Glossary of ad and profit terms

The middle level of a Meta campaign, between the campaign and its ads. An ad set holds the audience, placements and schedule, and its own budget unless the campaign sets one for all its ad sets.

Guide: Meta Ads Account Structure for D2C: Fewer Campaigns, Clearer Results

Meta’s automated sales campaigns, which replaced Advantage+ Shopping campaigns in 2025. You supply creatives, a budget and a conversion goal, and Meta decides audiences, placements and how the budget is split.

Guide: Advantage+ Sales Campaigns (Formerly Advantage+ Shopping): A Guide

Revenue divided by the number of orders over the same period. Use revenue after sales tax and, for profit decisions, after cancellations and returns.

AOV = revenue ÷ orders

Guide: How to Increase Average Order Value Without Hurting Conversions

How long after someone clicks or views an ad the platform still credits that ad with a purchase. Meta’s common setting is 7-day click and 1-day view. Longer windows credit ads with more sales, whether or not the ad caused them.

Guide: Meta Ads Attribution Windows in 2026: What Changed and What to Use

All marketing spend across every channel divided by the new customers won in the same period. It is harder to flatter than one platform’s cost per purchase, because no ad platform decides who counts.

Blended CAC = total marketing spend ÷ new customers

Guide: Blended CAC: How to Calculate Customer Acquisition Cost for D2C

Search ads shown when people search for your brand’s name. They look very efficient because many of those buyers were coming anyway, so judge them apart from ads on other searches.

Guide: Brand vs Non-Brand Search: Stop Brand Traffic Flattering Your ROAS

The most you can pay in ads for one purchase before the order loses money: the margin an average order leaves after product cost, payment fees, shipping and returns.

Guide: D2C Unit Economics Template: Profit Per Order and Per CustomerBreak-even CPA calculator

The ROAS at which ads neither make nor lose money: order value divided by the margin an order leaves after product cost, shipping, fees and returns. Below it, every order the ads bring in loses money.

Break-even ROAS = 1 ÷ contribution margin before ads, as a share of revenue

Guide: Break-Even ROAS: The Formula, With Returns and a Worked ExampleBreak-even ROAS calculator

What it costs to win one new customer: marketing spend divided by the new customers won in the same period. For profit work, leave out first orders that were cancelled or came back.

Guide: Blended CAC: How to Calculate Customer Acquisition Cost for D2CCAC payback calculator

The number of months until the contribution from a new customer’s orders covers what it cost to win them. Paying back on the first order is safest; three to six months is workable if you can fund the gap.

Months = (CAC − first-order contribution) ÷ monthly contribution per customer

Guide: CAC Payback Period: How Long Until a New Customer Pays Back?CAC payback calculator

A payment option where the buyer pays when the parcel arrives. It is common in India, the Gulf and parts of Southeast Asia. It lifts conversion but also returns, because refusing a parcel costs the buyer nothing.

Guide: COD vs Prepaid Orders: The Real Cost Difference for Indian D2C BrandsCOD vs prepaid profit calculator

Two ways to set Meta budgets. CBO, now called Advantage+ campaign budget, sets one budget for the campaign and lets Meta move it between ad sets; ABO gives each ad set its own fixed budget.

Guide: CBO vs ABO on Meta: Campaign Budget or Ad Set Budget?

The payout of cash collected on cash-on-delivery orders from the courier or shipping platform to the seller, usually on a fixed cycle a few days after delivery and minus fees.

Guide: COD Remittance Cycle: How Long Your Cash Waits, and What It Costs

Grouping customers by when they first bought, usually by month, and following what each group spends afterwards. It shows whether newer customers come back as often as older ones.

Guide: Cohort Analysis on Shopify: See Whether New Customers Come Back

What an order leaves after the costs that order causes. CM1 takes off product cost; CM2 also shipping, payment fees, packaging and returns; CM3 also marketing. Fixed costs such as salaries come after CM3.

