The first thing that clients often ask when we start setting up a search marketing campaign is, "What do all these terms and acronyms mean?". Here is an overview of the basic search marketing terms you need to know when running campaigns with Google AdWords, Yahoo Search Marketing (YSM), Microsoft AdCenter, and other search marketing networks.
Ad position: The the location of an ad on the search results page. Position 1 is the top of the first page. On Google, if your ad is in position 1-8, it will almost certainly appear on the first page of search results, though positions 1-11 may appear on the first page of search results depending on the configuration of advertisements.
Bid price: The maximum amount of money an advertiser is willing to pay for a click from a given keyword. Advertisers generally pay less than the maximum bid price set in the Google, Yahoo, or Microsoft ad management systems.
Call to action: Direction within an ad or a web page for the reader to take an action.
Conversion: A desirable action taken by a web site visitor. Conversions can include joining a mailing list, buying a product, calling a phone number, visiting a web page, or downloading a file.
CPC (Cost per click): The amount an advertiser is charged for a single click. Different keywords cost different amounts, depending on competition.
CTR ( Click-through rate): The number of clicks an ad receives divided by the number of impressions. The higher the CTR, the more effective ad management systems (AdWords, YSM, AdCenter) generally consider the ad. A high click-through rate doesn't necessarily mean your ad is effectively meeting your conversion goals, but it certainly means that Google, Yahoo, or Microsoft are making more money from your ad. For this reason, ad management systems generally rank ads with a high CTR above other ads.
Impression: The display of an ad on a web page.
Landing page: The first web page shown after an ad is clicked. The page is constructed to appeal to the same desire as the ad.
PPC (pay per clck): The advertising model that charges advertisers only when their specific ads are clicked.
Split test: Test that divides online traffic randomly between two or more creative approaches and measures which one generates more conversions.
Traffic: The number of visitors to your website.
Visitor value: How much money, on average, a single visitor to your web site is worth. Determining the visitor value will help you set your bid price, so that you can be sure that you are not losing money on your PPC campaign.