From SEM to CTR to CAC, it can be hard to keep up with all of the marketing lingo being thrown around these days. Of course, not knowing what these terms mean can make it difficult to keep up with conversations about marketing.
Ideally, a digital marketer should be able to understand the “what” and the “why” behind each of these terms. The “what” is usually straightforward, such as what an acronym is short for. The “why” is a more nuanced and important look at why a marketer should care about a given term and what it means for business.
If you’ve been looking for a way to improve your marketing vocabulary, or you want to find a marketing glossary, you’re in the right place.
We’ll explain the what and the why behind our list of 20 marketing terms every digital marketer should know.
The Top 20 Digital Marketing Terms You Should Know
For this list, we’ve avoided creating a marketing dictionary of basic terms such as “social media,” “website,” or “advertisement.”
Instead, we’ve focused on digital marketing terms that new and experienced marketers alike may have overlooked or be fuzzy on. We also have a bias toward terms that aren’t just buzzwords but have some substance behind them.
If that sounds like a list you’re interested in, let’s jump in.
1. Conversion rate
Conversion rate is the percentage of customers, or potential customers, that take a specific action. The “specific action” can be anything from opening an email, to signing up for a demo, to making a purchase. Since many marketing efforts focus on compelling a customer to take that next step in the sales funnel, conversion rate is an important marketing metric.
As a marketer, it’s important to be able to contextualize conversion rate data. Average conversion rates vary greatly depending on marketing channel and industry.
For example, Marketing Sherpa research found that the average website conversion rate for the professional or financial services industry was 10%, while the retail or ecommerce industry was only 3%.
2. Push marketing
Push marketing refers to marketing efforts designed to send a targeted message to a given set of potential or existing customers.
Examples of push marketing include targeted email campaigns, television and radio ads, and line-of-sight marketing using digital signage within brick-and-mortar locations.
3. Pull marketing
Also called inbound marketing, pull marketing refers to marketing efforts designed to “pull” or attract sales prospects to your website, brand, and products or services.
Examples of pull marketing include SEO (search engine optimization) and social media marketing.
4. Customer acquisition
Digital marketing is all about customer acquisition and retention. Customer acquisition refers to all of the sales and marketing activities involved in obtaining a customer.
5. Customer acquisition cost (CAC)
Customer acquisition cost (CAC) tells you the average cost of acquiring a customer. You can calculate CAC using this formula:
sales and marketing expenses ÷ total number of customers = CAC
CAC is important because, coupled with CLV (customer lifetime value), it can tell you a lot about the potential profitability of your business model.
6. Customer lifetime value (CLV)
Customer lifetime value (CLV) tells you the amount of revenue a customer generates for your business. CLV is sometimes referred to as lifetime customer value (LVC). There are a number of different ways to calculate CLV, but here’s one of the simplest:
average purchase amount × frequency of purchases × customer lifespan = CLV
Here are a few rules of thumb you can use to analyze your business model using CLV and CAC:
- If CLV divided by CAC is higher than one, each incremental customer is costing you money.
- If CLV divided by CAC is less than one, each incremental customer is bringing in money.
- Generally, having a CAC that’s about a quarter to a third of your CLV is considered a good foundation for profitability. If your CAC costs are lower than that, you may be under-investing in customer acquisition.
7. Search engine optimization (SEO)
Search engine optimization (SEO) is one of the most common marketing terms digital marketers encounter.
Simply put, SEO is the process of increasing the amount and quality of traffic to your website from unpaid web search results. The “unpaid” part is important; SEO excludes paid search.
8. Search engine marketing (SEM)
Search engine marketing (SEM) is the process of increasing the amount and quality of traffic to your website using SEO and paid advertisements. In simple terms, SEO + paid search results = SEM.
9. Search engine results page (SERP)
Search engine results page (SERP) is the page of results a user sees when they type a term into a search engine. Generally speaking, the higher your SERP rank for a given term, the more likely a user is to click on your result.
An impression is an instance of a piece of online content being shown. Often, the term is used in the world of paid online ads. For example, clickthrough rate (CTR) is calculated using clicks and impressions.
