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PPC 44 min read April 4, 2022

Contextual Advertising: Terms You Need to Know

Contextual Advertising: Terms You Need to Know
Tired of looking for PPC terms on different websites? Great news! We have collected all the basic contextual advertising terms in this article for you. In order to make this piece more useful, we reached out to the PPC specialist Bohdan Dudnyk, PM from the Inweb agency.

Is there a valuable term missing? Mention it in the comments down below, and we will add it!

Basic concepts in contextual advertising

CTA (Call to Action) is a piece of content, such as an image, a button, or a line of text, intended to prompt users to perform a specific action: buying, subscribing, writing a review for a purchased product, etc.

When creating calls to action, it is essential to take into account the type of audience you're dealing with:

  • cold: not interested in the offer yet;
  • warm: has a moderate interest in taking a target action in the nearest future;
  • hot: already willing to take a target action.

For a hot audience, it is appropriate to phrase CTAs with action verbs such as "buy now at the best price", or "subscribe today to get an e-book for free", etc.
When it comes to cold and warm audiences, you should be more careful, it's preferable to add an emotional and reasoned justification to convince the customer to make a purchase.

It is recommended to make your calls to action stand out, while not going overboard with them. If you place too many CTAs on one page, the users will inevitably find it overwhelming, so make sure to make them seamlessly fit into your website's design. A/B testing is typically used to select the most effective calls to action.
Ecommerce (Electronic Commerce) is a branch of the economy, which includes all types of businesses conducted over the Internet:

  • online stores, marketplaces, online services;
  • use of electronic money;
  • Internet marketing;
  • electronic data interchange;
  • Internet banking;
  • e-insurance, etc.

The attitude of users to e-commerce also depends on the generation they belong to. Online purchases are the most popular among Zoomers. In order to succeed in e-commerce, it is important to develop an omnichannel strategy in which a quality customer experience is a top priority.
Abandoned Shopping Cart is a shopping cart in an online store, to which the user added products but left the website without purchasing.

Such a scenario occurs for various reasons: high additional costs related to delivery or taxes, registration requirements, difficulties in making an order, technical problems on the website, etc.

To encourage the customer to complete the purchase, you can use abandoned cart reminders via email or text messages. They may include offers to assist them with placing an order, an additional discount, free shipping, or other benefits.
Sales Funnel (also called a purchase funnel) is a marketing concept used to convert cold customers into buyers. The classic version of a sales funnel consists of four elements: awareness➝ interest ➝ decision ➝ action.

Since online sales are performed virtually, the landing page should tackle all possible hesitations the customer might have and gently encourage the purchase.

It is vital to check the purchase funnel for vulnerabilities and eliminate them.
Contextual Advertising is a type of targeted advertising that takes keywords and content of the web page into consideration when displaying ads.

These commercial ads appear above organic search results on SERP.
Ads may also be displayed on websites, mobile apps, email, YouTube, and other platforms. They are displayed in various formats: as text, block with the title, price of the product and its image, banner, or video.

In contextual advertising, you usually pay for user clicks, not impressions. This model is called PPC (Pay-Per-Click).
Creatives are multimedia materials used in advertising.

A creative approach to images used in contextual advertising is necessary, in order to attract the attention of your target audience. When choosing pictures, pay attention to the following points:

  • competitor's ads: the selected image should stand out among your competitors;
  • image characteristics: clarity, readability, harmonious color scheme, etc.
  • technical requirements: size and resolution, which may vary depending on the search engine;
  • copyrights: you can't use copyrighted photos in advertising; create images yourself or use free stock images.
Landing Page literally means "the page users land on" by clicking the link. Users usually get to landing pages from contextual ads or email newsletters.

A landing page may be considered your website's homepage, a blog post, a product page, or a lead-generating page (leads are potential customers), etc.

In digital marketing, a landing page is specifically created for a certain advertising campaign to attract traffic, generate leads, and increase sales.