Guide: Contribution Margin for D2C Brands: CM1, CM2 and CM3 ExplainedContribution margin calculator

The share of visits or clicks that end in an order. A store’s conversion rate is orders divided by sessions; an ad’s is purchases divided by clicks, as the ad platform counts them.

Conversion rate = orders ÷ sessions

Meta’s way of sending purchases and other events from your store’s server or platform straight to Meta, alongside the browser pixel. It recovers events that ad blockers and browser privacy settings stop the pixel from sending.

Guide: Meta Conversions API for Shopify: Setup, Deduplication and Checks

Ad spend divided by the purchases an ad platform credits to the ads, shown in Meta as cost per purchase. It counts orders when they are placed, including ones later cancelled or returned.

CPA = ad spend ÷ purchases

Break-even CPA calculator

Ad spend divided by clicks. In search ads it is set by auction, so it depends on competition for the keyword and on your Quality Score.

CPC = ad spend ÷ clicks

Guide: Google Ads Quality Score: What the Three Parts Mean and What to Fix

The cost of 1,000 ad impressions. It shows how expensive an audience or a season is before any click or sale, and rises in busy sales periods when more advertisers compete.

CPM = ad spend ÷ impressions × 1,000

Guide: Meta Ads CPM in India: What Drives It and When It Actually Matters

When the same people have seen an ad so often that results fall: click-through rate drops and cost per purchase rises. It is usually fixed with new creative rather than a new audience.

Guide: Creative Fatigue on Meta Ads: How to Spot It and What to Change

Clicks divided by impressions. A falling CTR on an ad that used to work is often the first sign of creative fatigue.

CTR = clicks ÷ impressions

Guide: Creative Fatigue on Meta Ads: How to Spot It and What to Change

Google Ads campaigns that show image and video ads across YouTube, Discover, Gmail and other Google surfaces to people likely to be interested, rather than to people searching.

Guide: Google Demand Gen Campaigns: What They Are and When to Use Them

Giving all the credit for a sale to the first ad or channel the buyer interacted with. It favours channels that introduce people to a brand, such as video and social ads.

Guide: First-Click vs Last-Click Attribution: Which Should a D2C Brand Use?

The average number of times each person reached saw your ad in a period. Rising frequency with falling results is a sign the audience is worn out.

Frequency = impressions ÷ reach

Guide: Meta Ads Frequency: What Number Is Too High, and What to Do About It

Google’s analytics service, which records visits, where they came from and what visitors did. Its sales rarely match Shopify’s exactly, because blocked or untracked sessions are missing.

Guide: GA4 vs Shopify: Why the Sales Numbers Don't Match

Revenue minus the cost of the goods sold, as a share of revenue. It leaves out shipping, fees, returns and marketing, so for an online store it overstates what each order earns.

Gross margin = (revenue − cost of goods) ÷ revenue

Guide: Contribution Margin for D2C Brands: CM1, CM2 and CM3 Explained

The sales an ad caused that wouldn’t have happened without it, measured by comparing a group that saw the ads with a similar group that didn’t. Platform-reported sales include buyers who would have bought anyway.

Guide: Incrementality Testing for D2C Ads: Did the Ads Cause the Sales?

Thresholds agreed in advance for turning off an ad or ad set, such as spending twice the target cost per purchase with no sale. They stop decisions being made on hope.

Guide: Meta Ads Kill Rules: When to Turn Off an Ad, Based on Your Margins

Giving all the credit for a sale to the last ad or channel the buyer clicked before buying. It favours search and retargeting, which often catch buyers who had already decided.

Guide: First-Click vs Last-Click Attribution: Which Should a D2C Brand Use?

The period after a Meta ad set is launched or significantly edited, while delivery is still being worked out. Meta’s guidance is about 50 optimisation events within seven days to exit; until then results are less stable.

Guide: Meta Ads Learning Phase: What It Is and How to Get Out of It

A Meta audience of people similar to a source list you provide, such as your customers. With Advantage+ audience switched on, Meta may go beyond it when it expects better results.

