CAC: Customer Acquisition Chaos - by Rex Woodbury

We’ve seen tectonic shifts in the advertising world: customer acquisition costs for brands are getting prohibitively expensive, forcing brands to consider alternatives to the Google-Facebook duopoly.

It’s acquisition vehicles like Mavely, BrandBox, DTX Company’s Unbox, and Showfields that may influence this shift in the agency business model by providing meaningful opportunities for CAC diversification. And if so, the DTC era may finally begin to solve its profitability problem. This could be the first step towards improving valuation multiples... See more

Now-established players have learned that Instagram advertisements and influencer campaigns only scale to a point: they can net no more than a few hundred thousand of a brand’s “first best” customers. This has driven a shift toward physical retail and prompted founders to agonize over if and when to peddle their wares on Amazon, making direct to co... See more

Advertising spend is down, non-essential affiliate marketing is on life support, subscription strategies are nascent, and direct-to-consumer commerce is a rarity. Media is being forced to evolve, once more. And so are brands.

We are getting closer to a consumer-controlled world, and every company that spends money on advertising will be forced to find a new way to do business.

The distribution channels that underpinned the rise of today’s Internet giants have dried up. Google, Facebook, and Amazon serve as a triopoly that dominates online advertising. The three accounted for 90% of US digital advertising in 2020, up from 80% in 2019. The arbitrage that once existed on these platforms has more or less disappeared and CPMs... See more

To run a profitable and scalable business, you want LTV > CAC. Currently, w e have rising CACs and less scalable, measurable acquisition-and it's all happening in a recessionary market environment.