115 terms from Advertising Economics, each defined in a sentence or two, with a link to the calculator that works the number out where one exists.
The same idea, shortened.
The same plotted. Steep at first, then flattening.
The same measure, shortened.
How much results change when the budget changes. Rarely one to one.
Open the calculator →How much advertisers want to buy. Rises with retail seasonality and drives your costs up with it.
How advertising spend converts into demand, revenue and profit, and where it stops doing so.
Whether the advertising worked at all, separate from how cheaply it ran.
How heavily a category advertises relative to its size.
Ad spend framed as capital deployed rather than cost incurred.
Open the calculator →Return per unit of that capital.
What the spend produced, in impressions, clicks or sales.
Output produced per unit of ad spend.
The mathematical relationship between spend and outcome.
How much inventory exists to sell. Fixed in the short run, which is why prices spike in Q4.
Ad spend as a share of revenue. The simplest benchmark for whether you are spending like your category.
The limit on what you can spend, whatever the opportunity.
What you give up by funding one thing over another.
Cash burned per unit of new recurring revenue. Lower is better, and it exposes inefficient growth fast.
How much was built per unit of capital consumed.
How long cash is tied up between paying suppliers and collecting from customers.
The balance between routes to market.
The same analysed by joining group.
ROAS on contribution after every variable cost. The strictest and most honest version.
Open the calculator →Whether the result was worth the cost at all.
Achieving the same result for less.
Everything spent to deliver what was sold.
What making the assets cost. Amortise it across their useful life.
Return attributable to a creative asset.
How much revenue rests on your largest accounts.
The balance between customer types and what each is worth.
Return on activity aimed at creating demand rather than capturing it.
Each additional unit of spend producing less than the one before. The defining feature of media buying.
Cost traceable to a specific product or order.
Unit costs rising as you get bigger. Media buying hits this early.
Cost of getting the product to the customer.
Profit after the cost of the capital used to produce it.
Unit costs falling as you get bigger.
Output achieved per unit of input.
The same effect across a whole organisation over years.
Using debt to amplify returns, and losses.
Picking, packing and shipping. Variable, and routinely left out of ROAS targets.
Open the calculator →The balance between markets, each with its own margin.
Total money in, before any deduction.
Sales before deductions.
Growth achieved per unit of spend.
Margin on incremental growth rather than the base.
Growth achieved relative to investment made.
Margin on the additional volume rather than the average.
Profit that would not have existed without the activity.
Shared cost that has to be allocated somehow.
Costs falling as the team gets better at the work.
Lifetime value against acquisition cost. Three to one is the common target, and it says nothing about how long you wait.
Open the calculator →New recurring revenue divided by prior period sales and marketing spend. Above one means spend more.
The next unit of budget, not the average. It always performs worse than what came before.
Cost of producing one more unit.
What is left from that additional unit. When it hits zero, stop scaling.
What that next unit produced.
Revenue from one more unit of activity.
Revenue or contribution produced per unit of marketing cost.
Open the calculator →How much extra revenue each marketing pound produces at current scale.
The marketplace cut of each sale.
A charge applied on top of media cost.
Revenue after returns, discounts and allowances. The number margin should be calculated on.
Another name for net revenue.
How much profit moves when revenue moves. High fixed costs mean big swings both ways.
The value of the best option you did not take.
The point where marginal profit reaches zero. Spend past it and you are buying revenue with profit.
Open the calculator →What the payment provider takes. Small per order, large across a year.
What the platform charges for access to its customers.
The balance of products sold. Mix shifts move blended margin without any price changing.
Open the calculator →Valuation as a multiple of profit. Harsher, and more honest.
ROAS on profit. Also called POAS, and the version that reflects reality.
Open the calculator →How much of revenue depends on a few customers or products. A risk measure.
How much revenue grows relative to the effort behind it.
Valuation expressed as a multiple of revenue.
How predictable and durable the revenue is, not just how large.
Growth rate plus profit margin should exceed forty. A quick health check for software businesses.
Revenue produced per unit of sales cost.
Where extra spend produces almost nothing. Most accounts are closer to it than they think.
How unit costs change as volume grows.
Whether growth is making the business more efficient or just larger.
Cost with a fixed base and a variable part, such as a platform fee plus usage.
What the tools take, usually as a percentage of spend.
Everything spent to win a customer, media and non-media.
Open the calculator →The cost of completing the exchange itself.
The money needed to keep operating day to day.
How much working capital each unit of revenue demands.