Performance marketing is advertising where you pay for measurable results, such as clicks, leads or sales. This glossary explains more than 85 performance marketing terms from A to Z in plain language, each tagged Beginner, Intermediate or Advanced, from ROAS, CAC and LTV to attribution, incrementality and CRO.
Performance marketing is a way of buying advertising and other marketing where you pay for measurable outcomes, such as clicks, leads or sales, and judge every channel by the results it produces. It spans search, social, display, email and affiliate channels, and it relies on tracking, testing and attribution.
Start with the Beginner terms, such as funnel, CPA, ROAS, KPI and customer journey. Move to Intermediate terms as you run campaigns across channels, and use the Advanced terms for attribution, experimentation and measurement under privacy limits.
Search by term or filter by level above. Related terms link to each other, so you can follow an idea from one concept to the next.
No single method tells the whole story. Mature teams combine several, and use experiments to check what the dashboards say.
| Method | How it works | Best for |
|---|---|---|
| Last-click attribution | Gives all credit to the final touchpoint | Simple, quick reporting and bottom-funnel campaigns |
| Data-driven attribution | Uses machine learning to share credit across touchpoints | Accounts with enough conversion data on one platform |
| Multi-touch models | Spread credit across the journey by linear, time decay or custom rules | Understanding how channels support each other |
| Incrementality testing | Compares exposed people with a holdout group | Proving what a channel adds beyond what would happen anyway |
| Geo-lift testing | Compares regions with and without a campaign | Channels that are hard to track by person, such as TV or audio |
| Marketing mix modeling | Models historical spend against total sales | Budget decisions across all channels, with privacy-safe data |
Quick answers to the most searched performance marketing basics.
Performance marketing is marketing where you pay for measurable results, such as clicks, leads or sales, and judge each channel by the outcomes it delivers. It covers search, social, display, email and affiliate channels, and depends on tracking, testing and attribution.
Performance marketing aims at measurable, near-term actions such as purchases or sign-ups. Brand marketing builds awareness and preference over time and is harder to attribute. Most growing businesses need both, because brand demand makes performance campaigns cheaper to run.
ROAS, or return on ad spend, is revenue divided by ad spend. For example, 5,000 in revenue from 1,000 in spend is a ROAS of 5, or 500%. Compare it with your break-even ROAS, which is 1 divided by your profit margin, to know if the campaign is profitable.
ROAS usually refers to one platform’s reported return, so conversions can be counted by several platforms at once. MER, or marketing efficiency ratio, divides total revenue by total marketing spend across every channel, so it avoids double-counting and gives a steadier view of overall efficiency.
CAC is the cost of winning one new customer. LTV is the total value, ideally gross profit, a customer brings over the whole relationship. Comparing them as an LTV to CAC ratio shows whether growth is profitable. A ratio around 3 or higher is a common rule of thumb.
An attribution model is a rule set that decides which touchpoints get credit for a conversion. Last-click gives all credit to the final touch, multi-touch models share it, and data-driven models use machine learning to estimate each touchpoint’s contribution.
Incrementality testing measures what a campaign adds beyond what would have happened anyway. You compare people or regions that saw the campaign with a similar holdout group that did not. It is the most reliable way to check what attribution dashboards report.
First-party data is information a business collects from its own customers through behavior and transactions. Zero-party data is information a customer deliberately shares, such as preferences in a quiz or survey. Both are consent-based and become more valuable as third-party tracking declines.
Common core KPIs are CPA, ROAS, MER, CAC, LTV and conversion rate. Which ones matter most depends on your goal and business model. Track profit-based measures alongside channel metrics, so you do not optimize for numbers that do not pay the bills.
Yes. It is completely free to read, with no sign-up. You can search it, filter it by level and jump to any letter.
Looking for SEO, PPC, social media or web design terms? Each has its own dedicated glossary.
Test your knowledge with our Performance Marketing Quiz, or play Find the Marketing Words.
Get in touch and we will add it, or walk you through what it means for your business.