Landing pages can also be dedicated to advertising a special offer: a free e-book, a trial version of a software product, or a discount coupon.
Marketing Budget is a financial estimate that contains a list of the company's planned marketing activities and their cost. Typically, such a financial plan is drawn up for a year with monthly detailing of the types of activities, prices, and planned profits.

Creating a marketing plan consists of several stages:

  • defining strategic marketing goals;
  • selecting marketing activities and necessary tools;
  • adding the costs of selected services to the budget;
  • including the cost of specialists' or company personnel services in the budget;
  • entering data into a table and allocating the monthly budget.
Display Advertising is various banners, videos, audio messages, branding, and other formats. Through display advertising, you can increase brand awareness, draw attention to promotions and sales, increase the number of site visits, and introduce new products to the market.

There are various advantages to display advertising: various targeting options, broad coverage, a wide range of platforms, collection of statistics for performance analysis, the option to add interactive elements, etc.

The disadvantages of display advertising are the high cost of creating high-quality creatives and posting them on popular sites, the risk of ads getting blocked by users, and banner blindness when advertising gets ignored.
Advertising Platform is a website, free mail server, forum, social network, trading system, or application on which the advertisement is placed.

It is important to choose advertising platforms taking into account the characteristics of the target audience: age, gender, social status, and the requirements of resource owners for creatives.

Ad placements should be pre-tested to avoid low conversions or a negative impact on the company's reputation.
Ad Networks are systems for managing advertisement placements on various platforms, which basically connect advertisers and publishers.

Each advertising network has its own rules, which may include size restrictions, subject or quantity of an advertising banner, requirements for placing ads, etc.
Before launching the ad, the banner goes through moderation.
Product Feed is a file that displays the assortment of an online store in a given format, indicating various attributes and characteristics of goods. Feeds allow you to automate updating your ads so that their availability and price are always up-to-date.

Feeds are usually created through dedicated modules or plugins in the website's CMS but you could also create them yourself. Feeds are created in various formats: XML, YML, CSV, GZ, etc. Such documents are used to set up dynamic ads in Google Ads, Facebook Ads, shopping ads in the Google Merchant Center, etc.

Search queries

Branded Queries are keywords that are used to search for a specific website, company, or product. It includes exact brand names, as well as brand names with spelling mistakes.

Such search queries are used by the most loyal audience, very likely to make a purchase. Also, branded queries may contain the manufacturer brand names of goods that are presented in an online store: Samsung smartphone, LG microwave oven, etc.

Since branded queries have a high conversion rate, contextual advertising is often ordered for them, so that competitors don't lure loyal customers to their websites.
High-Frequency Queries are keywords that are most often searched for through search engines.

Such requests are the most competitive ones, but they do not always result in high conversions since it is difficult to determine the user's intentions accurately. Promoting such requests to the top of the SERPs is really challenging. It's a long and expensive process. You can determine the frequency of a search query by using various services, including Serpstat.
Geo-targeting Queries are keywords that users enter when searching for any services or goods in their locality, for example: "sushi delivery," "beauty salon."

In this case, the search result page will be formed according to the user's location.

Geo-independent queries include keywords for which the results don't change based on location, for example: "English textbook," "homemade ice cream recipe," etc.
Informational Queries are keywords used when searching for any information about a particular subject, concept, product, or service. For example, "how to hang wallpaper," "what is the capital of Australia", or "how to pick a laptop ", etc.

Some informational queries may show the user's interest in a particular product or service, in this case, they can be used in contextual advertising.

If, for instance, the query clearly articulates an intent to solve a problem without having to make any purchases, such as "how to fix a dresser at home for free", then using such keywords in advertising is wouldn't make much sense.
Negative Keywords are keywords for which a contextual ad is not shown to users.

This may include regions the company doesn't conduct business in, brand names that are not in the online store assortment, and other keywords or phrases on which you don't want to spend your advertising budget.

