Getting the best value from your marketing in 2022

Marketing efforts to get new customers cost money, either in the form of resource budgets or media budgets (or both). This metric, known as the Customer acquisition cost [CAC] is an important commercial metric that calculates the total sales & marketing effort used by the number of visitors that convert or buy a product / service. This figure, along with Customer Lifetime Value (LTV), are probably the two most effective and comparable marketing metrics used.

Understandably most digital marketing managers also like this overall average cost to be broken down by each acquisition channel. This allows them to assess the effectiveness of each, with the usual groupings given by digital analytics applications including: 

• Paid Search - visitor clicks on a paid advert in a search engine results page
• Organic search - visitor clicks on a link in a search engine results page that can be improved using Search Engine Optimisation techniques
• Referral - visitor clicks on a link (usually not paid for) in another website

Note: when explaining this topic I should always mention the Direct channel. This is when no channel can be identified by the analytics application used  e.g. the visitor types the URL director into the browser or when the source cannot be determined). For some sites a large percentage of Direct visits can either be an indication of brand recognition or a reflection of significant offline marketing activity; but for others it could simply highlight a tracking issue with a few key inbound links.

Organic search can have the lowest CAC

Typically Organic Search still delivers a lower CAC than other marketing channels, such as paid search or display advertising. 

This has been explained in detail in many posts, e.g.

https://www.growthcollective.com/blog/customer-acquisition-cost-ads-seo

https://firstpagesage.com/seo-blog/seo-roi/average-customer-acquisition-cost-cac-by-industry-b2b-edition-fc/

Although my own word of caution when calculating CAC is that all costs must be counted (e.g. media, agency management, in-house staff coordination, etc.) not just some, if you are to properly compare "apples with apples".