> ## Documentation Index
> Fetch the complete documentation index at: https://www.laurence.com/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Dictionary

> The terms we use for Amazon ads, performance, margin and customer value, in plain English with the formula behind each one

This page is the shared vocabulary for Laurence: what each term means in plain English and, where one exists, the formula behind it. Terms run from simple to complex, so each term is defined before another term uses it. If a word is new, start at the top and read down.

For Amazon-specific terms and the page that explains each one, see the [Amazon Glossary](https://www.laurence.com/docs/amazon/glossary.md). Where a term appears in both, this page defines it the way we use it inside Laurence.

## Amazon basics

| Term | Meaning |
| - | - |
| `ASIN` | Amazon Standard Identification Number; unique code per listing on Amazon |
| `Parent ASIN` | Parent ASIN = groups of products |
| `Child ASIN` | Child ASIN = one size, colour, scent, etc. |
| `Product line` | Our term for listings that differ only by colour, scent or size. |
| `SKU` | A seller's own unit id. An ASIN can have several SKUs at different prices. |
| `Seller (3P) / Vendor (1P)` | Third party selling through Seller Central vs wholesale to Amazon through Vendor Central. |
| `FBA / FBM` | Fulfilled by Amazon vs fulfilled by the merchant. |
| `Private seller` | A seller (3P), usually a smaller store, that buys products to resell on Amazon at a profit rather than building a defined brand of its own. It uses Fulfilled by Amazon: Amazon stores, packs and ships its orders. |
| `Buy Box` | The featured offer on a product page. Sponsored Products only serve while the advertiser holds it. |
| `SERP` | Amazon search engine results page. |
| `Sponsored tile` | A paid product in the search results. |
| `Organic rank` | Position among unpaid results for a search. |
| `Market` | An Amazon subcategory (browse node). |
| `Niche` | A cluster of searches sharing one shopper intent. Never a subcategory. |
| `BSR` | Best Sellers Rank. |

## Ads & campaigns

| Term | Meaning |
| - | - |
| `Sponsored Products (SP)` | Ads for a single product that look like normal listings with a “Sponsored” label, shown in search results and on product pages. Targeted by keyword or product; paid per click. Our primary channel. |
| `Sponsored Brands (SB)` | Ads that show the brand's logo, a custom headline and several of its products, or a video, mostly at the top of search results. Need Brand Registry. Targeted by keyword or product. |
| `Sponsored Display (SD)` | Display ads that follow shoppers on and off Amazon (product pages, the Amazon home page, other sites and apps), targeted by product, category or audience, such as people who viewed a product but did not buy. |
| `DSP` | Amazon's demand-side platform for programmatic display and video. Runs on our own seat. |
| `Profile` | A brand's Amazon Ads account in one marketplace (for example the US). The top level we manage; settings and budgets roll up to it. |
| `Campaign` | A container for ads inside a profile, with its own daily budget, targeting type (manual or AUTO) and placement modifiers. It holds the keywords or product targets we bid on. |
| `Search term` | What a shopper actually types into Amazon search. Not the same as a keyword: one keyword can match many search terms, depending on its match type. |
| `Keyword` | Search text we bid on, with a match type. |
| `Match types` | Exact (known searches), phrase (search contains our text), broad (loosely related). Phrase and broad discover new searches. |
| `Close variant` | A search Amazon treats as the same as an exact keyword (plurals, spacing, dropped function words). |
| `AUTO targeting` | Campaign with no keywords. Amazon picks where it shows, via four clauses: close match, loose match, substitutes, complements. |
| `Product targeting (PT)` | Bidding on a specific ASIN or category instead of a search. |
| `Negative keyword / negative target` | A search term or product we exclude from a campaign or ad group. The ad keeps running everywhere else; it just won't serve on searches that match the negative keyword (by its match type) or on the negated product's page. |
| `Branded / non-branded` | Searches containing our brand name vs generic or competitor searches. Different economics. |
| `Defensive targeting` | Targeting our own products to protect them. |
| `Placement` | Where an ad shows. Sponsored Products has three: Top of Search, Rest of Search and Detail Page. Each converts and costs differently, so each can get its own bid uplift. |
| `Top of Search (ToS)` | The sponsored slots in the first row of the first page of search results. Usually the highest conversion rate and the highest click price. |
| `Rest of Search (RoS)` | Sponsored slots anywhere else in search results: lower on page one and on later pages. |
| `Detail Page (DP)` | Sponsored slots on other products' pages (Amazon calls this “product pages”), such as the carousels under a competitor's listing. |
| `Bid` | The most we will pay for one click on a target. |
| `Placement modifier` | A percentage uplift on the bid for one placement, set per campaign, 0% to +900%. |
| `Audience modifier (SH)` | Uplift for Shopping History audiences. |
| `Dynamic bidding` | Campaign setting that lets Amazon lower, or raise and lower, a bid at auction time. |

