A collection of common advertising knowledge and terminology

In the previous action guide for Amazon sellers to switch to independent websites, we have said that traffic generation is an important part of independent websites, and advertising is a major form of traffic generation.

For those who have just started advertising, are you confused by the complicated process and have to look up the definitions of some professional terms one by one?

Don’t worry, today we will start from several aspects of advertising and systematically sort out the commonly used knowledge and corresponding terms in advertising. The total word count is over 4000, share and collect it and read it later!

Table of contents

Part 1: Advertising Tiers

Part 2: Display Rules

Part 3: User Positioning

Part 4: Event Tracking

Part 5: Cost accounting

1 Advertising level

The two most commonly used platforms for cross-border e-commerce advertising are Google Ads and Facebook Business Manager. Both platforms divide advertising into three levels: campaigns, ad groups, and ads. Different levels require different advertising information. The overall idea is from big to small, from abstract goals to specific materials. Take Google Ads as an example:

Google Ads interface screenshot

1. Campaign

2. This level determines the advertising goal (can be untargeted) and selects the type of advertising to be delivered. Common ad types include search ads, shopping ads, display ads, and more.

3. Ad group/Ad sets

4. This level determines specific audience characteristics, ad placement, keywords, etc. This level needs to solve specific strategic issues, that is, under what conditions do you want the ad to be triggered, where do you want it to be displayed, and to whom do you want it to be displayed.

5. Ads

6. This level determines more specific advertising materials (ad titles, descriptions, pictures, etc.) and decides the content and form of the final ad display.

Google Ads advertising hierarchy diagram

2 Display Rules

Note: The display rules for different platforms or different ad types on the same platform may vary. The following summarizes the relatively commonly used terms, which mainly do not appear in all ad platforms or types:

1. Keyword

2. It is hoped that advertisements can be presented to users when they enter certain words into the search engine. Note that when setting a keyword, words with the same meaning will also be counted. It can be understood as a secret code for advertisements and users to meet. When someone searches for this secret code (or a secret code with the same meaning), the advertisement will appear in front of him as much as possible.

3. Keyword match type – Keyword match type

4. Keyword matching type will affect the scope and accuracy of keyword-triggered ads. It is generally divided into three types: broad match, phrase match and exact match.

5. As the name suggests, broad match can be understood as fuzzy match, and your ad will be displayed when users search for related words; phrase match means that your ad will be displayed if it contains your keyword; exact match means that it can only be the keyword or a word with the same meaning.

6. Negative keywords

7. That is, you want the advertisement not to be displayed when the user enters certain words. Negative keywords work in the same way as keywords but have the opposite effect. Their main purpose is to exclude similar but irrelevant keywords (such as the Xiaomi brand and the keyword "Xiaomi porridge") to avoid useless investment.

8. CTR (click-through rate)

9. The percentage of users who click on the ad out of the users who see the ad. Generally, high-quality ads will get higher click-through rates; high clicks will increase the ad quality score; and ads with higher quality scores will be ranked higher and have lower single-click charges, forming a virtuous circle.

10. Quality score

11. Quality score: It is an indicator calculated based on the relevance and practicality of the advertisement and the user's search keywords. It can be understood as an evaluation of the overall quality of the advertisement from the user's perspective.

12. Quality score is very important because the ranking is judged comprehensively based on the bid and quality score. That is, the higher the quality score, the lower the cost per click, and the higher the ad ranking will be.

13. Ad quality is strongly related to three aspects: relevance, landing page experience, and expected click-through rate. The above content can be represented by a graph:

3 User Positioning

User targeting refers to which groups of people you want your ads to reach. Common terms for this are as follows:

1. Target Audience

2. People who are valuable to you and have demand for your products or services.

3. CA (Custom Audience)

4. Custom audiences usually allow the platform to give you a high degree of customization, allowing you to choose an audience group that suits your business. Generally speaking, these are groups that have a certain interest in your products or business or have had some interactions with you. For example, in Facebook, you can select people who have interacted with your various media, or you can import custom user information to reach your audience precisely.

5. Lookalike Audience

6. Simply put, using the existing custom audience as the data source and matching basis, Facebook will use algorithms to select a group of new audiences from a large number of users whose behavioral characteristics are similar to those of the original audience groups. These new audiences matched by the Facebook algorithm are called similar audiences.

7. Remarketing Ads

8. Remarketing advertising is not a specific form of advertising on a specific platform, but a marketing method, or an advertising strategy. That is, set the people who visit the independent site but do not convert into a separate audience list. After creating the ad, target this group of people, show them the ad again, and remarket to them. The specific process is as follows:

9. CBO (Campaign Budget Optimization)- Campaign budget optimization.

10. CBO usually refers to the automatic optimization of ad campaign budget function of Facebook platform. It can help your ad campaign achieve better delivery effect under the same budget. The working principle is that Facebook will automatically and continuously search for the best-performing ads in each ad group and allocate more budget to these better-performing ads.

