You don't need to memorize 40 acronyms. You need to understand 8. These are the ones the platforms care about, the ones investors will ask about, and the ones that actually let you make a good decision.
1. Impressions
The number of times your ad was shown. Doesn't mean anyone looked at it carefully — just that it loaded on a screen. Impressions are the top of the funnel.
You'd compare impressions across platforms to see where you have the most reach, but a million impressions with no clicks is worthless.
2. CPC — Cost Per Click
What you pay every time someone clicks your ad. Calculated as total spend ÷ clicks.
CPC varies wildly by industry. Personal injury law: $50–$200. A local pizza shop: $0.50–$2. Don't compare your CPC to "the average" — compare it to your own historical CPC and your competitors in the same niche.
3. CTR — Click-Through Rate
The percentage of people who saw your ad and actually clicked it. Calculated as clicks ÷ impressions × 100.
A high CTR is good — it means the ad is relevant to the audience. Google rewards high CTR with lower CPCs (the "Quality Score" mechanism). For search ads, 2–5% is healthy. For display/banner ads, 0.1–0.5% is normal.
4. Conversion rate
Of the people who clicked, how many did the thing you wanted them to do? Calculated as conversions ÷ clicks × 100.
A "conversion" is whatever you defined as success — a purchase, a form submit, a phone call, a demo booking. If your conversion rate is 0%, your ad is doing its job but your landing page isn't.
5. CPA — Cost Per Acquisition (or Cost Per Action)
The most important number for most businesses. How much did you spend per conversion? Calculated as total spend ÷ conversions.
CPA tells you "for every customer I want, I have to spend $X." If $50 acquires a customer worth $300 over their lifetime, you have a winning channel. If $50 acquires a customer worth $40, you're losing money on every sale and need to fix something fast.
6. ROAS — Return On Ad Spend
Revenue divided by ad spend. Expressed as a multiplier (e.g., "4.0x"). Calculated as revenue ÷ spend.
ROAS is for e-commerce and any business with a clear sale price. It's not profit — it doesn't account for cost of goods, shipping, salaries, software. A 1.0x ROAS means you broke even on ad spend alone, which is usually a loss overall.
Most healthy businesses target 3–5x ROAS to be profitable. Some venture-backed startups burn at 0.5x ROAS for growth, but they have a path to profitability later.
7. Bounce rate
The percentage of people who land on your page and leave without doing anything else. Some platforms count "leave" as "less than 30 seconds + no other interaction"; others define it as "single-page session."
High bounce rate is sometimes fine (if your page answers the question completely — like a phone number for a plumber). High bounce rate on an e-commerce category page is bad. We have a full guide on bounce rate coming up.
8. Quality Score (Google) / Relevance Score (Meta)
A platform-internal grade of how good your ads are. It mixes CTR, landing page quality, and ad relevance. Higher quality score = lower CPC for the same ad position. Optimizing this is the cheapest way to lower your costs.
Putting it all together
A complete SEM funnel reads like this:
- 10,000 impressions →
- 250 clicks (CTR 2.5%) at $2 CPC = $500 spend →
- 175 visits hit the landing page (75 bounced — bounce rate 30%) →
- 10 conversions (conversion rate 4% of clicks) at $50 CPA →
- $2,000 revenue (ROAS 4.0x) →
- If gross margin is 50%, $1,000 contribution margin minus $500 spend = $500 profit on this campaign.