eCommerce Metrics & Definitions
We have created this list of definitions as it is amazing how many eCommerce retailers don't understand the nuanced differences in metrics. Understanding the definitions and meaning is crucial to understanding the performance of ad campaigns and thresholds for decision-making.
The (Expanding) list of digital marketing & eCommerce metrics & definitions
AOV (Average Order Value)
The average revenue generated from each individual transaction. It provides insight into customer spending habits. The formula is Total Revenue / Number of Orders.
Data Source: This metric is calculated using revenue and order data passed from your e-commerce platform into your Google Ads account via conversion tracking.
Example: If your store generated £5,000 in revenue from 100 transactions, the AOV would be £50.
Average Cart Size
A basket-level metric that measures the average number of items sold per transaction.
Data Source: This is calculated from data sent to Google Ads via enhanced conversion tracking that includes basket-level details. The formula is Total Items Sold / Number of Orders.
Example: If you sold 300 items across 100 separate orders, your Average Cart Size would be 3.0.
Buckets
Custom-defined segments used to group products or keywords based on their performance, making it easier to analyse large sets of data.
Data Source: These are typically not a standard metric but are created within a spreadsheet or a third-party reporting tool using rules and formulas based on standard metrics like cost, conversions, and ROAS.
Example: You could create a 'high-performer' bucket for all products with a ROAS above 8, allowing you to analyse their shared attributes.
CAC (Customer Acquisition Cost)
The total cost associated with acquiring one new customer. It includes all marketing and sales expenses over a period, divided by the number of new customers acquired.
Data Source: This is calculated using spend from advertising platforms (e.g., Google Ads, Meta Ads) and new customer data from your CRM or e-commerce platform.
Example: If a business spends £2,000 on marketing and sales in a month and acquires 200 new customers, the CAC is £10.
Channel
A high-level grouping of where your adverts are shown. Google Ads organises campaign performance data into several channels. The primary channels for e-commerce are typically Search, Shopping, Display, and Video.
Data Source: This is a top-level classification within the Google Ads platform. Reports can be segmented to show performance by channel.
Example: Analysing your Channel report might show that your Shopping channel has the highest ROAS, while the Display channel is most effective for new customer reach.
Churn Rate
The percentage of customers who stop using your service or product during a given time period. It's a critical metric for subscription-based businesses.
Data Source: This data comes from your Customer Relationship Management (CRM) system or subscription management platform.
Example: If a subscription service starts the month with 500 customers and 25 cancel their subscriptions, the monthly churn rate is 5%.
Clicks
The count of how many times users have clicked on your advert to visit your website. It is a primary indicator of ad engagement.
Data Source: This is a standard metric reported directly by the advertising platform, such as Google Ads.
Example: An advert in [Your Campaign Name] was shown 10,000 times and received 200 clicks.
Conversion (Conv)
A key action a user completes on your website after clicking your advert. For an e-commerce business, this is almost always a completed purchase.
Data Source: This is reported by Google Ads once conversion tracking is configured on your website's transaction confirmation page.
Example: The [Your Campaign Name] campaign generated 50 conversions over a 30-day period.
Conversion Rate (CR or CvR)
The percentage of ad clicks or website visits that result in a conversion. It indicates how effectively your advertising and website persuade users to act. The formula is (Number of Conversions / Number of Clicks) * 100.
Data Source: This metric is calculated automatically within the Google Ads platform and web analytics tools like Google Analytics.
Example: If an advert receives 1,000 clicks and results in 40 conversions, the CR is 4%.
Cost (Ad Spend)
The total amount of money you have spent on an advertising campaign, ad group, or keyword over a defined period.
Data Source: This is a core metric provided directly by the Google Ads platform.
Example: The total ad spend for the [Your Campaign Name] campaign last month was £2,500.
Cost of Goods Sold (COGS)
Represents the direct costs of the products sold in a transaction. This basket-level data is essential for calculating true profitability.
Data Source: This value is sourced from your inventory or e-commerce system and passed into Google Ads through your conversion tracking tag. It is not a default metric and requires advanced setup.
Example: A camera sold for £1,200 might have a COGS of £800, which includes its wholesale purchase price and any shipping costs to your warehouse.
CPA (Cost Per Acquisition or Cost Per Action)
A metric that measures the average cost to generate one conversion (like a sale or a lead). Disambiguation: CPA often refers to a specific campaign action, whereas CAC encompasses all business costs to acquire a customer.
Data Source: Sourced directly from advertising platforms like Google Ads, which track the specified conversion action.
