11 Pay-per-Click (PPC) Terms and Definitions You NEED to Know to Understand Paid Ads!
This morning my boss came into the office and said: “These KPIs are terrible. We need to improve our ROI or you’re fired. Stop what you’re doing and start using PPC immediately.” Then she left. I had literally no idea what she meant, so I did a quick Google Search. Luckily I came across the Spaceboost Blog’s Helpful Guide to Pay-per-Click (PPC) Terms and Definitions and pretty soon I understood perfectly.
I found out that PPC advertising isn’t as complicated as all that. It’s just a matter of responding to the Keywords in your target audience’s Search Queries with Paid Ads that appear on the SERP of the channel I’m advertising on, to provide my ideal customers with what they are looking for, when they’re looking for it!
If you’d like to understand the above story, and other, similar stories that Paid Search marketers are very likely to tell you, consult this handy list.
What Do All These PPC Terms Mean?
What is Pay Per Click (PPC)?
- Pay-per-Click advertising does exactly what it says on the tin. Advertisers create online ads, and pay a publisher (for example a search engine like Google or Bing) every time somebody clicks on their ads, which redirect them to the advertiser’s website. Learn how to use PPC to grow your business, join the Spaceboost Academy 🙂
What is Search Engine Marketing (SEM)?
- Search Engine Marketing (SEM) is the general term for all activities related to Search Engine Advertisement and Search Engine Optimization (SEO). This means combining both PPC – traffic which you pay for on channels like Google and Bing – and SEO – traffic which you drive organically to your site to increase positioning, visibility and results for your business online!
What is a Search Engine Results Page (SERP)?
- The Search Engine Results Page, regardless of what channel you are on (Google, Bing, etc.), is the page showing results that you’ll see after searching for something. You will see a combination of organic results and paid ads. Here’s an example of an SERP that you will likely recognise:
What are Key Performance Indicators (KPIs)?
- Key Performance Indicators are the most important metrics that you need to pay attention to in your paid media strategy. The next six acronyms are all KPIs, and if you want to know what your boss is shouting at you about, you need to internalize them all, now!
What is Cost Per Acquisition (CPA)?
- Cost Per Acquisition is a very important metric indeed. It is the total cost you require to get an acquisition, whatever that means for your business. Most often CPA is a metric for advertisers with online shops (Here you can check our full explanation of what CPA is and how to use it for ecommerce!)
What is Cost Per Lead (CPL)?
- Cost Per Lead is the same as CPA, only when the conversion you are working towards is a Marketing Lead, not a sale.
What is Return on Investment (ROI)?
- Return on Investment / Return on Ad Spend. If you only remember one detail of this listicle, make it this one. ROI is the overall business return you gain on the investment that you have dedicated to advertising. Put simply, everything you do in your PPC strategy should be focussed on increasing this metric! To calculate your ROI use the following formula: Total PPC Revenue / PPC Costs = ROI
Got it? Check out our lesson on how to get started with PPC ROI Search 😉
What is Conversion Rate (CR)?
- Your Conversion Rate is the rate at which your ads lead to a conversion (whatever goal you want your ads to achieve – whether that is a sale, lead, sign up etc.) You calculate your CR by dividing the total number of Conversions by the total interactions with your ads.
What is Click Through Rate (CTR)?
- Click Through Rate is the rate at which searchers who see your ad decide to click on it. Of course, the higher the better!
What is Cost Per Click (CPC)?
- This is your Cost per Click. It is the basis of PPC marketing – you only pay for clicks (and certain interaction with your ad) rather than eyeballs, meaning you can know exactly how much your ads are costing you, and what results you are getting for your business in return.
What is Impression Share (IS)?
- Impression Share is the percentage of ad impressions you got out of all the impressions that that ad was deemed eligible to receive. You can try to increase your IS by increasing your bids to make your ads appear in higher positions!