Friday, December 9, 2011

The Rising Cost of Customer Acquisition - II

In our last article, we touched on the impact of unmonitored competitor activity. This article looks at another possible contributor to the rising cost of customer acquisition.


When the forces of rising demand and limited supply interact, it’s almost inevitable that prices will increase. Let’s consider this powerful cocktail:

Every year there are more advertisers competing for less space, amongst search results which are becoming more localised. Add to this a tendancy for Advertisers to impulsively bid higher when sales are slow and there is a strong likelihood of increased cost of customer acquisition.
Furthermore, the first two factors collude to push organic search results further down the page – sometimes to/ below the critical fold of the page.
Possible remedy: review of Ad Positions. We review history of Positions first at an Adgroup, then at a Keyword level. Identify the high and low performers and bid according to their Positions. If budget is being exhausted each day, consider trying lower positions to make it last longer. Another option is to grant Google’s wish and increase your budget.
Try to prove a successful conversion model with a position-based bidding strategy. If sales are thin more spend may be required, but the rise in cost per acquisition should be contained, by avoiding entering a bidding war.
Another helpful byte coming up!

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