## Performance metrics

| Term | Meaning | Formula |
| - | - | - |
| `Impression` | One showing of an ad or listing to a shopper. | |
| `Click` | A shopper clicking the ad. | |
| `PPC` | Pay per click: we pay only when a shopper clicks. | |
| `CTR` | Share of impressions that become clicks. | `clicks ÷ impressions` |
| `CPC` | What we actually pay per click (can be below the bid). | `spend ÷ clicks` |
| `Attribution window` | How long after a click an order still counts for the ad (1, 7, 14 or 30 days by ad product and report). | |
| `Orders / Ad sales` | Orders and sales Amazon credits to ads inside the attribution window. | |
| `CVR` | Share of clicks that become orders. The one number the bid model estimates. | `orders ÷ clicks` |
| `AOV (average order value)` | Revenue per order. | `sales ÷ orders` |
| `ROAS` | Sales per \$1 of ad spend. | `ad sales ÷ ad spend` |
| `ACOS` | Ad spend as a share of ad sales. Inverse of ROAS. | `ad spend ÷ ad sales` |
| `TACOS` | Ad spend as a share of all store sales, paid and organic. | `ad spend ÷ total sales` |
| `Organic vs ads split` | How much of revenue came from unpaid vs paid sales. | `ad sales ÷ revenue basis` |
| `Implied TACOS` | TACOS we expect from a plan. | `expected ad spend ÷ expected total store revenue` |
| `CPA (cost per acquisition)` | What we spend on ads per attributed order, new or repeat customer. Lower than CAC whenever some ad orders come from existing customers. | `ad spend ÷ ad orders` |
| `CAC (customer acquisition cost)` | Customer acquisition cost: what we spend on ads to win one new customer. | `ad spend ÷ new customers acquired` |

## Margin & order valuation

| Term | Meaning | Formula |
| - | - | - |
| `ASIN Price` | What the shopper pays for an ASIN (not incl. taxes fees shipping); the listing price | |
| `COGS` | Cost of goods sold; direct costs of producing or purchasing the goods a company sells | |
| `Trade terms` | Discounts Amazon deducts from what it pays a vendor (co-op, damage, freight, early payment), as a share of cost price. | |
| `Contribution Margin` | A product's value after subtracting COGS from its sales price | |
| `CM2` | Money left per unit after Amazon fees and COGS, before ads, in the store's currency. | `price − Amazon fees − COGS` |
| `CM2%` | CM2 as a share of the listing price. The margin that prices every bid. | `CM2 ÷ listing price` |
| `CM2 (Vendor Central)` | CM2 for 1P brands, where the money flows differently. In Seller Central the brand sells to the shopper: it gets the listing price and pays Amazon's referral and FBA fees. In Vendor Central the brand sells wholesale to Amazon: it gets the wholesale price minus trade terms, pays no referral or FBA fees, and Amazon sets the listing price. Example: \$20 listing price, \$10 wholesale, 10% trade terms, \$5 COGS gives CM2 = \$4. | `wholesale price × (1 − trade terms) − COGS` |
| `CM2% (Vendor Central)` | Vendor Central CM2 as a share of the listing price, not the wholesale price, because ad sales and ROAS are reported at the listing price. In the example above, CM2% = \$4 ÷ \$20 = 20%, not 40%. | `CM2 (Vendor Central) ÷ listing price` |
| `CM3` | Money left per unit after ads too, in the store's currency. Not used to price bids. | `CM2 − ad spend per unit sold` |
| `CM3%` | CM3 as a share of the listing price. | `CM3 ÷ listing price` |
| `Value per conversion` | What one order is worth after costs. Also the most we could pay to win a customer who only ever orders once. | `AOV × CM2%` |
| `Breakeven ROAS` | The ROAS at which ads pay for themselves on ad sales alone. Never 1.0. | `1 ÷ CM2% (30% margin gives about 3.3)` |

## Customers & how much to spend

| Term | Meaning | Formula |
| - | - | - |
| `NTB (new-to-brand)` | Customer with no order from the brand in the prior 12 months (Amazon's definition). | |
| `NTB share` | Share of ad-attributed orders that come from new-to-brand customers. | `NTB orders ÷ attributed orders` |
| `Breakeven CAC` | The most we can pay to win one customer and still break even, at a named horizon. | `AOV × CM2% × (1 + L); L = expected additional orders per first order` |
| `LTV` | Average revenue a new customer generates across the whole brand catalog over a horizon (blended, 1 to 4 years), from AMC cohorts. | `cohort revenue ÷ cohort buyers` |
| `LTV:CAC` | Lifetime value to customer acquisition cost. How much margin a customer brings in over their life for every \$1 spent to win them. We target the typical 3:1, meaning \$3 back for every \$1 of acquisition cost. | `(LTV × CM2%) ÷ CAC; target 3:1` |
| `Target CAC` | The most a brand can pay to acquire a customer and still hit a 3:1 lifetime value to cost ratio. | `cohort LTV × CM2% ÷ 3` |
| `Incrementality` | Share of attributed sales that would not have happened without the ad. | |
| `CPC ceiling` | The most one click is worth. It is not a bid. | `CVR × value per conversion` |

## Data sources

| Term | Meaning |
| - | - |
| `AMS (Amazon Marketing Stream)` | Near real-time feed of ads traffic and conversions. |
| `AMC (Amazon Marketing Cloud)` | Amazon's clean room for event-level queries. |
| `Brand Analytics` | Amazon reports for brand owners (SFR, SQP, top clicked products). |
| `SFR (search frequency rank)` | Rank of a search by how often shoppers make it. Ranks searches, not products. |
| `SQP (Search Query Performance)` | Impressions, clicks and purchases per search for our products vs the market. |
| `SP-API` | Amazon's Selling Partner API. Source of total sales. |


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.