Ecommerce Marketing Glossary for DTC Brands

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This ecommerce marketing glossary explains the terms we use every day when we run ads and stores for DTC brands. Each entry gives a one-line definition, the formula where there is one, a worked example and the decision the number should drive.

The terms link to the free calculators where you can work out your own numbers, and to the guides that go deeper.

What ecommerce marketing terms should a DTC founder know?

The core set is MER, ROAS, CAC, LTV, AOV, contribution margin and conversion rate for the economics, plus CPM, CPC and CTR for ad delivery, and Advantage+, Conversions API, attribution windows and creative fatigue for how Meta works today. Each term below has a plain definition, the formula where one exists and an example.

All terms

MER (Marketing Efficiency Ratio): MER is total store revenue divided by total marketing spend for the same period, showing revenue earned per marketing dollar regardless of platform attribution.
CAC (Customer Acquisition Cost): CAC is the average marketing cost to acquire one new paying customer, calculated as acquisition spend divided by new customers in the same period.
LTV (Customer Lifetime Value): LTV is the total value a customer brings to your store across all their orders over a defined period, ideally measured on gross margin.
AOV (Average Order Value): AOV is the average amount a customer spends per order, calculated as total revenue divided by total number of orders in the same period.
CPM (Cost Per Mille): CPM is the cost of 1,000 ad impressions, calculated as ad spend divided by impressions and multiplied by 1,000.
CPC (Cost Per Click): CPC is the average amount you pay for each click on an ad, calculated as total ad spend divided by the number of clicks.
CTR (Click-Through Rate): CTR is the percentage of ad impressions that result in a click, calculated as clicks divided by impressions and multiplied by 100.
Conversion rate (Ecommerce conversion rate): Ecommerce conversion rate is the percentage of store sessions that end in a purchase, calculated as orders divided by sessions.
Advantage+ Shopping (Advantage+ sales campaigns): Advantage+ shopping campaigns are Meta's automated ecommerce sales campaigns that use machine learning to handle targeting, placements and creative delivery.
Conversions API (CAPI): The Conversions API is Meta's server-side tracking tool that sends website events like purchases directly from your server to Meta for attribution and optimisation.
Attribution window (Conversion window): An attribution window is the period after an ad click or view during which a purchase is credited to that ad by the ad platform.
Creative fatigue (Ad fatigue): Creative fatigue is the decline in ad performance that occurs when an audience has seen the same creative too often, lowering CTR and raising costs.
UGC (User-Generated Content): UGC is content showing real people using or talking about a product, typically creator-made videos used as native-looking ads on social platforms.
Contribution margin (CM): Contribution margin is revenue minus all variable costs, such as product, shipping, fees and often marketing, showing what each sale contributes to fixed costs and profit.
Blended ROAS (Blended return on ad spend): Blended ROAS is total store revenue divided by total ad spend across all channels, measuring overall advertising efficiency without relying on platform attribution.
ROAS (Return on Ad Spend): Revenue from ads divided by ad spend. The full guide covers the formula, benchmarks and break-even ROAS.

Frequently asked questions

What is the most important metric for a DTC brand?

There is no single metric, but contribution margin after ad spend comes closest, because it shows whether growth makes money. MER, CAC and break-even ROAS all feed into it. A brand can show a high ROAS and still lose money if product cost, shipping, fees and returns are not counted first.

What is the difference between CAC and CPA?

CPA is the cost per acquisition a platform reports for a conversion event, usually a purchase, and it includes returning customers. CAC is what it costs to win a brand new customer, ideally including all marketing costs. CAC is the number to compare with first-order profit and LTV.

Why do Meta and Shopify show different numbers?

They measure differently. Meta credits purchases within its attribution window after a click or view, models some conversions it cannot observe, and can count a sale another channel also claims. Shopify records actual orders. That is why we track MER from Shopify alongside platform ROAS and check the Conversions API setup.

Where can I calculate these metrics?

Use the free tools hub. There are calculators for break-even ROAS, MER, CAC, LTV, AOV, Meta ads budget and conversion rate, plus the original ROAS calculator with a full profit model. Each one explains the formula and how to act on the result.

Turn the metrics into a plan

In a Brand Growth Audit we calculate your real MER, CAC and break-even ROAS and show which lever moves profit fastest. Book a Brand Growth Audit.