Marketing glossary

Plain-English definitions of 22 digital marketing terms, from CTR and CAC to ROAS, ROI and share of voice, each with the formula and a worked example. Every term is something you can watch move in the free marketing simulation game Viral or Bust.

All terms

Active subscribers

Customers who currently maintain a subscription, including existing subscribers.

New subscribers join the total; customers who cancel leave it.

By channel

A comparison of spend, visitors, conversion rate, customers, CAC and ROAS for each channel.

Channel CAC uses channel spend ÷ new purchases. Channel ROAS uses new-purchase revenue ÷ channel spend, so these can differ from monthly totals.

CAC (customer acquisition cost)

CAC is how much marketing money it takes to win one new customer: total marketing spend divided by new customers. If you spend £1,000 and gain 50 customers, CAC is £20. A business only grows when CAC is lower than the profit each customer brings.

Formula: marketing cost ÷ new customers Example: £1,000 spent to acquire 50 new customers means a £20 CAC. This game includes channel spend plus offer, collaboration and decision costs. A dash means no new customers or no spend.

Cash

Money available for future campaigns and operations.

Cash reflects costs and final gains or losses. It is different from revenue.

Conversion rate

Conversion rate is the share of visitors who buy or sign up: conversions divided by visitors. If 1,000 people visit and 30 buy, the conversion rate is 3%. Targeting, content and trust all move it.

Formula: new customers ÷ visitors × 100 Example: 50 purchases from 1,000 visitors means a 5% conversion rate.

CPC (cost per click)

CPC is how much you pay each time someone clicks an ad. Each channel has a different CPC, and it can rise when competition spikes.

CTR (click-through rate)

CTR is clicks divided by impressions. If 1,000 people see an ad and 20 click it, the CTR is 2%. A higher CTR usually means the audience and content fit well.

Formula: clicks ÷ impressions × 100 Example: 20 clicks from 1,000 impressions means a 2% CTR.

Funnel

The stages a customer passes through before buying.

Impressions → visitors → purchases. Compare the stages to identify where potential customers drop off.

Gross margin

Gross margin is the share of each sale you keep after the cost of making the product. A £28 serum with a 68% margin leaves about £19 to pay for marketing and overheads.

Formula: gross profit ÷ revenue × 100 Example: £30 gross profit on £100 revenue means a 30% margin.

Gross profit

Revenue remaining after product costs, before marketing costs and overhead.

Formula: revenue − product costs

Impressions

Impressions are how many times your ad or post was shown on screen. One person can see it several times, so impressions are always higher than visitors. In the game, impressions show how far a campaign reached before anyone clicked.

Example: one person seeing an ad three times counts as three impressions. This game estimates impressions from visits.

Marketing cost / Ad spend

Ad spend is the budget spent across channels. Monthly marketing cost also includes additional campaign costs.

This game includes channel spend plus offer, collaboration and decision costs when calculating monthly CAC, ROAS and ROI.

Net profit / loss

The final result after marketing costs, overhead and other adjustments.

This game also accounts for refunds and special gains or losses. Net profit therefore differs from gross profit and ROI.

New customers and returning customers

New customers are people buying from you for the first time this month. Returning customers come back on their own: repeat buyers for products, or subscribers who stay for apps and coffee plans. Returning customers cost nothing to acquire, which is why loyalty compounds.

Example: 1,000 visitors at a 5% conversion rate produces about 50 new customers. Repeat purchases help sustain revenue without depending entirely on acquiring new customers.

Organic traffic

Organic traffic is visitors you did not pay for in that moment: search results, your own followers, word of mouth and people who already know your brand.

Overhead

Operating costs outside your advertising budget.

Team, tools and other fixed costs reduce final profit and cash.

Revenue

Total sales or subscription income this month, before costs are deducted.

Revenue minus product costs is gross profit. Marketing costs, overhead and other adjustments determine final profit.

ROAS (return on ad spend)

ROAS is revenue divided by ad spend. Spending £1,000 to make £3,000 in sales is a ROAS of 3x. ROAS looks at sales, not profit, so a high ROAS can still lose money if margins are thin.

Formula: revenue ÷ marketing cost Example: £3,000 revenue from £1,000 spend means 3× ROAS. This game includes offer, collaboration and decision costs. A high ROAS can still lose money when margins are low. A dash means no spend or zero ROAS.

ROI (return on investment)

ROI is profit after marketing costs, divided by marketing costs: (gross profit − spend) ÷ spend. If £1,000 of spend brings £1,500 of gross profit, ROI is 50%. Below 0% means the campaign lost money.

Game formula: (gross profit − marketing cost) ÷ marketing cost × 100 Example: £1,500 gross profit and £1,000 marketing cost means +50% ROI. Marketing cost includes offers, collaborations and decisions. Overhead and special gains or losses are excluded, so this differs from final net profit. A dash means no spend.

SEO (search engine optimisation)

SEO is improving your website so it ranks higher in Google search and gets free, organic visitors. It is slow to start but keeps paying back over time, unlike paid ads which stop the moment you stop paying.

Visitors (traffic)

Visitors are the people who clicked through and landed on your shop or app. Traffic can be paid (ads), organic (search, your followers, word of mouth) or viral.

Read the funnel as impressions → visitors → purchases to understand where customers drop off.

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