For example, online stores selling new products should exclude everything "second-hand"-related, and websites dedicated to selling men's clothing should add "women's," "children's", etc. to their list of negative keywords.
Navigational Queries are phrases that are used to search for a particular website. Various spellings can be used in this case, for example: "Netflix website," "Ikea online store," "Instagram registration," etc.

In organic search results, search engines will most likely display the exact website the user is looking for, no matter what the search query looks like.

When it comes to paid search results, competitors can bid on the same keywords to lure someone else's target audience to their website.
Long-tail Queries are keywords (phrases) that consist of several words, which users tend to search for less often than for others.

Typically, such queries have low competition, but at the same time, a higher conversion. The reason is simple: such a specific query means that the users know exactly what they're looking for and they're more likely to turn into customers when they land on a relevant page.

Therefore, such requests are a great way to promote a project.
General Queries are keywords or phrases that make it difficult to understand what the user is specifically looking for.

For instance, the user searching for "iris" might be looking for a flower, a candy recipe, as well as for a hotel, or a beauty salon named like that. It's hard to tell.

General queries are usually highly competitive and expensive to promote, while not even resulting in high conversions. Obviously, not everyone searching for a general query belongs to the company's target audience.

To increase conversion, the general queries you add to your keyword list should be clarified, as instead of just "iris" one could specify the company's line of business, like "wholesale iris flowers."
Search Queries are words or phrases users enter in search engines to find things of interest, goods, services, websites, etc.

Digital marketers collect and analyze such search queries (keywords) when creating a website, promoting it, optimizing, and launching advertising campaigns.

Serpstat tools are a great way to collect all relevant keywords for a project, taking into account their frequency, competitiveness, the difficulty of getting to the top of SERP, and cost per click in advertising campaigns.
Transactional Queries are search queries with an intention to purchase a particular product or service.

An example of transactional queries could be "buy a guitar," "rent an apartment in the city center," "washing machine price", etc.

Such keywords are often added to the website's semantics in advertising campaigns.
When adding keywords to a website page or meta tags, you should not use not organic phrases like "rent a car in New York city price", as search engines may consider it spam.

PPC tools

Google Ads Editor is a free, downloadable application for managing your Google Ads campaigns. The application allows you to download one or more account data, make changes offline, then upload the changes to Google Ads.

In this service, you can carry out mass editing, export, and import files, analyze statistics for all advertising campaigns, make changes to the texts, and more.

Such an application is especially useful for specialists running several advertising campaigns with numerous ads and keywords.
Call Tracking is an automated system for tracking all calls in the company.

Such a service allows you to determine the source via which the client called. As a result, you can evaluate the effectiveness of an advertising campaign, analyze ads that attract the maximum number of users, redistribute the budget, and increase conversions and business profits.

If the site receives many orders via calls, you need to use call tracking to monitor conversions. Otherwise, analytical information will not be collected correctly, and 'smart' campaigns will not be used since they are optimized for conversions. It also refers to machine learning.

In addition, the system allows you to evaluate managers' performance, as it stores audio recordings of calls that can be analyzed to improve the quality of service.
GA (Google Analytics) is a web analytics service by Google that tracks and reports website traffic. With GA you can work with the following information:

  • site traffic for a certain period of time;
  • data about the behavior and geographic location of website visitors;
  • users' devices;
  • sources from which users came to the site;
  • most popular website pages;
  • effectiveness of advertising campaigns;
  • keywords users discover the site with;
  • the number of new and returning visitors, etc.
The service allows you to evaluate the strengths and weaknesses of the project and then optimize it.
Google Marketing Platform (ex-DoubleClick) is an advertising analytics service that combines two marketing tools – DoubleClick and Google Analytics 360 Suite. The tool allows you to automate a number of processes for analyzing advertising trends using artificial intelligence.