Guide: Lookalike Audiences on Meta: Do They Still Work, and How to Build Them

What a customer brings over their time with you. For decisions, measure contribution margin over a fixed window such as 12 months rather than lifetime revenue, which needs guesses about the future.

Guide: LTV to CAC Ratio for D2C Brands: How to Calculate It HonestlyLTV to CAC ratio calculator

Contribution margin a customer brings over a fixed window divided by what it cost to win them. A ratio of 1 means you only got your money back. Worked out on revenue, it can look three times better than it is.

LTV:CAC = 12-month contribution per customer ÷ CAC

Guide: LTV to CAC Ratio for D2C Brands: How to Calculate It HonestlyLTV to CAC ratio calculator

A statistical method that estimates how much each channel adds to sales from the history of spend and sales over time, without tracking individual people.

Guide: Marketing Mix Modelling for Small Brands: When It Helps and When It Doesn't

An open standard that lets AI assistants such as Claude and ChatGPT call tools in other services. An MCP server offers those tools; Tera Ads Connect is one, for your ad results and store profit.

Guide: MCP Connectors Explained: How AI Assistants Reach Your Ad Accounts

Your store’s total revenue divided by your total ad spend on every channel. No ad platform decides what counts, so attribution can’t inflate it. Use it to set overall spend and ROAS to split it.

MER = store revenue ÷ total ad spend

Guide: MER vs ROAS: Which Number Should Run Your Ad Budget?MER calculator

Google’s service where online stores upload the product data, the product feed, that Shopping ads, Performance Max and free product listings are built from.

Guide: Google Merchant Center Feed Attributes: What to Fill In and Why

Code on your store that sends visits, add-to-carts and purchases from the shopper’s browser to Meta, so Meta can report results and find more buyers. It is usually paired with the Conversions API.

Guide: Shopify Customer Events and Pixels: Check Your Tracking Isn't Throttled

Splitting the credit for a sale across the ads and channels a buyer interacted with, instead of giving all of it to the first or the last click.

Guide: Shopify's Attribution Reports: How to Read Them and Pick a Model

A courier’s report that a delivery attempt failed, for example because the buyer wasn’t home or refused the parcel. Calling or messaging the buyer quickly saves many of these orders from becoming RTO.

Guide: NDR Management: How to Save Failed Deliveries Before They Become RTO

Searches you tell Google Ads not to show your ads for, so budget isn’t spent on people looking for something else. Find them in the search terms report.

Guide: Negative Keywords for Shopify Stores: A Starter List and How to Use It

Sales after discounts, sales tax, cancellations, refunds and returns: the revenue you actually keep. Profit, MER and contribution margin are most honest worked out on it.

Guide: Monthly P&L for a D2C Brand: A Simple Layout That Includes Returns

Asking cash-on-delivery buyers to pay a small part of the order online in advance, with the rest on delivery. The small commitment tends to cut refused parcels.

Guide: Partial COD: Take a Small Advance and Cut Cash-on-Delivery Returns

A Google Ads campaign type that spends one budget across Search, Shopping, YouTube, Display, Discover, Gmail and Maps, choosing where to show ads from your goals, product feed and assets.

Guide: Performance Max for Shopify Stores: Setup, Controls and Common Mistakes

Comparing return rates by delivery postcode (pincode in India) to find areas where cash-on-delivery orders come back far more often, then asking those buyers to prepay or confirm.

Guide: Pin Code RTO Analysis: Find the Areas Where COD Loses Money

The profit your orders leave, after product cost, fees, shipping and returns, divided by the ad spend that brought them. Break-even is always 1.0, whatever your margins.

POAS = profit before ads ÷ ad spend

Guide: POAS (Profit on Ad Spend): The Metric That Replaces ROASPOAS calculator

A short question after checkout, such as “How did you hear about us?”, that shows which channels buyers remember, including ones no pixel can track.

