Paid Advertising Terms
Every ad platform reports the same core numbers under slightly different names. This guide defines the ones you'll see across Google, Meta and TikTok, shows how each is calculated and points out where each one can mislead you.
On This Page
Cost Metrics
- CPM (cost per thousand impressions) Spend divided by impressions, multiplied by 1,000. It tells you how expensive attention is on a platform or audience. CPMs rise with competition, which is why they so often climb in November and December.
- CPC (cost per click) Spend divided by clicks. A low CPC is only good news if the clicks turn into customers.
- CPL (cost per lead) Spend divided by leads, where a lead is a form, call or message you count as an inquiry.
- CPA (cost per acquisition) Spend divided by the action you care about most, such as a booking or a purchase. Platforms often label this cost per result.
Engagement Metrics
- Impressions The number of times an ad appeared on a screen. One person can generate several.
- Reach The number of distinct people who saw the ad at least once.
- Frequency Impressions divided by reach, the average number of times each person saw the ad.
- CTR (click-through rate) Clicks divided by impressions. It measures how well an ad earns a click, which says little about whether the click becomes a customer.
Result Metrics
- Conversion Any action you've told the platform to count, such as a form submission, a call over 60 seconds or a purchase.
- Conversion rate Conversions divided by clicks or by visitors. Low conversion rates usually point to the landing page or the offer more than the ad.
- ROAS (return on ad spend) Revenue attributed to ads divided by ad spend. A ROAS of 4 means $4 of revenue for every $1 spent.
- Break-even ROAS One divided by your gross margin. A business with a 40% margin needs a ROAS of 2.5 just to cover the cost of the product and the ads.
- CAC (customer acquisition cost) Total marketing and sales cost divided by new customers, across all channels.
- LTV (lifetime value) The gross profit a customer brings in over the whole relationship. A dental patient or a lawn care client can be worth many times their first invoice.
See how impressions, clicks and leads follow from a budget. Move one number and watch the others change.
Typical CPMs, click rates and conversion rates vary widely by industry and platform. Replace the defaults with your own report figures.
Measurement Terms
- Attribution The rules that decide which ad gets credit for a conversion.
- Attribution window How long after a click or view a conversion can still be credited to the ad, for example 7 days after a click.
- View-through conversion A conversion credited to an ad the person saw but didn't click.
- Incrementality The share of results that happened because of the ads, measured by comparing people who saw ads with a similar group who didn't. Research on large Facebook advertising experiments found that common observational methods often misjudge this lift.
- Pixel and server-side tracking Code on your site and connections from your server that report actions back to ad platforms.
Reading the Numbers Together
No single metric tells you whether your advertising is working. A high CTR with a low conversion rate points to a gap between what the ad promises and what the page delivers. A rising CPM with a steady CPA means competition is up and your ads are still holding their ground. A strong ROAS on branded search can hide the fact that those customers would have found you anyway.
The number that settles most decisions is what a customer costs you compared with what a customer is worth. Every other metric helps explain why that number moved.
In Practice
Say a family dental practice spends $3,000 in a month and sees a CPC of $6, a CTR of 5% and 40 form leads, which works out to a CPL of $75. The front desk books 16 new patients from those leads, so the real cost per patient is $187.50. If an average new patient is worth $900 in the first year, the campaign is profitable, even though $75 per lead looked high at first glance.
Platforms calculate and label metrics differently, and definitions change. Check the sources below before you lean on any of these.
Key Facts
- ROAS measures revenue, so a campaign can show a healthy ROAS and still lose money once you count product and labor costs.
- Frequency that keeps climbing while CTR falls is a common sign of ad fatigue.
Sources
- Google Ads Help support.google.com
- Meta Business Help Center www.facebook.com
- Gordon, Zettelmeyer, Bhargava and Chapsky, "A Comparison of Approaches to Advertising Measurement: Evidence from Big Field Experiments at Facebook," Marketing Science, 2019, 10.1287/mksc.2018.1135 doi.org
- large Facebook advertising experiments pubsonline.informs.org
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