Also, the platform is designed to evaluate the effectiveness of marketing solutions, audience analysis, and collaboration between teams through a single interface. Using this service will allow you to manage investments more competently, and save time on making strategic decisions.
GTM (Google Tag Manager) is a free tracking tool and management platform that allows the user to add marketing tags, or snippets of code, to your website to track and collect marketing data.

Using GTM allows you to easily implement tags without programming skills and evaluate how effectively the site solves visitors' tasks, which buttons they click how they scroll, and analyze advertising campaigns and conversions. To analyze various actions, 50 ready-made tags are provided. In addition, you can implement your own options.
MCC (My Client Center), Google Ads manager accounts is a type of Google Ads account agencies typically use for managing multiple client accounts.

This service is essential for PCC agencies, freelancers, and anyone who wants to simplify the management of client accounts. The tool allows you to view the necessary information for all customer accounts in one place and simultaneously run reports on these accounts.
UTM (Urchin Tracking Module) tag is a piece of code marketers place at the end of the URL to track and analyze traffic sources.

The UTM codes help identify the advertisements and campaigns that attract the most considerable number of users and the most beneficial clients.

UTM tags are typically added to the URL to track clicks on advertising links, and the added words are usually related to the advertising channel to facilitate the analysis of statistics.

Contextual advertising systems

CTR (click-through rate) is a ratio of clicks to impressions on an advertising campaign. A high CTR is an important indicator of the effectiveness of an advertising campaign, showing the degree of user interest in ads.

CTR is the ratio between the number of users who click on a link and the number of users viewing the page the link is on. Ad clicks are part of the sales funnel, followed by conversions if the content on the page meets user expectations. A high CTR indicates that the target audience saw the ad, and the ad aroused their interest.
Responsive Search Ads are ads that tend to attract a higher click-through rate (CTR) than standard ads. They consist of headlines, descriptions, and a display URL with path fields. Once provided, Google tests all assets against each other by automatically rotating the individual assets based on the rotation settings you selected.

This is the format that allows you to show ads for more search queries and reach a wider target audience.
Google Ads Auction is a method by which Google Ads selects relevant ads, the order in which they appear, and the cost per click. An auction is held at each user's request, determining the ads that will be shown and their positions. The rank an ad receives depends on your bid and quality indicator.

At the same time, the quality score is influenced by the expected CTR, the ad's relevance, and the landing page's quality. When competition is high, ads may appear in lower positions or not appear at all. However, keywords that closely match the user's query may result in ads appearing even at higher competitor bids.
Day and Time Targeting is a simple yet effective campaign strategy. It's the choice of particular time intervals for displaying advertisements in order to reduce the number of ineffective impressions. Setting the impressions time is useful for companies that provide services on certain days of the week and time, for example, various delivery services (flowers, lunches, groceries, etc). For example, if a user requests a night pizza delivery, then it makes no sense to display such an ad at that time to companies that do not deliver orders around the clock.
Geo-targeting, Local PPC is a method of delivering different content to visitors based on their geolocation. If you do not set up geo-targeting when launching an advertising campaign, ads will be displayed to irrelevant users who live outside the company's area of activity, and the budget will be wasted.

Geo-targeting can be easily set up for contextual advertising in Google, as well as in social networks. The main advantages of geo-targeting are the ability to divide users into segments to create various advertising campaigns, weed out irrelevant visitors, and reduce inappropriate advertising investments.
Remarketing is an addition to standard contextual advertising, which is used to return users who have already visited your site, showing an interest in your brand. If the user saw some products of the online store or added them to the cart but has not made a purchase yet, they will be displayed in ad units on various online platforms.

Remarketing is focused on working with a warm audience. It returns customers, increases conversions and sales. Dynamic remarketing is especially relevant for sites that provide services or products of the premium segment before buying which users need time to think.

Regular remarketing is based on the automatic determination of the target audience using parameters such as age, gender, interests, and behavior on the site.

