Advertising Glossary

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A

A/B Testing: A method of comparing different options to determine which is the most successful at achieving a goal (like opens, clicks, or purchases). For example, a marketer may A/B test two subject lines to see which achieves a greater open rate or test a 30% off offer and a 50% off offer to see which leads to more profit.

AOV: Average Order Value, or the average spend of a customer in a store on a single order.

Attribution:   Source of a customer or a purchase. For example, is this $50 order attributed to a Facebook ad, an email, or an organic Google search? More sophisticated models differentiate between first-touch attribution (the first engagement a customer had with your company) and last-touch attribution (the most recent one before the purchase). 

B

B2C:   Business To Consumer. Describes companies that sell to consumers (as opposed to other companies). Klaviyo is a B2B company because we sell software to other companies. Chubbies is a B2C company because they sell short shorts to consumers.

Bootstrapped:   A bootstrapped company operates on the initial contributions from the founders and revenue subsequently generated by the business. The company may also take on debt from banks or suppliers in order to finance the business without giving up equity. In contrast, a venture-funded company sells equity for cash and can operate at a loss while ramping marketing and other expenses. 

Bounce rate:  The percentage of website visitors who leave after viewing only a single page, potentially indicating a lack of interest. Marketers generally aim to minimize bounce rate.

Brand ambassador: A person with a formal relationship with a company that advocates for that company online or offline. Brand ambassador compensation may take the form of payment or free products.

C

CAC: Customer Acquisition Cost, or how much it costs (potentially by advertising to many people) to acquire one paying customer. Also known as CPA (Cost Per Acquisition).

Channel: This can be a tough term to get a handle on because it gets used in multiple ways. In retail, one common use is the arenas in which goods are sold. For example, you may sell your products through two channels: your website and your brick-and-mortar stores. Another common use of the word refers to different marketing methods. For example, your marketing channels may be paid search, organic search, email and direct mail.

CLV:   Customer Lifetime Value, or the amount that a customer will spend over all time. For example, if your customer lifetime value is $100 and your average first order value is $30, you may be comfortable having a CAC of $30 (see above) even though you will lose money on the first order.

COGS: Cost Of Goods Sold. While looking at total revenue generated is important, it’s also essential to understand how much it cost the company to produce or purchase those items. For example, if it costs $2 to manufacture each gadget, and you sold 3,000 of them, your COGS is $6000.

Cohort: A time-based group of customers or web visitors. For example, customers that purchased for the first time in February 2019 make up a specific cohort. Cohorts are useful in comparing the behavior of different customer groups over time. For instance, looking back, the average number of orders per customer over 12 months for your April, May and June 2018 cohorts might be 1.8, 1.2 and 1.9. You would then investigate why the May cohort behaved very differently from the April and June cohorts.

Conversion: Getting members of a group to take a desired action, like signing up for a mailing list or buying an item on a website. Commonly used as “conversion rate” to refer to getting some percentage of website visitors to make a purchase.

CPM: Cost Per Thousand (literally: cost per mille). Used in advertising to refer to how much a company pays for 1,000 impressions, which means showing the ad 1,000 times. (M = 1,000 in Roman numerals. In financial documents, $1MM = one million dollars because 1,000 x 1,000 = 1,000,000.)

CPA: Cost Per Acquisition, or how much it costs in advertising (potentially to many people) in order to acquire one paying customer. Also known as CAC (Customer Acquisition Cost).

CPL: Cost Per Lead. If a company is paying for advertising with a CPL model, they’re paying for each time a potential customer provides their contact information (as opposed to, say, CPC, where they’re paying each time someone clicks on their ad). Most commonly used for higher-priced items with a longer sales cycle or for brands who are looking to drive blog subscribers.

Creative: When a company is creating website content, emails, or ads, “creative” can be used as a noun to refer to the copy (words) and images: “Is the creative ready for the Memorial Day campaign?”

CRO: Conversion Rate Optimization, or making changes to a website in order to increase the rate at which visitors take the desired action (typically making a purchase). 

CTA: Call To Action. In an email, ad, or website, a CTA is the language that attempts to get the recipient/reader/visitor to do something specific. For example, the “Buy Now” button in an email is a CTA.

CTR: Click-Through Rate. Used for ads and email. For an ad, CTR is normally the number of clicks divided by the number of impressions. For email, CTR is the number of clicks divided by the number of delivered messages. (CTR is sometimes calculated as number of clicks divided by number of opens, so clarify what people mean when they talk about CTR.)

D

Display advertising: A display ad, also known as a banner ad, is a form of online paid advertising that is typically a designed image or a photo and copy. Viewers can then click on the image with the promotion to then be taken to the corresponding landing page.