Example: If an ad campaign costs £100 and results in 5 sales, the CPA is £20 per sale.
CPC (Cost Per Click)
Hopefully a no-brainer, but this is the price you pay for each single click on your advertisement in a pay-per-click (PPC) marketing campaign.
Data Source: This metric is provided directly by the advertising platform, such as Google Ads or Microsoft Advertising.
Example: If you spend £150 on a campaign and receive 300 clicks, your CPC is £0.50.
CPL (Cost Per Lead)
The amount a business spends to generate a single new lead (a potential customer who has provided their contact information).
Data Source: Calculated using spend data from ad platforms and lead counts from your CRM or lead capture forms.
Example: A social media campaign costing £500 generates 25 leads, making the CPL £20.
CPM (Cost Per Mille)
Also known as cost per thousand impressions (this is the US version and CPT is the UK!), this is the cost an advertiser pays for one thousand views of an advertisement.
Data Source: This is a standard metric reported within advertising platforms like Google Ads, display networks, and social media ad managers.
Example: If an ad campaign costs £100 and receives 20,000 impressions, the CPM is £5.00.
CRO (Conversion Rate Optimisation)
The systematic process of increasing the percentage of website visitors who take a desired action. It's an ongoing activity, not a single metric.
Data Source: This practice relies on data from A/B testing tools (e.g., Google Optimize), website analytics, and user feedback tools.
Example: Testing two different button colours on a product page to see which one results in a higher "add to basket" rate is a CRO activity.
CTR (Click-Through Rate)
The percentage of impressions that result in a user clicking on your advert. It is a primary measure of ad relevance and creative appeal. The formula is (Total Clicks / Total Impressions) * 100.
Data Source: This is a standard metric calculated and reported within the Google Ads platform.
Example: If your advert was shown 10,000 times and received 200 clicks, your CTR is 2%.
Gross Profit
The profit made on a transaction after subtracting the cost of the goods sold (COGS). When analysing ad performance, it can be calculated as (Revenue – COGS – Ad Spend). It is the most accurate measure of a campaign's financial success.
Data Source: This is a calculated metric, derived using data from Google Ads (Cost) and basket-level data passed from your e-commerce platform (Revenue, COGS).
Example: A product sells for £200 (Revenue), its COGS is £120, and the ad cost to generate the sale was £30. The Gross Profit would be £50.
Impressions (Impr)
The number of times your advert has been displayed on a screen.
Data Source: This is a fundamental metric provided directly by the advertising platform, such as Google Ads.
Example: An advert for [Your Product] in [Your Campaign Name] received 50,000 impressions last month.
Items Sold
A basket-level metric representing the total quantity of all items sold across one or more transactions, rather than a count of the number of orders, which it is sometime confused with.
Data Source: This data is passed from your e-commerce platform to Google Ads with each transaction through an enhanced conversion tracking setup.
Example: A single transaction that includes a camera, a lens, and a memory card would report a value of 3 for Items Sold.
Lead-Based Revenue Tracking
An advanced strategy that connects an online lead to a eventual offline sale with detailed transaction data. This is crucial for businesses with long or complex sales cycles that start online but finish offline.
Data Source: A user's click ID is captured with an online lead (e.g., form submission). When the sale is completed offline, the transaction data, including revenue and basket-level details, is uploaded to Google Ads and matched to the original click ID.
Example: A customer clicks an ad and requests a quote for a custom camera kit. Two weeks later, they complete the purchase over the phone. The sales data, including all items in the kit, is uploaded to Google Ads to attribute the revenue back to the initial ad click.
LTV (Lifetime Value)
A prediction of the total net profit attributed to the entire future relationship with a customer.
Data Source: This is a complex calculation requiring data from your CRM, e-commerce platform, and financial records.
Example: If an average customer spends £70 per purchase, buys twice a year, and stays for three years, their LTV (before costs) is £420.
MQL (Marketing Qualified Lead)
A lead who has shown interest in your business based on marketing efforts but is not yet ready for a sales call.
Data Source: This status is typically tracked within a marketing automation platform (e.g., HubSpot) or CRM.
Example: A user who downloads a detailed guide from your website would be flagged as an MQL.
nGram
A contiguous sequence of 'n' words from a set of search queries. An nGram analysis aggregates performance data for these single words (1-gram) or phrases (2-gram, 3-gram, etc.) to identify common themes and performance trends.
Data Source: This analysis is performed on search query report data exported from Google Ads, typically using a script or a spreadsheet tool.
