For most small businesses, online advertising is a great way to reach new customers. Unfortunately, when you start digging into your options and learning more about it, you can quickly feel confused and disheartened. There are so many marketing acronyms . . . it can be discouraging to a newcomer!
Let’s cut through the confusion and clutter, shall we? Here are the five online marketing acronyms you need to know – and why they matter.
CPC – Cost Per Click
How to calculate it: Total cost of clicks divided by the total number of clicks
Why it matters: Knowing this allows you to maintain control over your budget , understand if it’s a good use of your money, and calculate your ROI.
CTR – Click Through Rate
How to calculate: Simply count the number of clicks on your ad (or any link – you can use this for email and social media marketing, too)
Why this matters: If no one is clicking on the link in your ad, you know you have a problem. Time to tweak or completely change the offer, design, and/or messaging.
CPCon – Cost Per Conversion
How to calculate it: Total cost of ad divided by number of conversions
Why it matters: This number helps you understand how much it costs to grab the attention of a prospective customer and move them into the sales funnel.
CPA – Cost Per Acquisition
How to calculate: Total cost of ad divided by converted clicks
Why this matters: Because it always costs money to acquire new customers, this metric will help you understand how valuable and effective online ads are as a sales tool. You can compare this number to the cost of acquiring customers via in-person events, print ads, social media marketing, direct mail, etc.
ROAS – Return On Ad Spend
How to calculate: Revenue from ad divided by cost of ad
Why this matters: You definitely want to determine how effective online advertising is and whether or not to continue with the campaign. So, did you spend more than you earned? Break even? Blow your best estimates out of the water?
Do you have any other online marketing definitions that confuse you? Let me know, and I’ll shed light on what they mean.
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