Performance Marketing for Beginners: 33 Terms You Should Know

Tips & Guides — 26 Dec 2019

Performance Marketing
from A to Z

Performance Marketing for Beginners: 33 Terms You Should Know

The Performance Marketing industry has its own language that can be confusing for a newcomer in this business area. It can easily catch you off guard when you realize that such terms as Lead Generation or Creative have various meanings in different areas of marketing. On top of that, the Performance Marketing has plenty of unique terminology and acronyms. You don’t want the complicated vocabulary of this industry get on your way to creating high-performing digital campaigns!

So, we prepared for you a list of basic terms in alphabetical order to minimize your confusion and help you speak performance marketing confident. Notice, this is a living article and will be updated frequently.

A/B Testing – is a method of comparing version A and version B of a web page, email, or other marketing assets by users’ reactions to determine which one performs better. The results usually based on such metrics as conversions or time on page.

Ad Fraud – is a type of bogus activity in which the fraudster fools advertisers into paying for fake traffic and fake leads. Also, when someone wants to get illegitimate, unearned revenue for ad placement.

Advertiser – is a company that offers and sells products or services. Advertisers pay affiliates for new customers and new leads they bring to them.

Affiliate – is a salesperson or publisher who promotes an offer for an advertiser and gets a commission in return.

Affiliate Marketing – is an advertising model in which a company has an agreement with an affiliate to drive customers to the company’s products or services. In return, the affiliate earns a payout for referring actions.

Affiliate Network – serves as an intermediary between affiliates and advertisers. It offers advertisers access to affiliates participating in the affiliate network. For affiliates, it allows them to find and take part in affiliate programs easily. Affiliate networks make their profit on the difference between revenue from advertisers and payout to affiliates.

Affiliate Program (or Referral Program) – is when an advertiser pays affiliate commissions based on specific actions performed by a customer. The commission model may include payout for subscription to a service or sales generated from affiliate’s site or through affiliate’s promotional efforts.

Affiliate Software – is a software which enables advertisers to create and manage an affiliate program. This solution also provides tracking and reporting of commission-triggering actions and improves existing affiliate programs.

Application Programming Interface (API) – is a set of routines, protocols and tools that specifies how software components should communicate. To put it even simpler, API is a tool that allows two different applications to interact with each other. A good API makes it easier to develop a new program by providing the required building blocks.

Attribution – is a process of identifying what actions and in what particular order contribute the most to engage conversions.

Bid – is a maximum amount of money that an advertiser is willing to pay for each click on an ad in paid search marketing. Bid payments can vary widely depending on the keyword’s search rank and popularity among other advertisers.

Click (or Click-Through) – is a transition from click on an online advertisement to the destination of that ad.

Click-Through Rate (CTR) – is an average number of Click-Throughs an advertisement receives per hundred possible views. For example, five clicks divided by 100 ad displays is 5 percent Click-Through Rate.

Commission Rate (or Compensation Rate) – is a percentage of income an advertiser pays an affiliate for making each click-through, lead or sale.

Conversion Rate – is an average number of Click-Throughs that converted into the desired action. Calculated through dividing the total number of converted clicks by the entire amount of clicks on the advertisement. For example, if five in every hundred landing page visitors leave a request, then the conversion rate is 5 percent.

Cookie – is a small file that contains information about site visitor preferences. It’s created by the web browser and stored on a user’s computer. In performance marketing, cookies keep track of what a customer buying and record which affiliate was generating the sale or subscription.

Cost Per Acquisition (CPA) – is a marketing metric for each time sales and registrations take place. CPA is a vital measurement of marketing success which calculates through dividing total campaign cost by the number of conversions.

Creative – is an advertisement with the referral link used by an affiliate to promote a product or service. Creatives appear in forms of a text ad, video or ad banner. The choice of the right ad type depends on the preferred channel, target audience and message.

Customer Acquisition Cost (CAC) – is an important business metric associated with convincing a new customer to purchase a product or service. CAC helps a company decide the worth of a particular customer and how this affects the return on investment of acquisition.

Email Marketing – is a promotion of products or services via email. Marketing emails usually send to the list of leads or a current customer database. If advertising sends to an email database purchased from a third-party, it’s called spam or spamming.

Impression – is a single instance of an online advertisement being appeared on a web page and potentially viewed by a customer. This marketing metric is an estimate of the number of people a particular ad is reaching.

Key Performance Indicators (KPIs) – are marketing metrics used to track the strategic performance of online campaigns. KPIs are provide companies and advertisers with information about the efficiency with which they achieve their marketing objectives.

Keyword – is a word that people enter into a search engine. Keywords form phrases or so-called “search queries” which people use to find a particular web page.

Lead Generation – is a process of generating submitted contacts of interested customers indicated as leads. The most common method for generating leads is an online form submission.

Lifetime Customer Value (LCV or CLV) – is a prediction of the total net profit a company gets over an entire relationship with a single customer. CLV changes organizations focus from quarterly profits to long-term prolific relationships with the customer.

Mobile Marketing – is a process of using advertisements optimized for mobile devices, whether it’s an app or mobile browser, to reach users.

Paid Search (Pay-per-click or PPC) – is a type of marketing when advertisement listed in a sponsored section of a search engine. Pay-per-click or PPC is essentially the most widespread Paid Search model, but also often refers to the marketing term in general.

Performance Marketing – is a type of marketing where advertisers or affiliate networks paying affiliates only for the desired results: a completed sale, lead, download or other targeted action. The main focus of performance marketers is on ROI improvement.

Referral Link (or Affiliate Link) – is a particular URL address affiliate use to send customers to a web page called landing page which contains advertiser’s offer. Referral Link designed to track a customer or visitor that came to the advertiser’s landing page.

Return on Investment (ROI) – is a ratio of marketing spend net to an amount of money invested in advertisement campaign. The purpose of ROI is to measure the degree to which spending on marketing contributes to profits.

Revenue Share (or Revshare) – is a longterm payment model where you get paid a certain percentage of the profits made by your client. For example, your Revshare percentage is 10%. So let’s say, if your client gains 100,000 over a few years, you will earn 10,000 from that profit.

Search Engine Optimization (SEO) – is a process of optimizing a website so that it does well in the organic, not paid, listings of search engines. The process usually involves choosing targeted and related keywords and phrases that will drive traffic to the site.

Software as a Service (SaaS) – is a service distribution model in which a provider hosts software and makes it available to clients via the internet. In the Performance Marketing industry, it refers to an affiliate program tracking and optimizing solution.
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Edgar is a Content Marketer obsessed with analytics & performance statistics. Edgar loves leveling up professionally and search for new effective ways to deliver quality content. After that, he’ll take every opportunity to take on exciting adventures with his GF.

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