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A Paid Search Glossary

Josh Dreller on January 28, 2010 at 6:00 am

Before we really start diving into the specifics of managing a paid search account, it is important to cover some standard industry jargon. You may want to bookmark this post as a resource for any terms you may need to go back and reference.

Account Terms

Query: The actual input by a user into a search engine. Also called the query string (for example, when someone says “I searched for Hawaiian vacation,” Hawaiian vacation is the query). The query is the most important element determining how a search engine returns a results page’s organic and paid listings.
Keyword: A term on which advertisers bid to trigger their paid search ads to be shown to relevant users. A keyword may not necessarily be a single word and can include phrases with many words in them. Thus, even multiple-word phrases are still referred to as keywords.
Ad group: A group of keywords associated with a set of ads.
Paid search ads: Generally a four line text element which users can click and be taken to an advertiser’s desired landing page. Ads are also referred to as creative.
Campaign: A group of ad groups.
Destination URL: Also known as the landing page. The page that a user is redirect to upon clicking an ad.
Max bid: The most an advertiser is willing to pay for a click on a keyword. This is not necessarily the price an advertiser will pay as it’s very possible to pay well below (but never above) your bid.

Important paid search metrics

Key performance indicators (KPI): An advertiser-defined group of top-level metrics that are core signs of the health of the account.
Impression: An ad exposure to a searcher.
Click: When a searcher clicks on an ad and is redirected to the destination URL of an ad.
Cost per click (CPC): Costs divided by clicks ($100 for 50 clicks equals $2 CPC).
Clickthrough rate (CTR): Clicks divided by impressions (100 clicks from 1000 impressions equals a 10% CTR).
Avg position: For the given date range, the aggregate position where your ads were placed (with 100 ads were in position 1 and 100 ads in position 2 the Avg Position was 1.5).

Revenue terms

Conversion: Any action taken by a user deemed important to an advertiser. A conversion can be a sale, a lead generation form completed, a download, a video view, etc.
Conversion rate: Conversions divided by clicks (two conversions from 100 clicks is a 2% conversion rate)
Return on investment (ROI): How much you earn minus how much you spend (you generated $1000 in sales from $100 in paid search. Your ROI is $900).
Return on ad spend (ROAS): Very much like ROI, but expressed as a ratio ($1000 sales from $100 in paid search yields a ROAS of 10:1 or just expressed as “10”).
Cost per acquisition (CPA): A price model where an advertiser is charged only when a conversion is generated by the advertising. The fee for such services is agreed-upon before the advertising begins. Not all media outlets will negotiate CPA pricing.

Miscellaneous terms

Quality score: A grade of the relevance of each keyword/ad/landing page combination which helps determine your ad position and cost. Quality Score is a Google term which has also become the industry standard term for these types of weighting features. However, other engines may have their own propriety terms.
Algorithm: A mathematical set of rules. Search engines use algorithms to determine whether your ad should run as well as to determine your ad position and cost.

Next week, I’ll go under the hood and check out a paid search platform in detail.

This week’s question: Are there any paid search related terms you’ve heard that aren’t on this list and would like defined? Please let me know in the comments section below.

Opinions expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.

About The Author

Josh Dreller

Josh Dreller has been a search marketer since 2003 with a focus on SEM technology. As a media technologist fluent in the use of leading industry systems, Josh stays abreast of cutting edge digital marketing and measurement tools to maximize the effect of digital media on business goals. He has a deep passion to monitor the constantly evolving intersection between marketing and technology. Josh is currently VP, Product Marketing at 4C. You can follow him on Twitter at @mediatechguy.