Marketing is deeply rooted in common sense. But if you’ve ever found yourself treading terminology in an alphabet soup of marketing lingo, you might be inclined to believe otherwise. What’s more, the rise of digital marketing is creating so many new terms so quickly that even experts can feel like they’re playing catch-up.
The good news: Professionals use marketing terminology because it has the ability to turn mouthfuls of words into bite-sized phrases.
With that positive thought in mind, we’ve decoded some of the most confusing marketing terms. Consider this post your marketing cheat-sheet.
This acronym stands for cost per thousand impressions (M is the Roman numeral for 1,000). It measures the cost of reaching 1,000 readers, viewers, visitors or listeners. CPM is most often used as a straightforward way to compare the costs of advertising in various media.
GRP & TRP
Gross Rating Points (GRP) and Target Audience Rating Points (TRP) are methods for measuring the impact of advertising. GRP is the percentage of audience reached multiplied by the number of exposures to the advertising. So, if you reach 50% of a medium’s potential audience with three ad exposures, your GRP is 150. TRP is the percentage of the target audience for your product or service that your ads reached multiplied by number of exposures to your advertising. If you reach 70% of your target audience with four exposures, your TRP is 280.
What makes your business unique? Why should a customer buy from you instead of your competition? The answers to those questions are what your key differentiators are. Your key differentiators should be accurate, demonstrable, and defendable. For instance, a music store could differentiate itself by offering the largest selection of name brand pianos in town. This could be demonstrated and defended by comparing the number of top brands stocked and number of SKUs per brand vs. what local competitors offer.
This acronym stands for key performance indicator. KPIs measure the progress and success of your efforts. They can be as simple as the number of visitors to a website or as complex as a sophisticated customer-acquisition-cost formula. Comparing your KPIs against industry data allows you to determine the efficiency of your approach.
This is a percentage measurement of how big a “slice of the pie” a business has, expressed as sales revenue or units sold. Unit Market Share divides the number of units a business sells by the entire number of units all businesses sell within a specific market and time period. So, a tire retailer who sells 10,000 tires annually in a city where a total of 100,000 new tires are sold a year has a 10% unit market share. If that same retailer’s sales account for $500,000 of new tire sales revenue out of a market total of $6,000,000, his business has an 8.3% revenue market share.
This is the established the pattern in which your ads will appear as part of a media schedule. An effective media schedule will often alternate periods when your advertising appears (flights) with periods during which it does not (known as a hiatuses). Using flights and hiatuses allows you to reach your target audience more cost effectively.
Pay per click (PPC) is a form of online advertising. With PPC, a business places advertising on a website. But instead of paying for the ads appearing on the site, the advertiser pays an agreed amount each time a visitor to the site clicks on one of the ads. Clicking will typically activate an interactive link, form, or feature. Managed PPC and bid-rate PPC models vary from a strict PPC approach, using search keywords and other targeting techniques to control costs and maximize results.
ROI & MROI
Return on investment (ROI) is used to measure the profitability of your tactics and to compare the profitability of one approach against another. The most common formula for determining ROI is: (Results – Cost) ÷ (Cost) x 100 = % ROI. Say your business generates $80,000 in income by spending $20,000. What happens when you plug those numbers into the ROI formula? (80,000 –20,000) ÷ (20,000) x 100 = 300%. Your $20,000 investment created a $60,000 payback, which equals 300% ROI, or $3 returned for every $1 you spent.
Marketing return on investment (MROI) applies the ROI formula to your marketing efforts so you can compare the effectiveness of different approaches. Say you spend $25,000 on online advertising and increase sales by $110,000. (110,000 – 25,000) ÷ (25,000) *100 = 340% MROI, or $3.40 returned for every $1 spent on online advertising.
Search engine marketing (SEM) promotes websites by raising their profile on the search engine results pages (SERPS) of popular search engines such as Google, Bing, and Yahoo! In addition to search engine optimization (SEO) techniques (see below), SEM often involves the use of paid online advertising.
Search engine optimization (SEO) covers a variety of techniques that can be used to make sure your website ranks high in online search results on popular search engines. This makes it more likely that consumers who are looking for the products and services you offer will learn about your business before they discover the competition. Adjustments to the content and architecture of your website are two common SEO techniques.
Your value proposition, or value prop, is both your promise of value to the customer and the customer’s belief that you can deliver on that promise. Your value prop engages your target market by stating exactly what need your business meets and how your key differentiator makes buying from you the best choice.
Words to sell by.
To learn more about the many ways marketing can help your business succeed, email us or call 888.573.4773. We’d love to partner with you—and take you from terminology to real-world results for your business!
Biedrzycki, Alec, (March 10, 2016) “The Ultimate Dictionary of Marketing Terms You Should Know,” blog.HubSpot.com, HubSpot, Inc.
Ferrell, O.C., Hartline, Michael, (2012) “Marketing Strategy,” South-Western College Publishers
Lake, Chris, (February, 2013) “100+ Frequently Used Digital Marketing Acronyms,” Econsultancy.com, Econsultancy.com, Ltd.
Perrault, William, Jr., Cannon, Joseph, McCarthy, E. Jerome (2014) “Essentials of Marketing: A Marketing Strategy Approach,” McGraw-Hill.
Westwood, John, (2011) “How To Write A Marketing Plan,” third edition, Kogan Page.