Online Marketing Glossary

Not sure about the difference between ROI and LTV? Looking for ways to boost your CTR and lower your CPC while maintaining your KPIs? Demystify the jargon & spoon up a bowlful of online marketing alphabet soup with this handy glossary. New terms added regularly.

Online Marketing Terms, Explained

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There are currently 16 names in this directory
Bounce Rate (Email)
A bounce is when an email is sent to a server and the server rejects it. This can occur for any number of reasons, but a high bounce rate will affect deliverability of your email campaigns. Bounce rate is calculated by dividing the number of bounced email addresses by the total number of recipients. It is expressed as a percentage.
Example: You send 1,000 emails and 10 of those emails bounce. Your bounce rate is 1%.

See Hard Bounce & Soft Bounce for types of email bounces.

CAC – Customer Acquisition Cost
In the most general terms, the CAC is a measure of how much it costs to successfully acquire a single paying customer.
Example: You run an ad campaign that costs $1 per click. Of the visitors who click-through on your ad, 10% go on to become a monetized customer. The acquisition cost for this ad would then be $10 – you have to pay for 10 clicks in order to get 1 paying customer. If what you're selling costs more than $10, congratulations! If not, it's time to rework your ad campaigns for lower costs per click and/or conversion rates.

Conversion Rate
This is the number of users who take a specific action, divided by the total number of people exposed to the opportunity to take that action. It is expressed as a percentage. A conversion rate requires a stated goal.
Example: On your website, you have a form that encourages people to sign up for your sales emails. The goal is email signups. You get 100,000 visitors in one month. Of those, 14,487 sign up for your emails.
Your conversion rate is 14.49%

CPC - Cost per Click
In a pay-per-click (PPC) campaign, this is the amount you spend each time someone clicks on one of your ads.
Example: You spend $1.74 for 87 clicks. Your CPC is $0.02.

CTR - Click-through Rate
The number of clicks on an ad in your ad campaign, divided by the number of times the ad was viewed. The number is reported as a percentage. Multiple clicks by the same person are generally counted in most advertising platforms.
Example: Your ad is viewed 10,000 times and is clicked on 3847 times. Your CTR is 38.47%.

A high CTR may mean that your ad is very interesting. However, for an ad campaign to be truly successful, it must generate sales and not just clicks.

Email Click Rate
The number of recipients who open your email, divided by the number of subscribers who received your email. It is expressed as a percentage. Click rates are good for determining the level of overall engagement of your list. Example: Out of 10,000 email recipients, 759 clicked the email. The click rate would be 7.59%

Email Click-through Rate (CTR)
The number of recipients who clicked on a link in your email, divided by the number of people who opened the email. Multiple clicks by the same recipient are not counted in this rate. You want this number to be as high as possible, but click-through rates will vary based on the content of your email.
Example: Out of the 759 recipients who opened the email, 376 recipients clicked one or more links within that email. The CTR is 376/759 = 49.54%

Email Open Rate
The number of recipients who open your email, divided by the number of users who received your emails. It is expressed as a percentage. Open rates are good for determining the quality of your subject line and the general interest-level of your subscribers.
Example: Out of 1000 email recipients, 759 opened the email. The open rate would be 75.9%

Goal
Any desired outcome that you want from your users. It could be engagement-based, such as the time spent on your website. It could be action-based, such as signing up for emails or making a purchase.

Hard Bounce (Email)
This is when the email is rejected outright. The most common hard bounces are for accounts that do not exist on the domain (i.e. there is no such email address) or the domain name itself doesn't exist.

KPI - Key Performance Indicator
KPIs are the metrics that matter most in determining whether or not your business is profitable. For some, this will be metrics pertaining to lead generation and closed sales. For others it will be metrics relating to conversion on landing pages and sales pages.

LTV – Lifetime Value
Lifetime value is the average amount of expected revenue generated from a customer. As you nurture repeat buyers (for products) and reduce churn (for subscribers), the lifetime value naturally goes up. Comparing the LTV to the customer acquisition cost (CAC) is how you determine if your marketing campaigns are truly profitable and if so, by how much.

PPC - Pay-per-click
A type of advertising campaign that charges you whenever someone clicks on your ad. The most common PPC campaigns are search advertisements and social media advertisements.

ROI - Return on Investment
This is a term used to describe the profitability (or cost) of a particular online marketing campaign. The return on the investment is calculated by dividing the profit generated by the campaign by the cost of the campaign. The answer is expressed as a percentage. More in-depth ROI calculations use the lifetime value (LTV) of the newly acquired customers, as well as the full implementation costs of the campaign.
Example: An advertising campaign costs $1,000 to implement and generates $5000 in profit. The ROI is 500%

Soft Bounce (Email)
This is when the email is sent back due to a temporary issue, such as internal server errors or the user is over their email storage limit. Soft bounces generally resolve themselves once the error is repaired or the user cleans their inbox, etc.

Spam Complaint Rate (Email)
The number of recipients who click the ‘report spam’ link when viewing your email, divided by the number of recipients who received the email. This is expressed as a percentage and you always want this number to be as close to 0% as possible. For most email service providers (ESP) the acceptable spam complaint rate is around 0.1%.
Example: If you send an email to 5000 recipients, to stay within a 0.1% complaint rate, you could have 5 complaints maximum. Smaller lists must strive to stay as close to 0 complaints as possible in order to maintain deliverability rates. Different ESPs will handle high spam complaints differently – but continued high complaint rates will almost always get your account suspended.

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