Guide: Post-Purchase Surveys: Ask Customers How They Found You

An order paid online at checkout, by card, UPI, wallet or bank transfer. Prepaid orders come back far less often than cash-on-delivery orders, so each one is usually worth more.

Guide: COD vs Prepaid Orders: The Real Cost Difference for Indian D2C BrandsCOD vs prepaid profit calculator

Google Ads’ 1 to 10 rating of how relevant your keyword, ad and landing page are to a search. Higher scores can lower what you pay per click and improve where your ad shows.

Guide: Google Ads Quality Score: What the Three Parts Mean and What to Fix

The share of customers who buy again within a set period, such as 90 days or 12 months. It decides how much a first order can afford to cost in ads.

Guide: Repeat Purchase Rate: How to Measure It on Shopify and Raise It

Showing ads to people who already visited your store, viewed a product or added to cart. It often reports a high ROAS because many of those buyers were close to buying anyway.

Guide: Meta Ads Retargeting for Shopify: Audiences, Windows and Budgets

Revenue credited to ads divided by ad spend. Each platform reports its own ROAS, counting orders when placed, including ones later returned, and two platforms can both claim the same order.

ROAS = revenue credited to ads ÷ ad spend

Guide: MER vs ROAS: Which Number Should Run Your Ad Budget?True ROAS after RTO calculator

A parcel that goes back to the seller without being delivered, usually because a cash-on-delivery buyer refused it or couldn’t be reached. The seller pays shipping both ways and earns nothing.

Guide: How to Reduce RTO in India: 12 Tactics That Work for D2C BrandsRTO cost calculator

The share of shipped orders that come back undelivered. Measure cash-on-delivery and prepaid orders separately, on orders old enough to have finished delivery.

RTO rate = RTO orders ÷ shipped orders

Guide: RTO Rate Benchmarks for India: COD, Zones, Order Value and Speed

Google Ads’ list of the real searches that triggered your ads. It is where you find wasted spend and new negative keywords.

Guide: Find Wasted Search Terms in Google Ads and Stop Paying for Them

Sending conversion events from a server rather than the shopper’s browser, so ad blockers and browser limits drop fewer of them. Meta’s Conversions API is one example.

Guide: Server-Side Tracking for Shopify: What It Fixes and What It Doesn't

Google ads that show a product’s picture, price and store name, built from your Merchant Center product feed. Their titles come from your feed, so feed quality drives results.

Guide: Google Shopping Product Titles: A Formula That Wins More Searches

A Google Ads bid strategy that aims for a set conversion value for each unit of spend. Set it from your break-even ROAS rather than a round number.

Guide: Target ROAS Bidding in Google Ads: How to Set It Without Starving Campaigns

ROAS counted only on orders that were delivered, after returned cash-on-delivery orders are taken out. It is lower than the ROAS Ads Manager shows, and closer to what reaches your bank.

True ROAS = revenue from delivered orders ÷ ad spend

Guide: True ROAS After RTO and COD: The Number Ads Manager Won't Show YouTrue ROAS after RTO calculator

What one order or one customer earns after every cost it causes: product, shipping, fees, returns and the ads that won it. If one order loses money, more orders lose more.

Guide: D2C Unit Economics Template: Profit Per Order and Per Customer

Tags added to a link, such as utm_source and utm_campaign, that tell analytics tools like Google Analytics where a visit came from.

Guide: UTM Parameters for Shopify: A Setup for Meta Ads and Google Ads

A purchase credited to an ad the buyer saw but didn’t click, within a window after the view: one day in Meta’s default setting. It can reflect real influence, but it also credits ads with sales that would have happened anyway.

Guide: View-Through Conversions: Should You Count Sales From Ads Nobody Clicked?

Spend on ads, keywords or audiences that brings no profitable sales once returns and costs are counted. It is easiest to see campaign by campaign, after returns.

Guide: How to Find Wasted Ad Spend in Meta and Google Ads: A 30-Minute Audit