With dynamic remarketing, the audience is determined more precisely since analytical systems collect information about the products viewed, information indicated on travel companies' websites, search history, and select the most relevant ads for each user.
PPC (pay-per-click) is an online advertising model in which an advertiser pays a publisher every time an advertisement link is "clicked" on.

The cost of a click can be calculated at a flat rate (flat-rate PPC), a fixed price per click, which is predetermined in advance, or at a competitive rate (bid-based PPC). In this case, the cost per click is calculated by the auction results based on the competition for a certain keyword, the ad's relevance to the user's query, the landing page quality score, CTR, etc.
Placement are websites, specific pages, particular ad units, mobile applications, or YouTube videos with ads added.

When running Display Network ads and video campaigns, you can manually select placements through targeting or automatically select suitable placements based on keywords. You can set individual bids for different placements, increasing them on those sites that bring the most profit.
Ads Display is one showing of an advertisement or banner. Based on the chosen payment option, impressions, clicks, and other user actions can be paid. CPM (Cost-Per-Mile), for example, is a payment model in advertising that provides payment for every thousand ad impressions. This model is applied to online marketing, television, print, and radio advertising.

The optimal pricing model is chosen based on the goals of the advertising campaign. If the main task is to increase brand awareness, then you can use CPM. To increase traffic and conversions, it's better to choose PPC and pay only for clicks that can lead to targeted actions.
Quality Score is a metric used by Google Ads to determine whether an ad will display, in which position, and what the cost per click will be. The score (scale of one to ten) is based on the quality of the ad and landing page. A high score indicates that Google considers the ad and landing page to be relevant to a particular search query. Increasing the quality score of the keywords improves your ad positions and increases your CTR.
Ad Position is the order of your ad in the auction results compared to other ads.

In contextual advertising, a rating is calculated for each ad. It affects its display and position. The ad rating depends on the specified bid, the maximum cost that the advertiser is willing to pay for one click, and the ad's quality score. The quality score is also affected by several factors:

  • relevance of the ad to the keyword;
  • expected CTR, which is calculated on the basis of impression and click statistics, as well as parameters that can affect ad visibility;
  • the level of competition in the auction;
  • landing page quality.
Relevance is one of the characteristics that are taken into account in contextual advertising when calculating the quality score. A relevant ad should lead the user to a useful page.

At the same time, the ad must contain key phrases in the title and description, link to a high-quality landing page, and must be adapted to mobile devices. The landing page should include a detailed description of the advertised offer, and it should allow you to place an order easily and not face technical errors. Increasing relevance results in higher conversions and marketing campaign ROI (return on investment).
Remarketing/Retargeting is a way to return visitors to the site who previously visited it. The method involves working with a warm audience and can be of various types:

  • display network;
  • lookalike audience;
  • search and dynamic remarketing;
  • email-based retargeting.

Thanks to remarketing, visitors return to the resource, conversions increase, and so do profits. To track statistics on remarketing and retargeting, you can use Google Analytics, Google Ads.
Click Fraud is a type of internet crime that occurs in pay-per-click online advertising when a person or computer program imitates a legitimate user of a web browser clicking on an ad for the purpose of generating a charge per click without having actual interest in the target of the ad's link. The purpose is obvious, to waste the advertising budget of competitors.

You can recognize this type of fraud by analyzing website visits: the duration of such actions is no more than 2 seconds, the traffic increases sharply, and several key phrases are entered from the same device. Search engines fight this forbidden method of promotion using a multi-stage protection and filtering system.
Targeting is a concept in contextual advertising that describes the focus of a campaign on a specific target audience, which is selected by geographic location, age, gender, behavior, interests, etc.

The main advantage of targeted advertising is the ability to show ads only to those users who may be interested in the advertising offer. Thanks to correctly configured targeting, the budget is spent more rationally, and conversions increase. Targeting also allows you to separately analyze statistics for different audience segments and exclude those that do not bring the desired result.

