While being potentially very profitable, Facebook advertising is also hard to master. One of the things that makes Facebook advertising difficult to learn is the large number of advertising and marketing concepts that you need to understand in order to effectively run Facebook ads.
Online learning materials such as blog posts, white papers, and ebooks are filled with technical advertising jargon and can be hard to understand. Almost all of the important advertising metrics and terms also have their own acronyms which you need to remember in order to be able to comprehend various learning materials.
Advertising Terms You Need to Know
We’ve prepared a list of the 33 most important advertising terms that you need to master in order to run profitable Facebook advertising campaigns. They are listed below in alphabetical order:
Add To Cart (ATC) – the number of add-to-cart events tracked by the Facebook Pixel that can be attributed to your ads.
Average Order Value (AOV) – a metric that measures the average dollar value of each order or sale made on your website. It’s calculated by dividing the total revenue with the total number of orders. AOV is one of the most important metrics you need to be keeping an eye on in order to determine your pricing and advertising strategy.
Bottom of Funnel (BOFU) – last stage of the sales process. During this stage, the customer is already interested in purchasing from your company but might need some questions answered before making the final decision.
Campaign Budget Optimization (CBO) – an option that allows Facebook to automatically optimize the distribution of your campaign’s budget across all the ad sets in your campaign. It’s designed to help you get the best possible results with your available budget.
Click-Through Rate (CTR) – the percentage of people who saw your ad and then clicked on it. Calculated by dividing the total number of clicks with the total number of impressions. It can help you determine how effective an ad is in driving traffic to your website.
Conversion rate (CVR) – the percentage of ad clicks that converted to a sale. It’s calculated by dividing the total number of sales (conversions) with a total number of clicks.
Conversion rate optimization (CRO) – the process of optimizing your ads to provide more conversions.
Cost Per Click (CPC) – the average cost of one click on your Facebook ad. It’s also one of the most commonly used metrics for determining the efficiency of an ad campaign.
Cost Per Engagement (CPE) – the average cost of a user engaging with your ad. It’ is calculated by dividing total ad spend with the total number of engagements.
Cost Per Thousand Impressions (CPM) – the average cost of showing your ad to a thousand people. CPM is used to determine the cost-effectiveness of your campaign.
Cost per action (CPA) – the average cost of a visitor performing an action on your ad. It’s calculated by dividing your ad spend with the total number of actions performed.
Cost per purchase (CPP) – the average cost of a purchase driven through your ads. It’s calculated by dividing the total ad spend with the total number of purchases.
Cross-Sell (XS) – a sales technique used to encourage a customer to purchase a product that is related or complementary to the product they’ve already added to their cart. Facebook allows you to set up cross-sell campaigns using dynamic ads.
Custom Audience (CA) – a type of audience you can create for your Facebook advertising campaigns using customer data such as email addresses or phone numbers. To create a Custom Audience, you will need to upload your customer list to Facebook.
Customer Lifetime Value (CLTV / LTV) – a metric that provides a prediction of the total lifetime profit that can be attributed to a specific customer. CLTV is crucial in helping you determine how much you can afford to spend on acquiring a customer.
Down-sell (DS) – a sales technique that involves offering the customer a cheaper product when he or she wants to give up on purchasing the product they were initially interested in. The goal of down-selling is to make sure to acquire the customer, even if it means making less profit on that particular sale.
Dynamic Product Ads (DPA) – a type of Facebook ads that automatically promotes your products to people who have visited your website or app. You will need to upload your product catalog to Facebook in order to be able to use dynamic ads.
Initiate Checkout (IC) – the number of Initiate Checkout events tracked by the Facebook Pixel that can be attributed to your ads.
Landing Page (LP) – a dedicated page on your website where people who click on your ads are sent.
Landing Page Views (LPV) – the number of times your landing page was viewed by someone who clicked on your ad.
Lookalike Audience (LAL / LAA / LLA) – a type of audience you can create for your Facebook advertising campaigns by using an existing Custom Audience. A Lookalike Audience consists of people who are similar to the people in your Custom Audience.
Middle of Funnel (MOFU) – the middle stage of the sales process. Here the customer is presented with your product or service as a solution to their problem.
One-click upsell (OCU) – a type of upselling offer where the customer is offered to add additional items to their cart with a single click.
One-time offer (OTO) – a type of upselling offer where the customer is offered to add additional items to their cart, but only for a limited amount of time.
Page Post Engagement (PPE) – a campaign objective that, when selected, tells Facebook to try to find people in your audience who are the most likely to engage with your posts.
Retargeting (RT) – the practice of advertising products or content to people who have already interacted with your content in some way. To be able to run retargeting campaigns on Facebook, you will need to place the Facebook Pixel on your website.
Return on Investment (ROI) – the overall return on the amount of money, time, and resources you invest in Facebook advertising.
Return on ad spend (ROAS) – one of the most important advertising metrics. It’s used to measure the performance of an advertising campaign. To calculate ROAS, divide the total revenue generated by the advertising campaign with the amount of money spent on the campaign.
Top of Funnel (TOFU) – the first stage of the sales process. This stage is usually used to educate the customer on a problem her or she is having.
Up-sell (US) – a sales technique used to encourage a customer to purchase a more expensive product than the one they are considering. Facebook allows you to set up upsell campaigns using dynamic ads.
Video Views (VV) – the number of times your Facebook video ad was viewed for three seconds or more.
View Content (VC) – a type of Facebook advertising campaign optimization which aims to optimize your ads for receiving as much traffic as possible to a specific landing page.
Website Conversion (WC) – a campaign objective that, when selected, tells Facebook to try to find people in your audience who are the most likely to convert. You will need to install the Facebook Pixel on your website in order to use Website Conversions as your campaign objective.
There you have it, the 33 advertising terms you need to know in order to run profitable Facebook advertising campaigns. Whether it’s ATC, AOV or just VV, understanding these terms can make you quick on your feet and put you ahead of the game.
HUNGRY FOR MORE?
CPM on Facebook is increasing dramatically. Facebook becomes more expensive.
So the main question is:
How do we survive the dramatic increase in CPMs?
This article aims to answer those questions.