Definition
Paid traffic is visits from ads you pay for: search ads, social ads, display and sponsored placements. Analytics tools recognise it from campaign tags and click IDs.
Tag every ad
Use UTM parameters with a paid medium (cpc, paid_social) so visits are grouped correctly and can be followed to sign-ups.
Judging it
Compare paid channels on cost per retained customer, not cost per click. Check paid traffic for automated clicks: invalid traffic inflates visits and spend without ever converting.