Growth strategies to maximize ROI
Tracking digital performance is increasingly challenging. The customer journey is getting more and more complex, with multiple media channels creating many touch points before any direct interaction with your brand.
iOS14 complicated tracking even more, and the end of third-party cookies will have an even greater impact.
Besides this there are ongoing best practices shifting between long-term brand building vs short-term activation, and the impact of high-quality creative content on business outcomes.
With constant changes in conditions, evaluating ROI is no longer an exact science. But there are a few basics that can help:
Customer Acquisition Cost (CPA/CAC): Know the cost of acquiring each customer.
Customer Lifetime Value (LTV/CLTV): Understand what a customer is worth over their lifetime. Simplify this to Profit * Retention of a customer. Ideally per cohort.
LTV/CAC Ratios and Payback Periods: Calculate these to assess profitability.
Channel Differences: Identify key differences in the above performance KPIs across your marketing channels. Ideally per cohort.
These basics provide a foundation to assess your current position. It’s important to understand the characteristics of each channel, and your primary company goals. For example, videos may offer more additional brand-building benefits compared to banner ads, justifying a lower LTV/CAC ratio or longer payback period.
To get into the full complexity of MMM, you can delve into the marginal CAC. A channel may have high scaling potential, but returns may decrease as incremental CAC rises.
The challenge is to balance out all the above conditions as they are changing with new tech releases, legal requirements and new media popping up. To maximise ROI will be an ongoing puzzle in your growth strategy. You will always find new ways to tweak your media mix.
