Can someone explain this to me? Why is it so high? Even if every single person on Facebook buys a product because of ads once per year, doesn't that mean companies are paying $240 to acquire a customer in the US? Is it worth that?
My first though was that maybe 1% of users buy something in a given year, but that's $24k to acquire a customer and is so far from reality that my perspective must be way off.
> Can someone explain this to me? Why is it so high? Even if every single person on Facebook buys a product because of ads once per year, doesn't that mean companies are paying $240 to acquire a customer in the US? Is it worth that?
1. I wouldn't be surprised if lots of businesses lose money on their Facebook ads, but either don't realize it or Facebook has enough churn that it doesn't matter if the quit (e.g. a revolving door of unsophisticated local businesses spending money on Facebook because it's the biggest game in town).
2. A lot of advertising is broad "brand awareness," and I imagine it's actually very hard to determine if it's actually working in many cases.
In consumer finance, CACs are even higher. For standard credit cards it’s around $200 but can be over $1000 for premium cards.
[1] https://www.fool.com/investing/2018/01/23/netflixs-83-millio... [2]https://www.unifimoney.com/blog/changing-the-vicious-cycle-o...
Also, online advertising can lead to in store sales. When you look at those dollars people spend a couple orders of magnitude more than $240 on stuff every year.
Of course the money is all being spaffed for nothing. It doesn’t take a degree in applied ecosystem analysis from Aberyswyth Technical College to figure out that Coke spending 50m on a christmas campaign doesn’t sell anymore Coke.