Hello, and welcome to Episode number 34 of Aftershock Weekly. This week I thought I would take some time and make our industry a little simpler. I know a lot of digital marketing companies like ourselves, digital marketing reps, will go out there and dazzle them with all these TLAs—Three Letter Acronyms. Things like CPC, CPA, TLA, ROI. There’s a lot of different Three Letter Acronyms, or acronyms, that are very important and easy to understand, so I’m going to break those down for you today, some basic ones in digital marketing that should help you understand a little bit more about your campaigns, a little bit more of how it’s affecting your business, and at the end of the line, how it’s affecting your bottom line.
So first off, ROI—Return On Investment. Now this is a popular one you probably already know, but why this is important is you need to know how much you’re putting into something, and then how much money it’s bringing back. Here’s a basic example. Let’s say you put a hundred dollars into your campaign, and it returned you a thousand dollars in sales you were able to identify. Now that thousand dollars, maybe that’s your gross, so you take out production costs and eight hundred dollars is the total net. So you spent a hundred dollars, and it returned you eight hundred dollars, so really there’s a seven hundred dollar return on investment from that. So it’s very important to calculate that, because if it’s a negative number, you know that you have to switch things up to make sure you’re getting a return.
Next thing, CTA—Call To Action. On your website, on your marketing materials, on your email blasts, on your text messages, there needs to be a call to action of what somebody needs to do. On a website it’s usually a button, it’s usually a form, you know, Free Trial, Sign Up Today, Buy Now. There’s a lot of different calls to action you might have, but you want to be sure that there’s an intent with everything you do. So if you send out an email marketing campaign, some of them might be informational, but there should be a Click Here to Get a Free Pass, Click Here for 15% Off of Your Next Meal—whatever that is, but Call To Action is CTA.
CPA—Cost Per Acquisition. This is a big one, too, because this is letting you know how much it actually costs to acquire a customer. To give you an example, let’s say that you’re doing a Pay Per Click campaign and each click costs you five dollars, and every ten clicks you’re getting one client. So fifty dollars is turning into a client, so that’s fifty dollars’ Cost Per Acquisition. Now you can look at, well, how much is a client worth to me. Maybe they’re worth a thousand dollars. So that means every fifty dollars you put in is returning a thousand dollars, that’s your ROI again. So Cost Per Acquisition is an important number to know.
CTR—Click Through Rate. What this means is, let’s say you have a hundred impressions of your campaign, and five people have clicked through on that, that’s a five percent Click Through Rate, so CTR is Click Through Rate. SEO—Search Engine Optimization. This is optimizing your site so Google, Bing, Yahoo, and other search engines know exactly what your site is about, what each page is about, and what it should serve up results when people are doing searches for.
PPC—Pay Per Click (Marketing), so Pay Per Click, meaning exactly that. Let’s say you have a campaign running on Google, you’re showing an ad at the top for a search, somebody clicks on that ad, you’re only paying when somebody clicks on your ad. So that’s where Pay Per Click came from.
CRM—Customer Relationship Management. This is a software that is usually designed for you to go into it and take notes about a client, show maybe invoices, the last conversation you’ve had, when they’re supposed to be starting the campaign. It keeps all the notes on the specific clients, and all the documents assigned to them. It keeps everything organized, so SalesForce, Zoho, there’s a million of them, but a CRM is something you’ll hear about a lot.
CPM—going back to display advertising, this is usually how display advertising is sold: Cost Per Mil. Mil is actually Latin for a thousand, so cost per a thousand impressions is really what CPM stands for. So, if I am buying ten thousand impressions, at a five-dollar CPM, I’m paying fifty dollars for that campaign.
Now lastly, CPC—Cost Per Click or Cost Per Conversion. It can mean both, so you need to distinguish this one. Cost Per Click simply means, how much does it cost every time somebody clicks on your Pay Per Click ad, or even your display ad, if you’re running a Google campaign, and you look at it and you’ve had a hundred clicks, and the average cost of that is seven dollars, your cost per click is seven dollars. Now, you can look at different keywords, and how much that Cost Per Click is for different keywords, you can look at different ads, and how much your Cost Per Click was for a specific ad, but that’s the first CPC. The next one is Cost Per Conversion, meaning what are you trying to accomplish, what is your conversion? Now, let’s say you’re sending traffic to an attorney website, and what you’re looking for is how many forms are being submitted, how many phone calls are being made, and you’re tracking those as specific conversions. If we’re sending a hundred people, and ten of those people convert, you have a conversion rate of ten percent. So, that is Cost Per Conversion.
So, I hope these TLAs—Three Letter Acronyms—helped you understand the digital world a little bit better. If you have other ones and you’re not sure exactly what it means, put it in the comments. We would love to answer and engage with you here. So, thank you so much for tuning in, and we look forward to seeing you next week. We’ll leave you with a quote!