Analytic systems

Assisted Conversions are conversions for which certain traffic sources were not the last before the purchase, but contributed to it. For example, a user visited the site after seeing an advertisement on some social network, then he went to the same resource after a while via contextual advertisement. After that, he got to the site again via organic search and made a purchase.

In this case, the conversion is credited to the last visited channel, and for the first two, it is considered associated since without previous visits the user might not have decided to purchase. Tracking assisted conversions allows you to evaluate the effectiveness of all sales channels correctly.
Multi-Channel Funnels
are a set of visitor interactions with a resource, after which conversion is made within a given time range. Reports on multichannel sequences in analytics systems allow you to evaluate the effectiveness of different traffic channels in attracting customers to the project. You can set the tracking period from 1 to 90 days.

Visits from organic search, contextual advertising, social networks, and email newsletters are considered to be interactions. In Google Analytics data, channels are ranked by performance based on the number of direct or assisted conversions.
Bounce Rate is a behavioral factor used in analytics systems to count ineffective visits to a resource. In case there is a session on the site where only one page was viewed and no subsequent action or transaction is made, Google bounces it.
Web Sessions are visitors' interactions with the website within a certain time frame, which include visiting various pages, watching videos, making conversions, clicking on links, filling out forms, etc. Sessions are an important concept in analytical systems, used in various reports when calculating several indicators. The session ends in the following situations:

  • by default, after half an hour of inactivity, or with manual configuration after a different period of time;
  • at the start of a new day;
  • when changing the advertising campaign, when the visitor came to the resource first via one ad and then re-visited it via another ad not related to the original one.
Unique User is a user that visited the resource during the day and whose characteristics are unique, for example, an IP address, registration data, etc. On more recent visits to the site before the end of the day, the user will no longer be considered unique, and his visit will be recorded in the report as a view. Many unique visitors are an important criterion that indicates good results in project promotion. In addition, large traffic attracts advertisers who select advertising platforms.
Attribution Modeling are rules that determine how credit for sales and conversions is assigned to touchpoints in conversion paths. There are various attribution models:

  • Last Interaction attribution model;
  • Last Non-Direct Click attribution model;
  • Last Google Ads Click attribution model;
  • First Interaction attribution model;
  • Linear attribution model;
  • Time Decay attribution model;
  • Position Based attribution model.
To learn more about each model, read the Google's explanation.

Pricing and Payment Models

CPA (cost per action) is a digital advertising payment model that allows to charge an advertiser only for a specified action taken by a prospective customer.

This method is one of the most profitable because you do not need to pay for unproductive views or clicks, but you are charged only for attracting users who are interested in the advertised offer. Paid actions can include product purchases, leads, visits to specific web pages, callbacks, video views, etc.

The average cost per action is calculated by dividing the total cost of conversions by the total number of conversions. This pricing model is often used in affiliate programs.
CPC (cost per click) is an advertising pricing model that allows advertisers to pay publishers for each click made on their ads. The cost is based on the chosen pricing model: flat or competitive bid. With a flat bid, a click has a specific and fixed cost. With a competitive one, CPC is affected by the results of an auction with other advertisers, the ad's relevance to the entered keyword, geographic location of the visitor, time of day, quality of the target URL, etc.
CPL (cost per lead) is an online advertising payment model in which payment is based on the number of qualifying leads generated. Leads are visitors' registrations, ordering callbacks, entering and completing levels on gaming portals, etc.

To evaluate the effectiveness of an advertising campaign, the cost of an attracted lead is calculated as the ratio of the channel's budget to the number of leads. You can reduce the cost of a lead by reducing the cost of attracting visitors, redistributing the budget to the most profitable channels, increasing the amount of the average purchase, etc.
CPM (cost per mille) is a pricing model in programmatic advertising where you pay a certain amount for 1000 impressions. This method is used in internet marketing, print media, television, or radio.