Example: By running a 2-gram analysis, you might discover that search queries containing "for beginners" have a much higher conversion rate, indicating you should create specific content or campaigns for this audience.
POAS (Profit on Ad Spend)
Measures the gross profit generated for every pound spent on advertising. It is a key metric for optimising campaigns for profitability. The formula is (Gross Profit / Ad Spend).
Data Source: This is a custom metric you would calculate using Gross Profit and Cost data from Google Ads.
Example: If you spent £1,000 on ads and generated £4,000 in Gross Profit, your POAS would be 4, meaning you earned £4 in profit for every £1 of ad spend.
PPC (Pay-Per-Click)
An online advertising model where an advertiser pays a fee each time one of their ads is clicked. Search engine advertising is the most common form.
Data Source: This is an advertising model, not a metric. Performance data is sourced from the platform where campaigns are run, such as Google Ads.
Example: A business runs a Google Ads campaign, bidding on keywords. They only pay the platform when a user clicks their ad.
Product ID / SKU
The unique identifier for a specific product in your inventory. Passing this with basket-level data allows for granular, product-level performance reporting and data history at a product level. This can be set to be a number of things from GTIN, SKU, MPN, Product ID according to your CMS (essentially the database ID).
Data Source: This identifier is sent from your e-commerce platform to Google Ads as part of the items array in your conversion tag.
Example: Your report shows that Product ID CAM-001-BLK has a high ROAS, while CAM-001-RED is unprofitable, enabling precise optimisation decisions.
Revenue (or Conversion Value)
The total monetary value of the goods sold in a transaction minus any checkout level discounts. To measure this accurately, basket-level data is sent from your e-commerce platform with each transaction, summing the price of each individual item in the customer's cart at the point of sale. For e-commerce, it is best practice for Revenue and Conversion Value to be identical.
Data Source: This is sent from your e-commerce platform to Google Ads via the conversion tracking tag.
Example: A customer purchases a lens for £800 and a filter for £50. The Revenue (and the Conversion Value passed to Google Ads) would be £850.
ROAS (Return on Ad Spend)
A metric that measures the total revenue (Conversion Value) generated for every pound of ad spend. The formula is (Total Revenue / Total Ad Cost).
Data Source: This is a standard metric calculated within Google Ads.
Example: If [Your Campaign Name] spent £500 and generated £5,000 in revenue, the ROAS would be 10, or 1000%.
ROI (Return on Investment)
Measures the gain or loss generated on an investment relative to the money invested. Disambiguation: Unlike ROAS, ROI accounts for total costs and net profit, not just revenue against ad spend. The formula is (Net Profit / Cost of Investment) * 100.
Data Source: Calculated using financial data from your accounting software and performance data from marketing channels.
Example: A campaign costs £1,000 and generates £3,000 in net profit. The ROI is 300%.
SEO (Search Engine Optimisation)
The practice of increasing the quantity and quality of traffic to your website through organic (non-paid) search engine results.
Data Source: This is a strategy, not a single metric. Its performance is measured using tools like Google Analytics and Google Search Console.
Example: Improving site speed and publishing high-quality blog content are SEO tactics used to rank higher on Google.
SQL (Sales Qualified Lead)
A lead that has been vetted and deemed ready for a direct follow-up from the sales team.
Data Source: This status is tracked and managed within a CRM system, often following a handover from a marketing automation platform.
Example: An MQL who fills out a "Request a Demo" form is typically elevated to an SQL.
Unit Price & Quantity
Specific basket-level data points that detail a transaction. Unit Price is the cost of a single item, and Unit Quantity is the number of that specific item purchased.
Data Source: These values are passed for each product within the items array in your Google Ads conversion tag.
Example: A customer's basket contains one camera (Product ID: 123, Unit Price: £500, Unit Quantity: 1) and two memory cards (Product ID: 456, Unit Price: £40, Unit Quantity: 2). This granular data allows for precise revenue and profit calculation.
Views
A metric specific to video advertising that counts the number of times your video advert has been watched. The definition of a "view" can vary by platform and ad format.
Data Source: This is a standard metric reported by video advertising platforms like Google Ads for YouTube campaigns.
Example: On YouTube, a view is typically counted when a user watches 30 seconds of your video ad (or the entire ad if it's shorter than 30 seconds) or interacts with it.
Making sure the metrics are fully understood is key to making sure the right decisions are made. So hopefully this quick list of digital marketing definitions is useful!
