Do just a quick Google search and you’ll encounter hundreds of digital acronyms. With so many options out there, how do you know which are important to understand and track? In modern digital advertising, everything should be data- and goal-driven. If you know these 9 digital acronyms, you’ll gain critical insight into the core goals of your marketing dollars.
- KPI – Key Performance Indicator – This one is fairly straightforward: It’s the goal for your digital marketing dollars and how they’re performing based on your tactics and activations. If you’re looking to drive users to your website, then your click volume and cost-per-click would be ideal KPIs. If you’re looking for lead volume, then your conversion rate or cost-per-lead would be ideal.
- CVR – Conversion Rate – When you’re talking about digital marketing, CVR is the percentage of users that convert online from your digital efforts. CVR is typically calculated by dividing the number of conversions by the number of clicks or users.
- CRO – Conversion Rate Optimization – This is an optimization strategy where the main goal is increasing your conversion rate by compelling users to convert online.
- CPA – Cost-Per-Acquisition – This is how much it costs to get a consumer to convert online. It can include a customer repeating a sale, but overall it means the user is taking the desired action and the CPA is how much it costs to get them to do it. CPA is calculated by dividing your overall media cost by the number of conversions (or the conversions you want to identify).
- CPL – Cost-Per-Lead – Much like CPA, but slightly different. Typically, a CPA is a cost for a completed action online, but with a CPL, you may only be getting consumer information or communications and need to follow up with them to complete a sale.
- LTV – Lifetime Value – This is your consumer’s lifetime value to your business. If your average consumer completes three purchases with your company, then the lifetime value would be 3x your average order value. LTV is a powerful metric, as it tells you what your desired customer acquisition cost needs to be to remain profitable.
- CAC – Customer Acquisition Cost – While CPA/CPL deals with the transaction, LTV and CAC deal with the customer and the longevity of the customer. CAC is how much it costs to acquire a new customer, rather than each transaction they make. For example, if you spend $500 and get 50 customers, your CAC would be $10. If those 50 customers make 5 purchases each, the CPA is $2.
- ROI – Return on Investment – This is your all-in cost (marketing, expenses, product/service cost, etc.) against the money your business brings in. Most agencies won’t be able to tell your true ROI as there are many factors that go into it. ROI is often mistaken for ROAS, which we will talk about next on this list.
- ROAS – Return on Ad Spend – This is commonly referenced as ROI (but there’s a lot more that goes into true ROI). The Return on Ad Spend is just that: How much revenue your marketing brought in. It can be a very strong KPI to leverage if you know the value of each conversion. This is calculated by dividing revenue by your marketing spend. If you make $250 by spending $100, then your ROAS is 250%.
If you’re working with an agency in the Cincinnati area, familiarity with these 9 digital acronyms will ensure you’re getting the most bang for your buck in your digital advertising. At St. Gregory, we partner with businesses across the TriState to help you optimize your digital marketing efforts, reach (and exceed!) your goals, and provide you with the assets and strategy needed to thrive. Looking for a partner to help grow your business? We’d love to hear from you.