CPM is a suitable option for advertisers who bring a new product to the market, want to increase brand awareness, inform the target audience about promotions, sales, and some events. You have to specify the cost of 1000 impressions and select the audience parameters in the setting of the advertising campaign. After that, the advertising platform will set the schedule for showing ads. It also has to be noted that with high user activity on the site, the budget allocated for CPM is spent quickly.
CPS (cost per sale), also known as pay per sale is a metric used by advertising teams to determine the amount of money paid for every sale generated by a specific advertisement.

All the orders containing data for contacting the client, advance payment, or payment of the full price can be considered as purchases. To use the CPS pricing option, it is required that the resource does not have any options for making a purchase, except for online orders. Otherwise, it will not be possible to track the number of attracted buyers.
CPV (cost per visitor) is a pricing ad model that implies that the advertiser will be charged a flat rate or a percentage from the sale for each time the visitor of the ad is turned into a conversion.

If the user left the resource and later returned again by clicking on the advertisement, the payment is no longer debited. Unlike the CPC model, in which click statistics are calculated on the advertising platform, in CPV, the number of clicks is calculated on the advertiser's website. This payment option is often used in contextual display advertising.
CPO (cost per order) is a metric that measures the total cost of advertising that went into generating a single purchase. It includes both new and returning customers.

CPO is calculated by dividing the marketing cost by the number of responses generated. For example, if you spend $500 on advertising, and it attracts 100 sales, then the CPO will be $5. To correctly determine the profitability of an advertising channel, it is important not to take into account other costs. That is, if the cost of an advertising campaign is higher than the average bill for each purchase, advertising will be unprofitable.
Pricing Model is a method used for determining the price of digital ads. An auction pricing model is often used in contextual advertising. There is a fixed model which can also be used. In most cases, the option where clicks are paid is called PPC (Pay-Per-Click). Alternative pricing models: PPA (Pay-Per-Action), PPM (Pay-Per-Mile), PPS (Pay-Per-Sale), PPL (Pay-Per-Lead), etc.
Auction Price Model is a payment method for online advertising, in which the cost per impression or click is specified in the campaign settings. The location of the ad unit depends on the final price, and the most relevant ad with the highest cost per click gets the highest position. The auction is carried out in real-time using software algorithms of search engines that determine which ads will be displayed for specific keywords.
Fixed Price Model is a model that guarantees a fixed budget for the project. This option is used when paying per thousand impressions, PPM. In most cases, it is used in media advertising. The fixed price model is less common than the auction model.


CR (l→s) Lead to Sale Conversion Rate is a rate that shows how many leads or customer calls are converted into sales. A simple formula to determine the lead to sale conversion ratio is:

Total Number of Sales
______________________ x 100
Total Number of Leads

Leads are considered to be any users of the site who are interested in the company's offer and perform target actions by leaving their contact details. The conversion rate from leads to sales allows you to evaluate the effectiveness of an advertising campaign, so you should strive to increase it.
CR (v→l) Visitor to Lead Conversion Rate (also known as traffic conversion rate) is a metric that indicates the proportion of visitors to a website that is converted into leads in a given period. Visitor-to-lead conversion rate is calculated by dividing the number of a website's visitors who were converted into leads by the total number of visitors. Mathematically, it can be expressed using the following formula:

Number of Visitors Who Became Leads
_______________________________________ x 100
Total Number of Visitors
Conversion is the user's performing of a targeted action on the site that contributes to profit.

Target actions include registration on the site, subscription to news, placing an order, contacting the company via call center, clicking on a banner, etc. Target actions are set in the analytical systems of search engines.

After collecting statistics, you can evaluate the conversion for each specified option. Standard conversion rates vary depending on the niche, the average conversion rate in online stores is 2-7%, and in B2B it's up to 12%.
Conversion Rate (CR) is the ratio between the number of visitors to a website that completes the desired goal (a conversion) out of the total number of visitors.

In order to calculate conversion, you have to divide the number of conversions you get in a given time frame by the total number of people who visited your site or landing page and then multiply it by 100%.

