Whether you are just starting in paid media or you just want to sound smart at parties, here are the top 6 terms that can put you in the conversation. They apply for both SEM and Paid Social Media.

#1 Impressions: How many times an ad was shown.

#2 CPC - Cost Per Click: Media cost per click. A bidding strategy where the advertiser (agency or brand) pays the publisher (AdWords, Facebook, LinkedIn, etc.) when the ad is clicked. If there is a link in your ad that directs people to a website outside of the platform, there is a variation of CPC which is Cost Per Link Click. For example, on Facebook you can see how many people actually clicked on a link versus just clicking on some part of the ad like your logo (which takes them to your Facebook page) or clicked on engagement (which means they just liked it).

#3 CPL - Cost Per Lead: Media cost divided by the number of leads. Advertiser pays for an explicit sign-up from a consumer interested in the advertiser's offer. It is used in online lead generation. 

#4 CPO - Cost Per Order: Media cost divided by the number of orders. Also called cost per acquisition, CPO is the amount spent on advertising or marketing in order to end with a sale. How much did I spend to get that sale? If I have a product that is $20 and I am spending $50 to get the sale, I am spending more than I should and I have to change my strategy, unless the Lifetime Value is greater than the CPO.

 #5 Lifetime Value:  A measure of performance reflecting the total expected amount of customer purchases attributed to the entire future relationship with such customer. If I have a product that is purchased more than once (for example, eye shadow for $10) and I know a customer will stay with us on average 2 years, buying every 6 months (4 times in 2 years), then my lifetime value for that customer is $10 x 4 = $40.

#6 CTR - Click Through Rate: The number of clicks divided by the number of times an ad was shown, expressed as a percentage. So If I have 1,000 impressions and I get 10 clicks, that will give me 0.1% CTR (10/1000). It is used especially to indicate if the ad is relevant to the target audience - very low CTRs mean you've got the wrong audience.

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By Naira Perez