11. Clickthrough rate (CTR)
Clickthrough rate (CTR) is the percentage of clicks a campaign receives relative to the number of impressions. A higher CTR often implies that campaigns are resonating more effectively with viewers. The formula for CTR is:
(clicks on a campaign ÷ total campaign impressions) × 100 = CTR
For example, if a given ad campaign has 5 clicks and 500 impressions, the CTR is 1%: (5 ÷ 500) × 100 = 1.
12. Cost per mille (CPM)
Cost per mille (CPM) is one of the few pieces of marketing lingo to use Latin. “Mille” is Latin for “thousand,” and CPM means cost per thousand impressions. CPM is often used for setting the price of a given paid ad campaign.
13. Cost per click (CPC)
Cost per click (CPC) is the marketing jargon that refers to the cost of each click in a paid search campaign. With the CPC model, you pay based on clicks as opposed to impressions. CPC is popular on pay-per-click platforms such as Google Ads.
14. Customer relationship management (CRM)
Customer relationship management (CRM) is the process of building, maintaining, and enhancing an organization’s relationship with its customers.
For many digital marketers, CRM software is an important aspect of effective CRM because the right software can enable scalable contact management, customer segmentation, automation of marketing efforts, and sales analytics.
15. Content management system (CMS)
A content management system (CMS) is a type of software designed to simplify the process of creating a website and publishing content. CMS software, such as the very popular WordPress platform, can help streamline everything from content management, to SEO, to user management.
16. Marketing analytics
Marketing analytics and digital marketing go hand in hand. Marketing analytics, or digital marketing analytics, is a data-driven approach to the measurement of marketing effectiveness. With the data marketers can capture from social media, web forms, and other mediums, marketing analytics can enable insights that make future campaigns more effective.
17. Bounce rate
Bounce rate is the ratio of how many users “bounce” after visiting your website. A “bounce” is a visit to your site that doesn’t involve the user visiting any other pages or taking any other actions. That is, they land on a single page and leave.
All else equal, a low bounce rate is better than a high bounce rate, but this is another piece of marketing terminology where context really matters. For example, you can expect press releases, contact pages, and product pages to have significantly different bounce rates. After all, a user likely landed on those pages for very different reasons.
18. Return on investment (ROI)
Return on investment (ROI) is the percentage of return made on a given investment. While there are plenty of marketing-specific metrics you’ll come across as you work through the marketing process, it’s important not to overlook the fundamentals, such as ROI.
Of course, the hard part of ROI in the world of marketing is attributing sales to a given marketing campaign. How can you know exactly what nudged the customer to make the purchase? Unfortunately, there is no single clear-cut answer to this question for every case. However, marketing analytics tools and email marketing software such as Mailchimp can help you attribute returns to specific campaigns.
19. A/B Test
A/B tests, sometimes referred to as split-run tests, are tests where two different versions of the same thing are tested and measured for effectiveness. In the world of digital marketing, the “thing” being tested is often a web page, social media campaign, email campaign, digital advertisement, or sign-up form.
To effectively A/B test, digital marketers need to control for all variables except the one they’re testing, look to avoid bias in the way the test is delivered, and capture a large enough sample size. In many cases, CRM software or email marketing software can help with A/B test implementation.
20. Customer segmentation
Customer segmentation, also known as market segmentation, is the process of categorizing and segmenting customers based on different criteria. The objective of customer segmentation is to enable you to group customers based upon their needs, interests, and budget as well as their potential value to your business.
By properly segmenting your customer contact information, you can send more targeted and useful information that your customers are more likely to find compelling. For example, proper customer segmentation is a big part of creating an effective email blast. You may also boost your conversion rates and overall marketing ROI.
Remember to understand the “why” behind each term
While memorizing a list of marketing terms to know has its benefits, understanding the “why” behind each term is more important. As you go through any list of terms like this, be sure the “why” makes sense to you.
For example, customer segmentation matters because it enables you to send more useful and targeted information to your potential customers. Similarly, ROI, CAC, and CLV help you understand the profitability of your efforts.
By focusing on the “why,” you can better understand how to contextualize the term and make sure you focus on using it (or not) to further your marketing efforts.