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Definitions for commonly used terms relating to pay-per-click advertising.

Conversion: A conversion occurs when a user performs a desired action determined by the advertiser. For example, a newsletter sign-up or a purchase.

CPA (cost-per-action): The average cost to convert a user to perform a desired action. Formula: Total cost / total conversions (or) CPC/CR.

CPC (cost-per-click): The total cost divided by total number of clicks. Formula: Total cost / total clicks.

CPM (cost-per-thousand): Some publishers or advertising networks charge on a CPM basis. For example, my ad may be charged $5 CPM, or $5 for every one thousand times my ad is displayed. It also refers to the average cost paid per thousand impressions for a PPC campaign. Formula: (Total cost / total impressions) x 1,000.

CR (conversion rate): The total number of conversions divided by total number of clicks. Formula: Total conversions / total clicks.

CTR (click-through-rate): The number of times an ad is clicked divided by the number of times it’s displayed. Formula: Total clicks / total impressions.

Geo-targeting: Targeting a specific geographic region by restricting the ad display to a particular country, state, city, area, etc.

Impression: An impression is counted each time an ad is displayed.

Landing page: The page the user is taken to after clicking on the advertisement.

PPC (pay-per-click): PPC refers to pay-per-click advertising, also called paid search marketing. When a user performs a search and clicks on a sponsored ad listing, the advertiser is charged by the search engine for the click.

ROAS (return on ad spend): The number of times the ad spend is returned. Formula: Total revenue / total cost.