6 Basic Internet Advertising Terms

In this hectic world of Internet Marketing we get new items, new systems, new engines and new everything as quick as an eye blinks. Changes in algorithms keep us on alert 24/7. Updates in interfaces force us to re-organize our habits and abilities and re-adjust. (Does anyone really like the new AdWords interface?!?). All that being said, there are always good old basics that stay the core, relevant foundations to everything we learn and expertise in. In this article we would like to give just a simple basic list of six definitions that if you have anything to do with online marketing, you would not want to get caught not knowing what they are.

1. Impressions

This used to be a term more appreciated, which means how many times a user saw your ad or banner or any online advertisement. Each time your ad has been viewed counts as an impression. So in the more old fashioned internet world, the advertiser would want as many impressions as possible, but we all know today that impressions without clicks are not good enough in most cases. We want our audience to be relevant enough to click on our ads too, to say the least.

3. CTR (Click Through Rate)

This term was also much more popular in earlier internet days. How many users that saw your ad have clicked on it too and visited your website or landing page. The Click Through Rate is calculated Clicks / Impressions. Let’s say your ad reached 100 impressions, and 10 users also clicked on the ad, it means your CTR is 10%. Clicks are important but usually we want more from our campaign. we want conversions.

3. Conversion

Once a user saw your ad, clicked on it and visited your website or any landing page, you want that user to buy / register / download / ask for more details etc,. Any of these actions would consider as a conversion. When we run an online campaign these days we usually ask for as many conversions as possible. For that we would need to have a good landing page with a distinct, easy to find, Call for Action on page.

4. Call for Action

Some say, the most important “object” on the landing page. Call for Action is what drives the users to interact with your campaign. Depending on the goals that the advertiser set for the campaign, the Call for Action may be: Request a quote, download a brochure, sign up for a newsletter, and of course- buy a product or book a room online. We should always try to concentrate on one specific Call for Action in order for the users to stay focused and understand the structure of the page, so that they will find what they were looking for on it and use it. When we succeed and see many conversions, following a good use of Calls for Actions, then we need to calculate our CPL or CPA.

5. CPL ( Cost per Lead) / CPA (Cost per Acquisition)

This is the definition we usually all wish to see in the lowest numbers, whichever currency we are using. If the numbers are low, it means that we have many conversions and a good conversion rate, thus bringing the costs of the conversions to low prices. Low can be only a few dollars, for example for a beauty spa, or they can be hundreds of dollars, for example for real estate leads or even acquisitions. The CPL/CPA is calculated Clicks spending / Conversion. Let’s say your ad drew 100 clicks at 100$, and you achieved 10 Conversions, then you CPL / CPA is 10$. Now you can evaluate your campaign ROI in order to understand if your campaign is on the right track, financially speaking.

6. ROI (Return on Investment)

The budget of the campaign is what ROI is all about. When running a campaign you have to set your goals in order for the campaign to be profitable. Any marketing manager must evaluate what he achieves in the campaign, and if the cost per lead or per acquisition is higher than what he can afford then the Return on Investment becomes negative, and on the contrary, if the cost is lower, then you have a positive ROI. Let’s say you are promoting your restaurant and the Call for Action is booking online reservation for dinner. You already know that your profit from every guest is 10$. In that case, if the CPA is 8$, which means you spent 8$ advertising money to get a reservation, than your ROI is positive, because you have 2$ profit on every reservation.

For any campaign, our goal for Internet campaign is:

1. Lots of Impressions.
2. High CTR.
3. Many Conversions (following an excellent and specific Call for Action).
4. Cheap CPL / CPA.
5. Positive ROI.

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