Shopper Marketing Glossary: Advanced Terms and Metrics
In this post, we’re continuing the shopper marketing glossary that we introduced earlier this week. In part 1, we covered the basic terms and concepts that shopper marketers should be familiar with. In part 2, we’ll go over the more advanced concepts, along with the metrics that shopper marketers and CPG marketers use to measure programs and performance.
Ad Exchange: Computerized marketplace for the buying and selling of ad space, connecting Supply Side Platforms (SSPs) and Demand Side Platforms (DSPs). The ad exchange announces each impression in real-time and asks buyers if they are interested in buying said impression and at which price.
Ad Network: Bundles inventory from different publishers and offers them for sale. The most prominent example is Google AdWords.
Average Order Value (AOV): the average dollar value of each purchase over a certain period of time. This is frequently used to evaluate particular campaigns with specific retailers. This is calculated by dividing the total revenue by the total number of orders.
Ad Server: A platform that distributes ads to end devices (ie. your computer or mobile phone) and captures performance metrics.
Category Captain: a team appointed by the retailer to serve as the category expert and focus strategies and tactics for that particular category at that retailer. Typically, the category captain is from the leading brand within a product category and thus has the needed insights and knowledge within that category.
Category Share: the percentage of all products in a category that a brand sells. This is calculated by dividing a particular brand’s own sales by the total number of sales in that category.
Click-Through Rate (CTR): the amount of clicks advertisers receive on their ads divided by the amount of impressions. Essentially, this measures how relevant users are finding the ad.
Commerce Media: Commerce Media is an emerging category of digital advertising that drives commerce outcomes for marketers and media owners (like publishers and retailers) by reaching consumers at all stages of their shopping journey. It can include commerce data or page-level information from contextual environments to inform targeting.
The goal of Commerce Media is to deliver relevant ad experiences to shoppers while giving marketers the ability to tie their advertising spend to lower-funnel engagement (like retailer-focused experiences including shoppability with direct add-to-cart functionality, retailer product description pages, and curated lists.
Contextual Commerce: aligning commerce-enabled advertising with relevant content (e.g.: shoppable ad for Perdue chicken within recipes that call for chicken). For food brands, engagement grows when in the recipe context, particularly with commerce-enabled ads that help the user solve their meal planning or add to their shopping list with a click. The more that a shoppable experience can reach the consumer in the right context online, the more likely they are to send items into retailer baskets.
Cost Per Action (CPA): The average cost of a previously-defined action (conversion, click of a specific link, time on site). Or, the amount a marketer spends for a consumer's action, i.e. a purchase, a form submission, or a completed booking. Calculated as total cost divided by total conversions.
Cost Per Click (CPC): The average cost of clicking on an ad, and an alternative billing model to CPM. Or, The price a marketer pays each time a consumer clicks on your ad. Calculated as total cost divided by total clicks.
Customer Relationship Management (CRM): the process of managing interactions with active shoppers, as well as new and lapsed shoppers. A CRM system enables brands to aggregate customer data and create shopper insights to personalize the purchasing experience and boost engagement.
Cost Per Mille (CPM): Cost per thousand impressions (Cost Per Mille). The amount a buyer pays publisher partners on a CPM basis: for every thousand impressions delivered on the partner’s website. (Revenue/Impressions) x 1000.
Cost Per View (CPV): The price a marketer pays each time a video ad is viewed. Usually, a consumer must watch a minimum duration of the video ad for it to count as a completed view. Calculated as total cost divided by total completed views.
Customer Acquisition Cost (CAC): the cost of getting a customer to purchase a product. This is calculated by dividing the costs spent on acquiring more customers by the number of customers acquired during the period when the money was spent. Also known as Cost of Customer Acquisition
Demand-side platform (DSP): A platform that allows brands and agencies to automatically bid on ad inventory. Buyers define information such as creatives and price and control the distribution of their ads. DSPs determine the best possible inventory for reaching a target audience, place buys, and report on the performance. They are connected to SSPs via ad exchanges.
Data Management Platform (DMP): A system for managing data used by agencies, advertisers, or publishers. Most first-party data is managed and integrated with third-party data to combine user information and activities as well as to optimize media purchasing.
First to Basket: when a brand’s product is added first to the digital shopping cart over competitor’s products. In the digital age and as more and more consumers incorporate online shopping into their regular shopping habits, in ecommerce, consumers rely heavily on "order again" features. Once a brand is the brand for the category of product for a shopper, then it’s heavily favored to be purchased again.
Lifetime Value (LTV): the total projected revenue that a brand can expect to generate from a customer during their lifetime. This is frequently measured against the Customer Acquisition Cost (CAC) in order to determine how long it would take to recover the cost of earning a new customer. Also known as: Customer Lifetime Value (CLTV), Lifetime Customer Value (LCV)
Off-Platform Media: media that appears off of a retailer’s site (e.g.: shoppable ads within food blog recipes that drive shoppers to purchase a product on a retailer’s site).
Real-time Bidding (RTB): RTB refers to the purchase of ads through real-time auctions.
Retail Media: A discipline that includes the buying and selling of advertising within retailer websites and apps. The most common ad format is the sponsored product ad, usually shown on search results, category, and/or product detail pages.
Retail Media Group (RMG): a retailer-owned media agency that facilitates advertising in-store and/or within retailer-owned sites and apps. Some examples include Walmart Media Group, 84.51° (Kroger) and Roundel (Target). While retail media has always been a fixture in CPG marketing, many major retailers have recently created their own media groups instead of working through third-party agencies to offer CPG brands advertising and marketing opportunities. While retail media groups are typically associated with on-platform opportunities, we may see them expand to support off-platform contextual commerce tactics.
Return on Ad Spend (ROAS): the amount of revenue a brand earns for each dollar it spends on advertising. This is calculated by dividing the total revenue by the amount spent. This may be represented in an X:1 ratio, with the first numeral showing the amount of revenue for every dollar (second numeral) spent, or may just be represented as a dollar amount.
Return on Investment (ROI): a metric used to evaluate how marketing efforts contribute to revenue growth. This is a general marketing metric but is frequently used by shopper marketers to measure the impact of particular campaigns or overall marketing strategies. In its simplest form, this is calculated on a campaign/program level by subtracting the marketing cost from sales growth and dividing that number by the marketing cost. The number is typically represented by a percentage or an X:1 ratio. Any ROI above one indicates a positive return on investment, but what constitutes a “good” ROI can vary based on the tactic, promoted item, time period, etc.
Supply-side platform or sell-side platform (SSP): A platform that allows publishers to sell their inventory automatically and is often linked to ad exchanges. It allows the setting of floor prices and the bundling of inventory for private marketplaces.
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