PPC (Pay Per Click) advertising is a form of online advertising where advertisers pay a fee each time one of their ads is clicked. It’s a for...
Alphabet Soup: PPC Agency Acronyms Explained in Plain English
You’ve finally decided to hire a PPC agency to do all your online advertising account management and optimization – great! However, when you begin researching and having conversations, you’ve become bombarded with digital advertising acronyms that make no sense. Usually, these are payment structures, making it vital to understand.
It can be incredibly overwhelming, and you aren’t the only person thinking OMG, WTF, SMH, I CBA to learn all these acronyms. But, fear not – by the end of this article, you’ll understand every PPC acronym you can think of, enabling you to find the perfect marketing agency with technical skills, payment model, and strategy for your business to succeed.
What Is PPC?
Let's start with the one everyone knows, as the channel's name and how agencies usually refer to themselves. PPC stands for pay-per-click. This concept isn't a payment model used by agencies themselves. Instead, it is how most digital ad platforms charge for advertising.
How Does PPC work?
When creating an advert targeting a specific keyword or demographic, you stipulate an amount you are willing to pay every time you click. Whenever someone clicks your ad, you’ll be charged the amount you have bid. Remember, this is for every click – if the same person clicks on your ad five times, it costs five times the rate.
However, you control your budget and allocation not to spend ridiculous amounts. Therefore, your ads will no longer appear when you spend your budget until you add funds to your account or at the beginning of the month.
What Is CPC?
CPC is one of the most crucial metrics in PPC advertising – it stands for cost-per-conversion. Often, businesses look at impressions, conversions, and click-through rates, forgetting about CPC.
How Does CPC Work?
There are two ways to use CPC. Firstly, as a metric to assess how your ads perform or as a payment model for agencies.
As a metric, it lets you know how much you are spending for each conversion. While you can easily calculate for accounts and campaigns, it becomes more detailed at the keyword and ads level. Often, businesses target keywords that generate a high amount of impressions and clicks but low conversions. When marketers have this information, they optimize their ads and landing pages or remove that keyword from the ad group.
As a payment model, CPC can also be referred to as CPL in advertising (cost-per-lead). Some agencies offer their services based on how many leads they generate for your business. Often, this is a specified amount per conversion or lead that comes from PPC advertising. This model has the power to create many new leads. However, if these leads aren’t qualified correctly, you could pay your PPC agency for leads who don’t buy from your business.
What Is CTR?
Calculate the CTR (click-through rate) using the formula (number of clicks ÷ number of impressions) x 100. It is a metric used to assess the success and relevance of keywords and ads.
How Does CTR Work?
Successful adverts should have a high click-through rate. This model shows that they target the right keyword, the content is appropriate, and the audience is engaged. Conversely, if you have a high CTR with low conversions, your landing page isn’t impactful enough or doesn’t carry the same theme as the content within the ad.
There could be numerous reasons if you have a low CTR for specific ads. Usually, it will target the wrong keywords, demographics, or locations. Alternatively, it could be due to a poorly executed ad copy.
What Is CPM or CPI Advertising?
Cost-per-mile, also known as cost-per-impression, refers to paying a publisher for several advertisements. Usually, it is 1,000 displays or impressions you will pay a flat rate for, which is called CPM.
How Does CPM Work?
PPC agencies don't traditionally use CPM. Instead, you’ll usually see platforms that use display advertising. This type of payment structure is preferred by ad publishers because of the guaranteed revenue it generates, whereas PPC relies on users clicking on ads. However, CPM is preferential for brand awareness campaigns rather than driving clicks and revenue.
What Is CPA Advertising?
The CPA acronym stands for two frequently used terms that mean the same thing – cost per acquisition and cost per action. This model is often used in affiliate or influencer marketing when payment occurs after a specific action.
How Does CPA Work?
You could provide affiliates of influences with unique tracking URLs or coupon codes to monitor purchases made with them as a starting point. This method is the perfect model to ensure you always make a preferential ROI on this advertising channel - you know you’re only paying out when somebody makes a purchase.
Additionally, use CPA as a metric to assess the continued success. For example, you are triggering an event when someone lands on a thank you page after completing a form or download – a similar calculation to CPC.
There are many acronyms to grasp and understand. For example, some refer to data analysis and performance metrics, while others form part of the payment structure you agreed with your PPC agency.
We suggest familiarizing yourself with as many of these acronyms as possible before heading into any discussions with an agency – meetings can be overwhelming and intimidating if you don’t have foundational knowledge. In addition, with you knowing what makes a successful PPC campaign will be beneficial too.
However, any reputable agency will be happy to explain the meaning of each, how important they are, and what you can learn from them. Once you know what an acronym stands for, in many cases, they become self-explanatory. Finally, ask questions to clarify anything you don’t understand – no question is a dumb question!