Get through your next meeting with the marketing team with this quick reference to common marketing acronyms.
Annually-recurring revenue. In subscription businesses, ARR is a measure of the revenue that is expected to be captured on an annual basis over the lifetime of the customer. It’s monthly equivalent is MRR or monthly-recurring revenue.
Business-to-business. A term used to describe companies that sell products or services to other companies, as opposed to directly to individual consumers (see B2C).
Business-to-consumer. A term used to describe companies that sell products or services to individual consumers. This can occur via direct sales or through marketplaces.
Customer acquisition cost. A measurement of the total cost required to acquire a new customer. This can include money spent on advertising, fees paid to a marketplace, or deferred revenue from sales and promotions. In some cases, CAC includes the costs associated with the marketing and sales personnel involved in customer acquisition.
Cost per acquisition. An advertising performance metric which measures the total cost of an advertising campaign divided by the number of new customers or leads it acquired. Advertisers can determine whether an advertising campaign is economical by comparing the CPA to the average cost to acquire a customer (CAC) and lifetime value (LTV). Campaigns with CPAs that exceed either average CAC or LTV should be reevaluated.
Cost per click. An advertising performance metric which measures the total cost of an advertising campaign divided by the number of clicks it generated. CPC can be used to compare how compelling content was between two or more ads.
Cost per 1000 impressions. An advertising performance metric which measures the total cost of an advertising campaign divided by the number of times the ad was viewed (further divided by 1,000). This metric can help advertisers optimize the delivery of their ads to the target audience by ensuring they are not paying too much to advertise to their audience.
Call to action. A prompt that encourages someone to take some pre-determined action. CTAs are often imperative phrases that are emphasized through visual design. For example, "Add to cart" or "Sign up" may be styled as buttons that attract a user's attention and link to the next step in a conversion funnel.
Go-to-market. An umbrella term used to describe the combination of tactics a company uses to monetize their products or services.
Ideal customer profile. The combination of traits associated with a person or company that is most likely to buy and generate a high LTV. ICP is usually expressed in terms of both firmographics (company traits) and basic demographics (personal traits) for B2B companies. For example, "an engineering manager working at a Fortune 500 financial services company." By contrast, B2C companies may use significantly more precise demographic traits. For example, "expectant mothers earning between $100K and $250K living in major urban areas."
Lifetime value. A financial representation of the total revenue a single customer generates over the entire period from when they first become a customer to when they end their relationship with the business. LTV is frequently compared to CAC as a simple ratio that represents the efficiency with which a company acquires and retains customers. Businesses should aim for an average LTV that is several times greater than their average CAC.
Marketing-qualified lead. A designation for leads (prospective customers) that have met certain criteria to be passed to a sales team. Most often used in B2B, MQLs typically indicate that a lead has a profile that matches a company's ICP and has taken some qualifying action like downloading content, requesting a demo, etc. For B2B companies, measuring MQLs (as opposed to all leads) helps ensure marketing programs are focused on the right people and are driving the right behaviours to move leads down the funnel.
Product-led growth. A go-to-market model that emphasizes the self-guided use of a product as a means to acquire, convert, and grow customers (as opposed to models that rely more heavily on marketing or sales to move prospective customers "down the funnel".
Pay-per-click. An online advertising method in which the advertiser is charged when a person clicks on their ad. By contrast, most traditional advertising (and some online advertising) is billed per “impression” or when the ad is seen. PPC is the method used by Google and other search engines for paid search engine marketing (SEM) and has become synonymous with that type of advertising.
Search engine optimization. The process of intentionally modifying web content to increase its visibility on search platforms like Google, Bing, and YouTube.
Search engine marketing. An online advertising method where advertisers bid against each other to show their ads to web users searching for specific topics or keywords. Google Ads is by far the largest SEM provider, generating $134 billion in revenue from these transactions in 2019.
Return on ad spend.
Return on investment. The ratio between the net outcome of an initiative divided by the capital invested. Expressed in percentage-terms, ROI is often used to describe the efficacy of a marketing campaign or program. For example, an advertising campaign costing $1,000 that resulted in $10,000 in new revenue has an ROI of 9X or 900%.