Managing Acquisition Costs Effectively

Managing Acquisition Costs Effectively
Website Magazine
By Keith Kochberg
July 1, 2009

1. Real-time tracking and reporting. The key to cost-effective management is to know what’s working and what’s not. Proper real-time tracking and reporting is imperative not only by channel, but across all channels simultaneously. That may require using duplicate tracking for a specific initiative — for each search engine, affiliate program, and so on. Align cookie duration appropriately and pay attention to lag times between clicks and conversions to get the metrics needed to determine which campaigns are working, and those that need to be tweaked, eliminated or replaced. If possible, try using a single centralized reporting tool for all campaigns, rather than maintaining separate tracking systems for each and manually compiling and analyzing data.
2. Proper attribution. Tracking the actual value of each campaign can get complicated when running many initiatives with multiple ad tracking solutions. Yet, establishing proper attribution is critical to optimizing costs across channels. Before launching a campaign, be sure to account for the effects of conversions on other channels’ reporting. For example: Will a view-based campaign result in double counting with a search marketing campaign? What else might skew the value and results? Figuring this out in advance is critical; assigning value after the fact will lead to inefficient campaign management, such as optimizing for an incorrect cost per acquisition (CPA) goal.
3. Daily optimization. What worked well yesterday, might not work today. Even the most successful campaigns should be analyzed, optimized and updated on a regular basis. Look at all metrics — from impressions and clicks, to conversions and sale amounts. Creative can be swapped out quickly, or perhaps traffic needs to be redirected to a different landing page. Build historical data to identify when something is an expected trend versus a true change in a campaign’s performance.
4. Customer value. Consider the life time value (LTV) of your customer. Managing to a LTV can often expand your marketing opportunities and lead to scalability of your campaigns. Depending on your product or service, this calculation can be done in months or years, and should be as granular as possible by customer source. For example: A customer acquired through search engine marketing who remains a customer for three years has a greater LTV than an incentivized customer who ends their relationship with you in 30 days. In this example, search campaigns are managed to a higher CPA than incentivized campaigns.
5. Campaign testing. Testing different aspects of your campaign in a controlled and continuous way is a must. Regular testing leads to optimized ROI and can increase campaign scalability. Test everything, one at a time — placements, demographics, creative, landing pages and more. To determine results, establish a number of impressions, clicks or conversions that are statistically relevant, rather than working within a predetermined timeframe to account for varying traffic volumes. You may be able to use your test results in one channel to improve performance in another. For instance, a creative that proved effective in a media buy might transition well to an affiliate program, or vice versa.
6. Channel selection. Each channel needs to be considered according to several factors, including budget, scalability, brand impact and purpose. Look at your specific goals and assess how different channels might support one better than another. For instance, e-mail marketing might work better for acquisition than it is for customer retention. When deciding which channels are right for you, understand the required investment of time and money to help determine viability. An affiliate program takes considerable time and energy to build and cannot be truly evaluated in the first few months after launch. Conversely, search engine marketing can be evaluated rather quickly.