Taylor Peterson wrote an article on Marketingpland titled D2C brands are driving up customer acquisition costs – and it’s time to course-correct. “For those digital brands with direct-to-consumer (D2C) sales models, online marketing is the lifeblood of growth. From targeted social to paid search, digital campaigns have proven an efficient and measurable way to build direct relationships with customers. But at what cost?”

“Customer acquisition cost (CAC) measures the total marketing cost to acquire a customer.”

“CAC = Total marketing expense / # of customers acquired.”

“CAC is outpacing customer lifetime value.”

“With the influx of D2C brands (and their inevitable competitors) playing fast and loose in the digital ad space, more dollars are needed to compete for the same impressions. As a result, CAC has reached a point where it’s outpacing customer lifetime value (LTV). This means the total amount a customer spends with a brand is less than the cost it took to acquire them, when calculating the marketing resource costs (effort and ad spend).”

“A fiercely competitive digital ad environment and a more saturated market will force D2C brands to seek more diverse, and potentially less-targeted forms of marketing. Likewise, they’ll need to stay hyper-focused on customer experience to retain a customer base for the long-term. For the digitally-native brands that grew up in the golden days of social advertising, sustaining growth in today’s environment means a return to brand-building basics.”

“An omnichannel brand experience – like that Heineken wallscape or Casper ad in the subway – requires marketers to set expectations with stakeholders. Top-of-funnel, branding initiatives aren’t designed to produce the instant satisfaction of programmatic metrics, but that doesn’t mean they aren’t contributing to long-term profitability. It takes the right mix of online and offline strategies to narrow the experience gap for customers.”

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