High customer acquisition cost (CAC)

High cost per order (CPA)

High spend as a factor of revenue

Low conversion rates

High cost to acquire traffic (CPCs)

Minimal new customers acquired, especially from “organic” channels

High cost of media (CPMs)

Low or no gross profit

Ensure incrementality of marketing efforts: run an incrementality test across the entire marketing program and specific channels as soon as possible. It is likely that some channels are not contributing to new customers and therefore are simply wasting investment and elevating overall blended CAC.
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Ad fraud and media waste: deploy an ad fraud tool like CHEQ to measure and mitigate bots, fraud, and other wasted media spend. This reduces ad fraud by an average of about 6% which is automatically reallocated into “real” audiences.
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Increased conversion rate (better traffic, CRO): conversion rate is a function of the quality of traffic and the quality of the user experience. Reducing mass volume of low grade traffic will improve CVR (such traffic is likely not incremental anyway), but often the right step is to run through Conversion Rate Optimization. Generally there are easy optimizations to make on landing and product pages, reducing site loading times on mobile, making checkout easier (such as with Apple or Amazon pay), and layering on exit intent overlays.
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Creative and content optimizations: audiences need to be convinced on the value in order to buy; the only way you can communicate with them is through ad creative or owned content (like your website). Optimizing the messaging in creative to clarify key value props unique to that audience are likely ways to increase conversion rate. More upper funnel media should focus on brand and identity while more direct response should sell product benefits.
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Audience optimizations: at times you might be spending against an audience that doesn’t gain much benefit or have a strong need for your product. This means that conversion rates will always be low, and a majority of spend is against an audience that finds your ads irrelevant. Identifying your ideal customer and building campaigns specific to their problems (including targeting, creative, and products) will improve CAC.
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Channel and media mix alignment (GWI): as with audiences and creative, ensure that you’re spending money in channels that your customer actually uses. Using twitch streaming for a product that caters to 65+ year olds is likely to not be effective, always run a marketing plan through Global Web Index in order to identify top opportunity channels for your audience.
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Focus on new customers: ensure that the media mix overall is focused on generating net new customers rather than orders, revenue, or some other KPI. Optimizing off of pROAS in Meta is counterproductive to reducing CAC, as it will hunt for and target users demonstrating the highest intent and the largest revenue opportunity rather than a true cold prospect that has yet to convert. Targeting specific prospect cohorts, leveraging new-customer-only conversion events (tie in new “true CAC” technology), and setting up proper exclusions will reduce CAC.
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Brand partnerships: Utilizing other brand’s first party data (customer and email lists) to get in front of prospects without ad spend required is a great way to expand organic acquisition which will help offset the rise in paid acquisition costs. An example of this would be a shared giveaway with a similar brand in a separate vertical with an agreement to share new email addresses acquired and utilize owned lists for email blasts (aka you get to sneak into someone else’s email list without increasing unsubscribe rates).