DTC: Direct To Consumer, meaning selling directly to the customer. Typically used to refer to selling through a company’s own online store. Also known as D2C. Traditionally, most B2C brands (think Tide from P&G) focused on getting placement in channels controlled by other companies, like retail stores. Digitally native brands (think Outdoor Voices) started from scratch as DTC companies and formed direct relationships with their customers.

Dropship: Shopify has a good definition for this one: “Dropshipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.” 

E

Earned media: Publicity and published content that you don’t pay for or create yourself. Instead, you “earn” it from people like journalists, customers and social media influencers. An interview on Good Morning America and a tweet from a customer are both examples of earned media. But posting about your product to your own blog isn’t earned media — that’s owned media.

EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization. For example, if a company has revenues of $100,000 and spends $100,000 on cost of goods, shipping, marketing, overhead, etc. and interest payments, the overall earnings (profit) will be zero. If $10,000 of that spend is interest on a loan (and tax, depreciation and amortization are all zero), then the company’s EBITDA will be $10,000. 

FY: Fiscal Year. Example: FY19 = Fiscal Year 2019. A company may start and end their fiscal year on a cycle that’s different from the calendar year. When in doubt, ask — Black Friday may actually be part of Q2 for them.

G

Google Analytics: Also known as GA, Google Analytics is a widely used system for tracking actions that take place on a website or mobile app. For example, GA is the default place many marketers go to view uniques (see below) per day or conversions per day. Other services retail companies might use for this purpose include Adobe Analytics (formerly Omniture).

Gross Profit: Revenue minus COGS (see above). Does not take marketing costs or overhead into account only the direct labor and materials involved in creating the product. If it costs $4 to produce a cell phone case and you sell it for $12, the gross profit is $8. (If you watch Shark Tank, you may have noticed that the Sharks frequently ask about gross margin which is: (revenue: cogs)/revenue. For this example it would be: ($12-$4)/$12= 66.6%

GWP: Gift With Purchase. When the customer buys something (or spends a certain amount), they get something else free. Often found in the beauty industry. 

H

Hero image: A large header or banner image at the top of a web page. 

I

Influencer marketing: A broad term that involves engaging vocal and influential people in a company’s orbit to promote their products. These engagements may be paid, unpaid, or in exchange for free products. 

K

Keyword: This is a term that comes up in a few different marketing channels, including SEO and PPC. It refers to a term that someone might type into Google as they are searching for a product or an answer. There are two types of keywords: branded and non-branded. Branded refers to when a keyword with the brand name is used (Klaviyo Email Marketing) whereas non-branded does not have a brand modifier (“email marketing”). Yes, Google makes a lot of money from companies bidding on their own brands.

KPI: Key Performance Indicator, or a metric that a company has identified as being of special significance for measuring their results. Sample marketing KPIs: site traffic, time on site, average session duration.

L

Landing page: A web page designed to receive visitors that have come from a specific source (for example, a particular Facebook ad) or for a specific purpose. The page may or may not be part of the store’s primary website. Typically it minimizes distractions, repeats the language of the source, and is designed to get the visitor to take a single well-defined action, like providing their email address or making a purchase.

Lifecycle: The stages of the relationship between a consumer and a company, from discovering the company for the first time to ideally becoming a repeat purchaser and advocate. Customer lifecycle is a framework that helps marketers interact with different customers in appropriate ways.

M

Merchandiser: Role most commonly found in larger retail companies. While descriptions may vary based on the company, often a product merchandiser will focus on product assortment,  pricing, promotion, and inventory, while a website merchandiser will focus on how products are represented on a website through images, copy, and user experience.

O

Organic: Organic traffic to a website refers to visits that come from people looking for something using a search engine and then clicking on unpaid (“organic”) results. For example, if someone looked up “email marketing ideas” and clicked on a search result for a Klaviyo blog post, that visit would be considered organic. By contrast, if the person clicked on a Klaviyo ad, that would be considered paid traffic.

Omnichannel marketing: Omnichannel refers to the multichannel sales approach that provides the customer with an integrated shopping experience. The customer can be shopping online from a desktop or mobile device, via phone, or in a brick-and-mortar store, and the experience will be seamless.

Owned marketing: An approach to marketing where a company focuses strategically on channels that they control (including their website, email, and app if applicable), utilizing the data they have in order to create and strengthen customer relationships. The experiences that are created with this data are critical to the overall success. A contrasting strategy might involve relying heavily on selling through Amazon, driving purchases through Google or Facebook ads, and/or utilizing third-party data to facilitate those marketing actions. 

Owned media: Published content that a company has created on channels that it controls, including their website, their app, and their own social media channels.

5 Ps: Product, Price, People, Place, and Promotion. A model for understanding the key components of marketing: what you’re selling, how much it costs the consumer, who you’re selling it to, where you’re selling it, and how you’re getting people to find out about it and buy it. 

