Introduction to Paid Customer Acquisition

1. presents Introduction to Paid Customer Acquisition ANDREW KREBS-SMITH NOAH FREEMAN

2. Andrew Krebs- Smith Andrew Krebs-Smith is the President/Founder of Social Fulcrum, a digital marketing agency in NYC and Boston. Before founding Social Fulcrum, he developed and managed marketing campaigns for accounts including Pﬁzer, Ocean City MD, The National Aquarium, and Strayer University. Andrew loves food, travel, music, exercise, and tea.

3. Noah Freeman Noah Freeman is the Vice President of Acquisition and Analytics of Social Fulcrum, a digital marketing agency in NYC and Boston. In addition, he manages the online customer acquisition campaigns for Testive and Working Advantage. Noah's an expert in Facebook advertising, in addition to having heavy experience in search retargeting, site retargeting, custom audiences, automated email management, email marketing, & lead nurturing. A graduate of Harvard, Noah most recently attended Startup Institute Boston in the technical marketing track.

4. Intro to Paid Customer Acquisition Andrew Krebs-‐Smith -‐ @AndrewKS Noah Freeman -‐ @noah_freem

5. What we will be going over • Intro to customer acquisition • Key Metrics • COCA • LTV • ROI • Choosing the right Channel

6. Intro to customer acquistion • Marketing: Customer Acquisiton • Free (ish) • • • • Organic search Inbound Referrals Word of mouth PR • Paid • Online Ads • Offline Ads (newspaper, TV, Radio, magazines) • Direct Mail • Sales-‐ Turn leads into sales (only used for some products)

7. What are you trying to accomplish? • Direct sales • Customers go online, see an ad, go to your site, buy a product • Customers sign up for a free trial with path to revenue later ! • Indirect sales • • • • Leads: Customers give phone #/email, then do a sales call Trials: Customers sign up online to trial something in the real world Email list signup: Customers sign up for emails Customers become regular readers of your site, then buy something later

8. Match the goal to the product • Tie of the month club-‐ $25/month • Online SAT tutoring: $1K/3 months, unknown brand • Sell a Ferrari: $200K one time sale • Dropbox

10. Cost of Customer Acquisition (COCA) Steps in the funnel: • Impressions • Priced as CPM = “Cost per 1,000 impressions” • Determined by Impressions • Who the audience is • Ad platform CTR • Ad type (newsfeed vs sidebar, etc) • Clicks • Click through rate x cost per impression = cost per click • Determined by: • Quality of ad Clicks • Match of ad to audience • Post click conversion • Cost per click x conversion rate = cost per acquisition • Determined by • Quality of site • Type of action required (signup for email list vs buy a ferrari online) • Match of audience to site • Post conversion sales • Some products require post-‐convsersion sales step • COCA = (CPM/1000) x (1/click through rate) x (1/conversion rate) x (1/post conversion sales rate) Conversio n Rate Convert once on site

11. How to minimize COCA • Buy as few impressions as necessary • Only show ads to people with a high likelihood of buying ! • Get a lot of clicks • High quality ads well matched to channel • Find the audience most likely to click ! • Get post click conversion • Have great landing pages • Different audiences will have different conversion rates ! • Have as few steps as necessary

12. Great Landing Pages • Your home page is NOT a landing page • You may need a lot of different landing pages • Components of a great landing page: • • • • Short description of what you are selling VERY LARGE calls to action Very few options that are not desired action Very short # of clicks between landing & completing action

13. A great landing page

14. Exercise: COCA Crossfit Gym • Path to sale • • • • • • Customers see a facebook ad ($10 CPM) They click, go to a landing page (2% CTR) They give their email address/phone to get a free class (5% conversion) Sales person calls them, schedules free class (70% never get in touch) They go to free class (50% show up) They sign up for a membership (50% sign up from free class) • What is COCA • What changes could they make to decrease COCA?

15. Key trick: UTM Tags • What they are: • Tags at the end of URLs that identify ad • When to use them • Each ad should have its own UTM code • All ads should have a code • How to use them • Lets you calculate CTR, conversion rate, COCA BY AD • https://support.google.com/analytics/answer/1033867?hl=en (google “UTM builder”)

17. Lifetime Value of Customer • Revenue per sale • # of items per sale x revenue per item • Gross margin • Profit per item / Revenue per item • # of sales per customer • Over lifetime of customer, how many purchases do they make? • If it’s a subscription, how many months do they stay around? ! • LTV = Revenue per sale x gross margin % x # of repeats • LTV = (# of items per sale) x (revenue per item) x ((item sales price – item cost)/ (item sales price)) x (# of sales per customer over lifetime)

18. LTV Exercise • Selling Neckties Online: • $25/tie, $10 cost/tie, average 2 ties/checkout. • 2.5 repeats per customer • What is LTV? ! • How can we increase this LTV?

19. Ways to maximize LTV • Increase dollars per checkout • Sell higher cost items • Sell bundles of many items ! • Increase Gross Margin ! • Increase repeat rates • Actively market to your past customers to remind them • Sell subscriptions and auto-‐renewals! • Good products & customer service

21. Marketing Return on Investment • ROI = (LTV) / (COCA) ! • ROI decision making: • <1: you are losing money on your ads. • You need to increase LTV, or decrease COCA • =1: breakeven. • >1: You are making more money than you put in. Advertise more! • Beware cash flow issues with long-‐period LTV

23. Which channels to choose Channel Subtype Facebook Social Demand Creation vs Fulfillment Audience Selection • Demand Creation • Who is fan of what page, who is friends Who they • with who. are Facebook Targeted • Demand Creation Paid (demographics) • Demand fulfillment for Google Adwords • identity/interest based • What they search for Demand fulfillment • What they are Google Display Other Sites Display • Demand creation • Demand fulfillment if Demand creation • well matched to site • Demand fulfillment if well matched to site • What site they are on (interest) • What site they are on (interest)

24. Which channels to choose (Part 2) Channel Subtype Pro Facebook Social • Cheap to free Facebook Targeted Paid Google Adwords • Google Display • • Other Sites Display • • • Con • • Insanely niche targeting • capabilities Very effective when • Very effective for right • product • Simple creative Good for non time • sensitive products Great for very targeted • niches Very labor intensive Less functional in “new facebook” challenging Technically interface Only works iexpensive Clicks often f well Needs sufficient search volume can be Creative challenging Negotiated individually, requires creative

25. Exercise: What Channels to use: • Heating Oil Delivery • SAT Tutoring • Card that combines all your credit cards • Discount shopping browser plugin • Necktie of the Month

26. Course Title Course Title INSTRUCTOR NAME

Introduction to Paid Customer Acquisition

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