What does CPC, CPA, CTR or CPI really mean? Digital Marketing Acronyms

abcMost of digital marketing beginners believe they totally understand what CPC, CPA, CTR and other terms mean, but after doing couple of campaigns and after seeing that your results on Google Analytics (or other measurement tools) don’t match with your expectations is when you understand how important is to understand these basics at 100%

Lets review some of the most used acronyms and their importance:

SEM – SEO – SERP – PPC. You may struggle to find 2 webs than agree on the full meaning of these terms. For this post I place myself along with Wikipedia, as these results have been deeply discussed among its publishing community

  • SEM – Search Engine Marketing: includes all the on-line marketing techniques that increase we traffic: SEO, PPC, etc. Most of times though, this term is used to refer PPC activities
  • SERP –  Search Engine Results Pages:  list of websites displayed by a search engine after running a queries.
  • SEO – Search Engine Optimization: SEO is “the quantity and quality of traffic earned from Search Engines”, or in other words, the set of activities needed to increase your rank in Search Engines results. SEO Moz, probably the best SEO portal nowadays, can be a good kick-off point for this area
  • PPC – Pay per click: internet ads that direct traffic to a specific website read more. Banners, Facebook ads and other Social Media ads should be included, however a big part of the web community will refer PPC to Search Engines Paid ads (Google Adwords for example) only like WordStream. Some blogs and communities even compare both approaches: Facebook vs PPC ads
  1. CPI – Cost per Impression. How much do I have to pay to make a digital (or offline) impression of my brand. Directly liked to the CPM below
  2. Cost per Reach. How much I have to pay to reach a user. Reach and Impressions  are usually confused as Reach makes reference to the number of unique users I score. The absolute number of a campaign or banner impressions number will always be higher that its reach as I many of my users may receive more than 1 impression
  3. CPC – Cost per click. Key term in digital marketing. The CPC is a dangerous term. Measurement tools like analytics usually measure “sessions”, not clicks, and these numbers are hardly ever the same which may make clients suspicious about what he buys (clicks) and what he gets (sessions).
  4. CPA – cost per acquisition. Acquisition means a goal, depending of the industry, it can be a user-registration, a purchase, an app download or a Video view. If your campaign has a clear goal, you need to monitor both CPC and CPA and compare it for each channel of your mix
    • CPA’s can have different names like CPL – cost per lead, CPI – Cost per install or CPV – cost per view, depending on you ultimate business goals.
  5. CR – conversion rate. Number of units or % needed of the previous level of the marketing funnel to get a conversion. Example: In terms of Leads generation, the CR can be shown in two ways:
    • Number of clicks  needed to get a lead (conversion)
    • The % of clicks that become leads
  6. CTR – Click through rate. It’s usually a % and it measures the amount of people that see your banner and click on it. Web Banners (like GDN, Admicro or other banner networks) usually offer low CTR’s (0.05%  to 0.1%). Good banners on Facebook or Instagram on the other hand can achieve higher numbers (1.5% to 5%). Anything over 3% is considered as a very good number.
    • CTR values depend not only on the platform we place the banner (Facebook, GDN, On-line Newspapers) but on the quality of banners.
    • To refine CTR marketers need to apply A/B testing. CTR improvements can bring a huge performance difference. If you manage to pass from CTR 0.5% to 2% it means you have 4 times more users for example, a huge difference in PPC plans where you are paying per booking time instead of clicks rate
  7.  CPM – cost per thousand impressions.

 

Marketing Principles

In this section you will find some marketing basics that every marketing plan needs to consider.

Most of the Digital Marketing blogs are extremely oriented in boosting reach, clicks and other user-interactions (so we are) but they forget the principles of why this plan needs to be executed and how to align that performance with the company business goals in short, mid and long term.

Many successful entrepeneurs and corporation think that marketing is not necessary to achieve success, and we do believe that’s good in part: if your product is amazing and there is no competition, you will always succeed. Nevertheless,  in digitalmarketigV&V, we believe that a well executed marketing plan congruent with the environment and linked properly with the business goals and customer needs of a company, brings this corporation closer to the position in the market the board wants/needs to achieve.

In order words, good marketing saves your time. You can succeed without marketing, but you will need much more time

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Instagram Vs Facebook – Reach performance

During the last weeks, some working mates and friends keep asking me about Instagram. Some of them have already opened a profile for their business and post randomly, however they still see no big advantage compared to Facebook, where they spend most of their Digital Marketing time
This post tries to answer all these request and to introduce the real power of Instagram (Reach) and why we should not choose between Facebook or Instagram, but go for both of them

Performance oriented plans. Taget: Sales

If we are looking for Direct Sales, Web Registrations or in general for a performance oriented plan,  Facebook is still clearly ahead Instagram. Comparable to Google Ads, Facebook Ads is a mature traffic generation tool with strong customization tools and a big variety of options (click to website, conversion to website, post-engagement), however Facebook is getting too big, and they are cutting their Reach capacity.

