Introduction to Paid Customer Acquisition

presents

Introduction to Paid
Customer Acquisition
ANDREW KREBS-SMITH
NOAH FREEMAN

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.

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.

Intro to Paid Customer
Acquisition
Andrew
Krebs-‐Smith
-‐
@AndrewKS

Noah
Freeman
-‐
@noah_freem

What we will be going over
• Intro
to
customer
acquisition

• Key
Metrics

• COCA

• LTV

• ROI

• Choosing
the
right
Channel

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)

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

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

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

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

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

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?

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”)

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)

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?

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

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

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)

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

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

Course Title
Course Title

INSTRUCTOR NAME

Introduction to Paid Customer Acquisition

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