1. Training
2. Local
3. VFR Traffic Advisories

VFR Traffic advisories are different from radar traffic advisories and are much more relaxed.  In a traffic advisory from the tower the main things you want to include are the aircraft's type and it's position.

e.g.  "(Callsign), traffic is a Beach 58 off your (left/right) wing."

e.g.  "(Callsign), traffic is a Cessna 152 off your nose."

If saying the position from the first aircraft is difficult you can say thier position in the pattern.

e.g.  "(Callsign), traffic is a Cessna 162, midfield downwind runway (XX)"

e.g.  "(Callsign), traffic is a Cessna 182, 4 mile final runway (XX)"

e.g.  "(Callsign), traffic is a Mooney turning downwind runway (XX)"

If the second aircraft has the first in sight you can say:

"(Callsign), follow that traffic, runway (XX), cleared for the option. number (2,3,4...)"

If you end up having traffic on the runway or flying over the runway that will cause a problem you could say:

"(Callsign), go around, traffic on the runway."

"(Callsign), cancel takeoff clearance, traffic overhead the runway."