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Using a blended CAC doesn't mean ignoring individual channel performance. Use the blended number as your high-level strategic guide. When it rises, dive into the siloed, channel-specific metrics to diagnose the root cause of underperformance and make tactical adjustments.
Applying a single attribution model, like last-touch, to all channels is a mistake. It undervalues top-of-funnel activities and can lead to budget cuts that starve the pipeline. Instead, measure each channel based on its intended outcome and funnel stage.
Establish a single, blended CAC target across all marketing channels. As long as your total spend stays below this number, you have the flexibility to continue spending and experimenting with new channels without being beholden to the short-term performance of any single one.
Focusing on a low Cost Per Lead is a common mistake; cheap leads often fail to convert. The more meaningful metric is Customer Acquisition Cost—total marketing spend divided by actual new customers. This shifts focus from lead volume to profitable growth and true campaign effectiveness.
A blended CAC across all channels hides crucial information. By calculating CAC for each individual platform or method (e.g., paid ads, content, outreach), businesses can identify their most efficient channels. This allows them to reallocate budget and effort to the highest-performing areas for more profitable growth.
Don't combine branded and non-branded search when calculating channel CAC. Branded search converts users who already know you from other efforts, making its CAC artificially low. Separating them is crucial to accurately assess how well your ads are acquiring truly new customers.
Early TV tests for DTC brands often focus on a strict Cost Per Acquisition (CAC). As a business scales into omnichannel, the definition of "performance" must expand. Success metrics should include the halo effect on other channels, like branded search lift and increased sales on Amazon.
Standard attribution models often fail to credit upper-funnel activities. A blended CAC mitigates this by focusing on total investment vs. total customers, implicitly valuing channels that influence conversions even if they don't get the final click. This prevents prematurely cutting channels that assist others.
Don't evaluate marketing channels in silos. A paid search lead isn't just from one click; it was enabled by 5-7 previous brand touchpoints from mass media, social, and other channels. The entire marketing strategy works as a closed loop, and its success must be measured holistically against overall business growth.
Marketing attribution models should not be used for precise, tactical decisions. Instead, view them as a compass that provides directional guidance on which channels are generally performing better, helping you make broader strategic choices rather than following it as an exact roadmap.
Rather than isolating test budgets, roll new channel experiments directly into your overall blended CAC calculation from day one. All spend is part of acquiring customers, and this maintains a holistic, accurate view of total marketing efficiency. Small test budgets are unlikely to skew the overall number significantly.