Direct-to-Consumer (DTC) brands are gearing up for the new year by revamping their growth strategies. As they should! Especially when you consider the obstacles that complicated growth campaigns in the past year, such as the limitations brought on by iOS 14.5+, Facebook’s deprecation of the Advanced Mobile Measurement (AMM) program, the latest Apple ruling, and so much more. Scalability is getting trickier as we’re diving deeper into the new normal.
In turn, DTC brands are beginning to realize that the Customer Acquisition Cost (CAC) strategy is limiting your brand’s ability to scale because it only “locks” the price you are willing to pay. Inversely, payback/return-based strategy allows growth teams to “stretch” that limit by focusing on the return.
Here’s how you can build campaigns with a payback strategy:
- Understand your customer data: Cross your own data with the marketing data cost. Find out how much it costs to acquire new customers, and how long it takes your high-value users to payback.
- Analyze the return on ad spend (ROAS) when the seven-day conversion window ends: Does the average ROAS for those users match the payback? Is it more or less? The answer will help you determine your ROAS for the limited time frame of the conversion window.
- Change your campaign objective: Switching from the standard cost cap calculated CAC, to maximizing your customer acquisition value through minimum ROAS needed after finding out the required ROAS in your customer cycle data.
Go to the full Voyantis blog post for more future-proofed insights on how your DTC brand can optimize growth campaigns for 2022 and beyond.