Reach Engagement Oriented plans. Target: Branding 

However, not everything is Sales. Brands need to be permanently in touch with their audiences: introducing new trends, sending messages along with their vision & mission and engaging target users with content.  Here is where Instagram has clearly passed Facebook, specially after Facebook modified its algorithm to cut organic reach several times during 2014 and force brands to pay to keep their boost rates, reaching a point of “organic death” according to many marketers

starbucksLet’s have a look to some examples of big brands to understand the difference. We can see how Facebook profiles with much larger communities have very low reach & engagement compared to their Instagram profiles with a lower amount of followers

Let’s say Starbucks, if we compared the engagement (amount of likes, shares and comments) of the last 3 Facebook post (Starbucks fan page has 35+million fans) with the latest 3 Instagram posts (Starbucks Instagram counts with 5.7 million followers) we see:

Facebook Engagement: 116,009  people

Instagram: 551,193 people

Starbucks Facebook Starbucks Instagram

Which means, that Instagram provided 5 times more engagement with a 7 times lower community. 

If we compared the last couple post, the difference is even greater with almost an almost 25 times largest engagement.

Facebook post – New store in Panama (12 September, 21hr after post): 6,876

Instagram Post – New store in Panama (12 September, 13hr after post): 179,379.

This happens not only to Starbucks, if you compare other big brands in different industries like Zara Facebook Zara VS Istagram Zara or even in Sports with the last 3 post of Man. United Facebook (243,040) against its Instagram pal (473,363 engaged people) more than double with 11 times less followers (6 million Instagram against 65 million in Facebook)

Why Instagram is not Facebook yet?

So, why people are not using Instagram instead of Facebook. There’re several reasons of why we have such a massive differences:

  1. Facebook ads as a product, is far more developed and mature than Instagram:
    1. In terms of markets: (not present at dozens of big markets), allowing marketers to drive traffic in a more effective way
    2. In terms of revenues: Facebook and Instagram, as marketing solutions, are in different production stages. We could say that Facebook is present with 7.8 billion USD in revenues during the first 6 months of 2015 only, compared to the 0.30 billion USD Instagram target (26 times higher), and Instagram is the future with a revenues target of 2.81 billion USD in 2 years .
    3. Expansion difficulties: due to a worse ads product and because of being a mobile platform, to grow in Instagram is always slower than Facebook.
    4. In terms of users: Facebook number of users is 5 times larger than Instagram
Social Media Users comparison 2015
Social Media Users comparison 2015

Conclusion

As an experienced digital marketing professional, I do recommend to keep both networks:

  1. Facebook: for performance oriented plans using their Facebook Ads
  2. Instagram: for brand oriented plans (and thinking in another tool to expand performance oriented plans in the future)

What does Marketing mean?

Whenever I have the chance to meet a marketer (specially senior level ones), one of the first questions I like to ask them is:

” What does marketing really mean to you?”

It may be a simple question, but it makes sense as most of marketers can’t answer or don’t really have it in mind. In some how is like if you ask to a football player “what is football to you?” or to an artist “What does art mean?”

marketingcloud1

According to Philip Kotler, considered the father of Marketing,  is “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit“. However, I do like much more a simple definition he states on is his personal site: “Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential”, in other words, Marketing satisfies customer needs.

Another great definition he does on his personal site, is the fact that sometimes companies don’t need marketing departments. So the question is, “Do we need Marketing?”

marketing-necessary

Sometimes, my master students tell me: “My company does not need marketing, our product is good enough to promote it”. In this point, my student is right and wrong:

  1. Companies don’t need marketing: Wrong. Every company need to develop marketing activities: understand the market place and your competitors, analyze customer satisfaction and develop short-mid term plans are marketing activities that every company should do
  2. Companies may not need marketing department. Right. According to Porter,  it can be positive to have a marketing department “because it unites a group of trained people who focus on the marketing task” however, he is totally when he states that “It’s also bad because marketing activities should not be carried out in a single department but they should be manifest in all the activities of the organization. 

In other words, companies may not need marketing department, but they need to plan and perform marketing activities, which means that at least one person (marketing manager, CEO or Sales Director) needs to understand “What marketing does mean?” and to design and implement a marketing plan along with the financial and strategic plan of the company