strong indication) of success or failure for your initiative. 

• Impressions are essentially views. An impression is measured differently according to the platform you’re looking at. While Facebook, Instagram, and Google will register anytime a whole ad appears on screen as 1 impression, other advertising platforms and providers count even “a portion” of the ad being on screen as 1 impression, so make sure you know what qualifies as an “impression” in your reporting.

• CPC is short for cost per click. This is one of the oldest and most common metrics in the world of digital advertising. Considering PPC means “pay per click”, CPC was the basis of most advertising platforms’ pricing models and still is the primary unit that search engines (such as Google and Bing) use to charge advertisers today. 

• ER might immediately make Americans think of the emergency room, but a lot of advertisers will actually shorten engagement rate to ER. It’s all about the context, so next time your social media manager says “ER is low on this post”, they just mean that post sucks ;) 

• Frequency is a calculated metric of the number of impressions a post or ad received divided by its unique user reach. So frequency = impressions / reach. Frequency is an important metric to keep track of to know if you’re oversaturating an audience segment or not; if your ad frequency gets too high, you could be beating those users over the head with your ads, exposing yourself to the negative user experience known as “ad fatigue”, and missing out on potential new users.

• CPM is short for cost per impression but is always calculated per thousand impressions. So CPM = spend / impressions * 1000. Most social media platforms charge you on a CPM basis. This metric is also a good indicator of market competition and content-to-targeting compatibility and is usually the first needle to move if auction competition changes.

• CPV is short for cost per view, a metric unique to video campaigns. If you run video ads on YouTube or other video platforms (including Facebook and Instagram), you’ll be given the option to be charged by CPV or at least set a CPV bid. CPV is different and still kept separate from CPM because the impression on an ad doesn’t always translate to a long enough video watch time to trigger a “view” event to register.

• CPLPV is short for cost per landing page view, which is similar to CPC, but takes the accuracy up a notch. A click action is one that happens easily and can even happen by accident (we’ve all fat-thumbed our way to a link we never meant to click before). A landing page view action requires the destination page that the ad was directing to to actually load before it registers, which for an advertiser, indicates that the click was at least intentional and that the traffic is higher quality.

• CTR is short for click through rate, which is a calculated metric where you divide the total number of clicks by the total number of impressions you’ve received for any given period of time. CTR = clicks / impressions. This is probably the most popular KPI for advertisers to look at because it’s the one that they have the most control over via targeting, bids, day-parting, creative, and content. It’s also an important KPI for business owners to keep track of because you want as much qualified traffic coming to your site as possible! 

• Bounce Rate is the percentage of new users to your site who exit or close the window immediately (before the page can fully load). The lower your bounce rate, the better quality of traffic you can assume you’re getting. If you have a high CTR but a really high bounce rate, you’re getting junk traffic that ultimately doesn’t mean anything for your business.  

• CVR is short for conversion rate and can be calculated in two ways, depending on context. The CVR of an ecommerce website is usually the total number of purchases divided by the total number of (unique) visitors while the CVR of an ecommerce ad campaign is the number of ad-attributed purchases divided by the number of visitors driven strictly through the ads in that campaign. Very broadly, you can assume CVR = conversions / users.

• CPL is short for cost per lead, a metric typically reserved for lead-gen accounts and service-based businesses. This is simply calculated by dividing the total cost of the campaign by the number of ad-attributed leads that were collected.

• CAC has come into greater popularity in recent years and is short for customer acquisition cost. As advertisers and brand owners work more closely together and customer lifetime values are becoming easier to calculate, many have sought to use CAC goals to measure advertising success. 

• CPA is a very contentious term in the world of digital marketing and can be confusing. It’s short for cost per acquisition which is unfortunately generic. That’s why it is often used interchangeably with CAC and CPL and is seen as a catch-all phrase. As such, make sure you’ve clarified what an “acquisition” is when you hear it being used to make sure that everyone is on the same page.

• ROAS stands for return on ad spend and is a very common metric of success for ecommerce brands, especially if you are aware of profit margins. A campaign’s ROAS is simply calculated by dividing the total attributable revenue generated by the campaign’s spend. Don’t mix ROAS up with ROI though.

• ROI is short for return on investment which is similar to ROAS in many people’s eyes, but usually encompasses a larger scope for calculations. While ROAS is focused on the spend and revenue of the ads alone, most people will include fees, product costs, shipping, and other miscellaneous costs into this equation to use the number as an overarching measure of total business success. ROI is thus calculated by dividing total profit by the sum of all costs that went into making those sales (including ad spend, of course).