Today, more than ever, competition is fierce for marketing budgets between the main digital channels. Search, social media, display, affiliate and email marketing are still growing at a steady rate, but the good news is they have finally been around for long enough for marketers to decide where they should spend their budgets.
Custora, the lifecycle marketing company, constantly analyses a number of key metrics (including customer acquisition) in the $200 billion U.S digital marketing and e-commerce sectors. Their findings are solid as they use aggregated data taken from millions of e-tailers and consumers. This year, the company has published data on the ‘lifetime value of customers based on the channel used to acquire them”.
The results are impressive:
Channel* Customer lifetime value
(as a percentage relative to average)
Cost per click advertising 46.50%
The table above shows that cost per click advertising helps acquire customers that are worth 46% more than your average customer. Organic search is top of the class, as it brings in buyers that are worth an impressive 54% more than the average customer. These are great results for both search channels. However, it is important to note that it is easier to show real customer value when the buyer comes directly via search. Search channels target people who already tell you what they are looking for; this means that they are further ahead on the intent graph. This is something that social platforms still find difficult to do.
To fight back, Twitter and Facebook are putting new tools in place in order to grab some of the intent graph via retargeting and new targeting tools. But the fact is, they both have a lot of work to do in order to become as effective as search channels with regards to acquisition of high value customers. The table above highlights that customers brought in via Twitter are worth 23% less (than the average customer) and Facebook only manages to bring in average clients.
With social channels upping their marketing game, search is going to have to work harder. This means that agencies and clients will have to look deeper into search users’ behaviour in order to better identify at what point the ‘intent to convert or buy’ occurs. This means having a much clearer view of the type of terms used for information gathering versus intention to buy or convert. In the meantime, we would expect that most of marketers’ money would remain on search.
* Results based on 2 years of data from 72 million U.S consumers shopping at 86 U.S retailers within 14 industries
Photo Credit: www.media.co.uk