P&L: From Investopedia: the profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs and expenses incurred during a specified period, usually a fiscal quarter or year. One of the best starting points for understanding a business is looking at its P&L, cash flow statement and balance sheet.

Paid media: Published content that a company has paid for: ads, content that they’ve paid to promote, content created by paid influencers.

PPC: Pay Per Click. In this advertising model, a company pays for each click on their ad. In some industries, a single click on an ad can cost a lot. Commonly used to refer to Google Ads.

Persona: A thoughtfully constructed and well-substantiated model that reflects a type of customer. May include details that paint a picture of their day-to-day life, values, and preferences.

Product Finder: An educational comparison tool or survey sometimes used on a website that can help a customer find the right product for them.

R

ROAS: Return On Ad Spend. If you spend $300 on Facebook ads and make $1500, your ROAS would be 5 (or 500%). Put another way, you bring in $5 in revenue for every $1 of Facebook ad spend. Useful for comparing one marketing channel to another or multiple campaigns.

ROI: Return On Investment. 

RFM: Recency, Frequency, Monetary value. This is a marketing model that highlights three customer attributes: How long ago did they make a purchase? How often did they purchase? How much did they spend? Can be useful for thinking about how to segment an audience.

Retargeting: Behavioral retargeting (also known as behavioral remarketing, or simply as retargeting) is a form of online targeted advertising where ads are targeted to consumers based on their previous actions, such as visiting a website or viewing a specific product on that site. When an ad “follows” you around the Internet after you express interest in a product, that’s due to retargeting.

S

Segmentation: The practice of grouping an audience into smaller audiences based on meaningful shared traits or behaviors, often with the goal of communicating with them in a way that is targeted to that trait or behavior. Common segments might include first-time purchasers or VIPs.

SEM: Search Engine Marketing is the umbrella term for advertising that occurs in search engines. SEM combines two types of search-based marketing, SEO (Search Engine Optimization) and PPC (Pay Per Click) advertising. In Google there are other types of advertising, such as display and YouTube, but they are adjacent to SEM.

SEO: Search Engine Optimization. Refers to methods a company can use to update their own website (or get links back to their website from other sites) to improve how and where they show up in organic searches. Changes may be visible or invisible to website visitors.

SG&A: Selling, General and Administrative expense. Marketing falls in here, as do just about all other expenses not directly tied to manufacturing products or performing services. 

SKU: Pronounced “skew,” this is short for Stock Keeping Unit. It refers to a specific product’s unique identifying code. A SKU number may contain specific identifying information as well. A store may say, “We have 3,000 SKUs,” meaning 3,000 individual products. Note that a blue V-neck sweater in size S could have a different SKU than the same sweater in size M.

Social proof: Evidence that other people had a good experience with a company, service, or product. Customer testimonials strategically placed in websites, ads, or emails are a common form of social proof and may increase the conversion rate.

T

Tracking pixel: Code added to a website that sends tracking information back to a source. For example, when a company advertises through Facebook, they have the option to add a tracking pixel to their website. It sends information back to Facebook about the visitors who came to the site through an ad and subsequently took the desired action. This technique is how the ad engines in Facebook and Google can report back and optimize results (e.g. $1000 sales or 5 leads collected). 

Transactional email: Email sent as a function of the purchasing process. Examples include an order confirmation or a shipping notification. 

Top of the funnel: Refers to a model of the marketing funnel. “Top of the funnel” refers generally to consumers who are in the early stages of learning about the company and haven’t substantively engaged yet or made a purchase.

U

Unique visitors: Also used as “unique website visitors” or “uniques,” this refers to the number of different people who did something. For example, a company may have 10,000 total website visits in a week but 3,500 unique visitors during that time because many went back more than once. (Also see Visits, below.)

User-Generated Content: Also known as UGC. From Curata: Any content created by unpaid contributors. It can include anything from pictures, videos, and blog posts to testimonials and discussion boards. User-generated content is typically created or uploaded online, where it is easily shared.

UTM parameters: Identifying text added to a URL that aids in attribution later on. (The name UTM comes from Urchin Tracking Module. Urchin was acquired by Google in 2005 and became Google Analytics.) Example: https: //storename.com?utm_source=google&utm_medium=cpc&utm_campaign=summer-sale

V

Visits: A visit is a record of the action of someone arriving at your website. Someone who visited a website three times would have generated three visits, but would only count as one unique visitor.

YoY: Year Over Year. Measurement to track growth. Use it to compare results from a point this year to the same point last year. Example: to find YoY growth for May, you would use this formula: ((May 2019 sales – May 2018 sales)/May 2018 sales)*100. For instance, if May 2019 sales were $10,000 and May 2018 sales were $5,000, the YoY growth would be (($10,000-$5,000)/$5,000)*100 = 100%.

YTD: Year To Date, referring to results from the beginning of the year to the present.

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