An impression is like someone looking at a sign you made. If your ad pops up on someone’s screen, that’s one impression—even if they don’t click on it. Imagine putting a poster on a wall; every person who walks by it counts as an impression.

Reach is the total number of different people who see your ad. Imagine you hand out flyers for your gym to 500 unique people in your town. That’s your reach—you connected with 500 individuals.

Frequency is how often one person sees your ad. For example, if someone sees your Facebook ad three times this week, your frequency for that person is three. It’s like seeing the same TV commercial multiple times during a show. To calculate, divide impressions by reach. For example, if your ad is seen 300 times (impressions) by 100 people (reach), then 300 ÷ 100 = 3. So, each person saw it three times.

This is the total amount of money you’ve spent on your advertising efforts. For instance, if you ran a $20/day campaign for 30 days, your total ad spend would be $600. It’s the advertising equivalent of adding up all the receipts.

Average Lead cost is the average of how much it costs to get one person interested in your business. If you spend $20 on ads and two people give you their phone numbers, your lead cost is $10 each. It’s like spending $10 to hand out a flyer to someone who actually wants to buy lemonade. For example, if you spend $50 and get 10 leads, your lead cost is $50 ÷ 10 = $5 per lead.

CAC shows the cost to get one paying customer. Divide your ad spend by the number of new customers. If you spend $100 and get 4 new customers, your CAC is $100 ÷ 4 = $25 per customer.

ROI is about whether your ad made you money. If you spend $10 on an ad and earn $30, your ROI means you made $20 more than you spent. It’s like buying a candy bar for $1 and selling it for $3. Subtract your ad spend & fees from your revenue, then divide by your ad spend. For example, if you spend $50 and earn $150, the formula is ($150 - $50) ÷ $50 = 2. Your ROI is 2 times or 200%.

This is how long it takes to earn back the money you spent. If you spend $100 on an ad and make $100 in two months, your payback period is two months. Divide your ad spend by how much you earn per month. For example, if you spend $200 and make $100 a month, your payback period is $200 ÷ $100 = 2 months.

Total revenue is all the money you earn before costs. Multiply how many things you sold by the price. For example, if you sell 20 memberships for $50 each, your revenue is 20 × $50 = $1,000.

Net profit is what’s left after you pay all your bills. If you make $50 from a lemonade stand but spend $30 on lemons and cups, your net profit is $20. It’s the money you get to keep. For example, if you earn $1,000 but spend $700 on rent and supplies, your net profit is $1,000 - $700 = $300.