In order to get statistics about the conversion rate, you must enable conversion tracking in analytics programs and set up the necessary goals, which may include placing orders, filling out contact forms, adding products to the cart, etc.

When calculating CR, the ratio can be more than 100% in case each user performs several target actions.
Lead is a user's interaction with the website or offline business that may lead to targeted action (e.g. a purchase).

The main condition of generating a lead is the ability to track customers and get their contact information for further communication with them.

Leads include filling out applications, registering on the site, filling out questionnaires in the store, subscribing to email newsletters, etc. Depending on the degree of loyalty to the company, leads are divided into cold, warm, and hot. Hot leads are most likely to turn into conversions.
Transaction is an act of taking a target action, which ends with the payment for a product or service. In Google Analytics Ecommerce, a completed order is considered to be a transaction.

In e-commerce, a separate direction has also appeared — transactional marketing, in which the company's strategy is only aimed at sales. The alternative is relationship marketing, where the relationship with the customer is key, so it doesn't end once the sale is made.

Productivity indicators

CAC (Cost to Acquire a Customer) is a performance indicator that determines the cost of acquiring a new customer. It is calculated as the ratio of the acquisition budget to the total number of attracted customers. If your CAC is high, you need to cut costs or extend the engagement period.
ECPC (Effective Cost Per Click) in online advertising is calculated as the ratio of profit to the number of clicks. For example, if placing an ad on a website leads to every 20th website visitor making a purchase and the purchase brings an average of $10 in profit, then the eCPC will be $0.5.
Accordingly, an advertiser earns approximately $0.5 per click, so CPC should not exceed this amount, otherwise, the advertising campaign will be unprofitable.
CLTV (Customer Lifetime Value) is a measurement of how valuable a customer is to your company, not just on a purchase-by-purchase basis, but across the whole relationship. CLTV is calculated using various formulas, including complex models that utilize artificial intelligence.

To find CLTV, you need to calculate the average purchase value and then multiply that number by the average number of purchases to determine customer value. Then, once you calculate the average customer lifespan, you can multiply that by customer value to determine customer lifetime value.
ROAS (Return on Ad Spend) is a marketing metric that measures the amount of revenue earned for every dollar spent on advertising.

ROAS can be calculated with a simple formula: ROAS = (revenue attributable to ads/cost of ads) x 100.

ROAS allows you to evaluate the cost-effectiveness of advertising campaigns.

Profitable campaigns have more than a 100% return ratio, while unprofitable campaigns have less. ROAS analysis allows you to find out the channels that bring the maximum and minimum profit, and correctly redistribute the marketing budget, regardless of how much traffic a particular campaign brings.
ROI (Return of Investment) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of several investments.

ROI is calculated by subtracting the initial value of the investment from the final value of the investment (which equals the net return), then dividing this new number (the net return) by the cost of the investment, then finally, multiplying it by 100.

For example, an online store made a profit of $2,000 from contextual advertising, however, $1,000 is the total amount spent. ROI will be calculated as follows:

ROI = ($2000-$1000)/$1000×100% = 100%
ROMI (Return of Marketing Investment) is a metric used in online marketing to measure the effectiveness of a marketing campaign. This ratio differs from ROI as it is only calculated for marketing, not for the entire business.
The basic ROMI formula is the following:

Revenue — Marketing Expenses
_______________________________ x 100
Marketing Expenses

Let's say a company spends $2,000 on advertising, $1,000 on a marketer's salary, and the advertising revenue is $9,000. Then ROMI is going to be calculated as follows:

ROMI = ($9000-$3000)/$3000×100% = 200%

All this means that the company earned $3 for every $1 spent.
Ad Spending is an amount of money spent on advertising.

It is calculated similarly to the ROI: the cost of advertising is divided by the profit received and multiplied by 100%. The lower the value is, the more profitable the advertising campaign will be. The number of orders on the site, sales via calls, and visits to stores or offices (if it's an offline business) are taken into account for the calculation.
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