4 Event Tracking

After the advertisement is placed, the independent website will gradually begin to have users visiting it. You need to use the data monitored by the platform to analyze the behavior of users when visiting the independent website in order to better optimize the advertisement and the independent website. The relevant terms are as follows:

1. Pixel

2. Pixel originally means "pixel", which is actually a few lines of detection code that can help record user behavior data visiting the independent site, such as search, add to cart, checkout and other events. Its main function is to monitor key user behaviors to optimize the accuracy and effectiveness of advertising.

3. CAPI-Conversion API

4. It can be understood as an enhanced version of Pixel. Its principle is that the data tracking method no longer relies on browser cookies, but directly obtains the corresponding data from the independent station server. The advantages are that it is more stable, more accurate, and can record more comprehensive behavioral data. For more information, please refer to the previous tweets - Facebook Conversion API, a new tool to improve Facebook advertising ROI

5. Impressions

6. This refers to the number of times the ad is displayed. It is worth noting that being displayed does not necessarily mean that users will see it. For example, ads at the end of some long pages may jump away before users reach the bottom, but they will still be counted as impressions.

7. Reach-number of people covered

8. The key is how many audiences the advertisement reaches. Even if it is shown 1,000 times, if it is viewed by the same person, then Reach is 1.

9. Clicks

10. The number of times users click on the ad.

11. Traffic

12. Generally refers to the number of visits to an independent site, that is, how many times the independent site has been visited.

13. Landing Page

14. That is, when a user clicks on your ad, he or she enters the first page of the independent website. This page has a great impact on conversions. A bad experience will cause a high bounce rate, which in turn leads to low conversions and unclear advertising revenue.

15. Sessions-session/access

16. It can be understood as a single behavior or a visit. The start time of a session is usually the moment the user enters the session, and the end time of a session is usually defined as a fixed time (such as 30 minutes). If the user returns after this time, it is considered a new session.

17. Bounce

18. A bounce is defined as browsing only one page of the independent site without sending a new page request to the independent site. This type of visit is recorded as a bounce, and the number of bounces divided by the total number of visits is the bounce rate.

19. Conversion

20. A more general definition is that the user has completed a specific action, which can be email subscription, new user registration, or purchase of goods. Generally speaking, conversion in the e-commerce industry refers to users successfully placing orders.

5 Cost accounting

Finally, after each stage of advertising is completed, we need to summarize the data of this stage, and then organize this data into common indicators to help us judge the effectiveness of advertising, analyze our costs and benefits, and where there is room for subsequent optimization. The commonly used indicator terms are as follows:

1. CPM (Cost Per Mille) – Cost per thousand impressions:

2. The fee that the advertiser needs to pay for every 1,000 times the ad is displayed. Please note that the display here does not necessarily mean that the user will see it. The ad space at the end of some pages will be counted even if the user does not see it. Similarly, the definition shown above is not necessarily visible to users

3. CPC (Cost Per Click) – Cost per click

4. The fee that the advertiser needs to pay every time a user clicks on the ad. This fee is strongly related to the popularity of the keyword, and the price ranges from tens of cents to tens of dollars.

5. CPA (Cost Per Action)

6. The advertiser sets a conversion goal, such as a user placing an order, and charges for advertising based on the number of times this goal is achieved. This method has a higher per-time cost and is generally used for high-priced products.

7. Revenue

8. The total value generated by advertising (in US dollars), which can be understood as the GMV brought by advertising.

9. Profit

10. The total value (in U.S. dollars) generated by the advertising after deducting expenses (such as advertising costs and merchandise costs).

11. ROAS (Return on Ad Spend) – Return on advertising expenditure:

12. The calculation formula is: total revenue (Revenue) brought by advertising / advertising expenditure (Cost) x 100%, which is often used to measure how much revenue each set of advertising expenditure can bring. Generally speaking, ROAS must be above 2 to be profitable, but different industries and products require specific analysis and there is no uniform standard.

13. AOV (Average Order Value)

14. Average order value is calculated by dividing total revenue by number of orders.

15. LTV/CLV (Customer Lifetime Value)

16. It refers to the total economic benefits a company obtains from all user interactions, that is, how much money you have earned from him. The calculation method in the e-commerce industry is generally the average number of purchases by a customer x the profit generated by each purchase. It can help you determine how much it is worth spending to acquire a customer.

I wonder if after this classification and organization, you have a clearer understanding of the advertising process and some common terms? In addition to advertising, other modules of operating an independent website, such as logistics, payment, marketing, etc., also have many rules and terms that confuse novices.

Author: Shoplazza

Source: Shoplazza