Even the most savvy of digital marketing professionals will start to look at you cross-eyed if too many acronyms are used in the same train of thought. If you’ve ever been party to one of those unfortunate conversations, you know how quickly all of the “CTR of the FMC is affecting the ROI considering our CPL” ends up just giving you a H-E-A-D-A-C-H-E.
The more you can arm yourself with this knowledge, the quicker you’ll be able to make significant positive changes in your business. Further than that, understanding these acronyms will help to avoid potential miscommunication when communicating with your advertising or marketing partners, which is unfortunately common in the digital marketing world.
The following list breaks down some of the most commonly used acronyms in the world of Google AdWords — the internet’s most widely used digital advertising platform. However, many of these acronyms will transfer over to general marketing and advertising methodology.
PPC – PPC stands for pay-per-click advertising. The most prominent of today’s digital advertising methods is pay-per-click. This is just one of a number of ways advertising channels like Google AdWords charge advertisers for their ad placements.
Functioning almost exactly as it sounds, PPC charges advertisers only when ads are clicked on, as opposed to how often they are served.
The benefit of a PPC campaign is that you can achieve brand awareness without breaking the bank, because if no web users click on your ad, you do not get charged. If high budgetary control and ad testing are your goals, PPC might be your best option for advertising campaigns.
CPC – One of the primary metrics in determining bid strategies and success of advertising campaigns is cost-per-click (CPC). As the name of the metric suggests, CPC lets advertisers know the cost of each click in a particular campaign, or more specifically, how much an advertiser gets charged every time someone clicks on one of their ads.
Generally the lower the CPC, the more cost effective you’re being, however, some important keywords come with a slightly higher price tag and should not be overlooked. CPC is determined (in AdWords) through the volume of average monthly searches for a particular keyword, and by the competition for the keywords by other advertisers. In other words, the actual popularity of the keyword and the number of advertisers that are bidding on it — supply and demand comes into play here!
CTR – CTR, or click through rate is a simple, yet crucial metric that indicates relevance to advertisers. It is measured by dividing the number of clicks an ad gets by the number of impressions. The resulting fraction is shown as a percentage. For instance, if an ad is served to 50 people and receives 5 clicks. The CTR would be 10%. CTR is primarily used to determine how effective a keyword strategy is, but may also indicate poor content choices for ads. A poor click through rate on a particular ad either shows that the ad wasn’t very relevant for the audience that was targeted, or the copy of the ad wasn’t enticing enough for someone to click-through.
CPM – If you’re aware of the ins-and-outs of Facebook advertising, cost per mille (cost per thousand) may already be familiar to you. Unlike PPC, CPM charges advertisers based on impressions. From a branding perspective CPM bid strategies allow for brands to get their name out without worrying about paying for individual clicks.
On an advanced level, the benefits of CPM become apparent. For instance, if you have an ad with a proven high CTR (click-through rate), the cost may prove to be lower in a CPM campaign, where you are only charged for number of impressions. In other words, if you know you are going to get many clicks on an ad, paying by impressions will be more cost effective than paying by click.
CPA – CPA stands for cost per acquisition, another popular metric for measuring AdWords success. CPA, unlike the other metrics we’ve addressed in this article, takes a deeper dive into adjusting your ad strategy depending on price and conversions.
AdWords offers a number of different targeting methods that give advertisers the ability to automatically optimize their bids based on specific user behavior. One of these — Target CPA bidding — makes adjustments to bid strategies based on how much you want to pay for each conversion (sales, sign up submissions, forms, etc). These adjustments are based on the potential profitability of a click in each ad auction.
CTA – Though the CTA acronym is not solely applicable to advertising, call-to-actions within digital ads and their corresponding landing pages are directly relevant to digital paid media. Of all the facets we’ve mentioned thus far that help to determine advertising success, CTAs are one of the hardest to measure because they don’t deal with numerical data.
A call-to-action is commonly tied to the expressions or phrases used throughout an ad that invite users to complete a specific action. For instance: “Call us today!” or “Submit your guess.”
When writing expanded text ads or extensions such as callouts, call-to-actions are often one of the most overlooked aspects of ads. Generally speaking, the better the CTA, the higher your CTR.
ROAS – In the paid media world, crowd favorite ROI (return on investment) is often replaced by ROAS (return on ad spend). If not the most important metric to measure in the world of digital ads, ROAS is certainly the most talked about. Though the metric is simply calculated as ad revenue/cost, it serves to indicate the holistic effectiveness of a campaign as compared to others.
By keeping tabs on this number across all campaigns, regardless of size, advertisers are able to identify flailing larger campaigns, as well as small campaign trials that have upscale potential in the future. For many bottom-line oriented businesses, this metric will be the end-all number that determines campaign success. Unfortunately, it does little to indicate where specific campaign improvements can be made, unlike average CPC or CTR.
Digital ads can be daunting, even to the most experienced of marketers. If you are looking for PPC (now you know the acronym!) guidance, we’re happy to help. With AdWords certified team members on staff and paid media expertise, you can trust your campaigns to the talented folks at Mountain Mojo Group.
So the next time you are looking to invest in PPC using CTR to measure your CPC or CPM, make sure to include CTAs to ensure your CPA is giving you a solid ROAS. Reach out today and find out how we can increase the ROAS in your next campaign!
By Alex Carel