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What are the best ways to measure search ad impact on customer acquisition costs?

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Search ads are a powerful way to attract and convert potential customers online, but how do you know if they are worth the investment? One of the key metrics to track is the customer acquisition cost (CAC), which measures how much you spend on average to acquire a new customer through a specific channel or campaign. In this article, we will explore some of the best ways to measure the impact of search ads on CAC and how to optimize your campaigns accordingly.

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1 Define your goals and segments

Before you start measuring the impact of search ads on CAC, you need to define your goals and segments. What is your target CAC for each product or service you offer? How do you segment your customers based on their behavior, demographics, or interests? How do you align your search ad strategy with your segments and goals? These questions will help you set clear and realistic expectations and benchmarks for your search ad performance.

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Safeer Ahmed

I Help Scale eCommerce Brands with Google Ads | 9+ Years of PPC Experience | Google Ads Specialist | PPC Media Buyer | SEM @ Logical Gecko | Google Ads Professional
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Define account goals and what you are looking for: 1. Calls 2. Form fills 3. Email contact 4. Zoom/Calendly meeting The account optimized around your goals and what you are looking for. If you prefer form fills and then only track form fills and give give proper attribution to the keyword, adgroup or campaign.

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2 Use attribution models and tools

Attribution models and tools are essential for measuring the impact of search ads on CAC. Attribution models are methods of assigning credit or value to different touchpoints along the customer journey, such as clicks, impressions, or conversions. Attribution tools are software or platforms that help you track and analyze your attribution data. Last-click attribution is a popular model that gives 100% of the credit to the last click that led to a conversion; however, it can be biased and ignore other factors. Multi-touch attribution is a more complex and accurate model, but it can be difficult to implement and interpret. Google Analytics is a free tool that allows you to measure and compare different attribution models, customize your own, and integrate with other platforms such as Google Ads. Google Attribution is a newer tool using machine learning to measure and optimize cross-channel attribution, as well as create smart bidding strategies based on your data.

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Safeer Ahmed

I Help Scale eCommerce Brands with Google Ads | 9+ Years of PPC Experience | Google Ads Specialist | PPC Media Buyer | SEM @ Logical Gecko | Google Ads Professional
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Improper attribution can lead to incorrect decisions, so it's important to find the attribution model that suits you best. It's recommended to use data-driven or multi-touchpoint attribution to accurately understand your customer's journey. For instance, you might notice certain keywords receive many clicks and incur ad costs but show no conversions. Turning them off may cause a significant drop in account activity, as these keywords may initiate customer interaction. This can occur if you're using last-click attribution, which overlooks the importance of initial interactions in the conversion process.

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3 Calculate and compare your CAC

Once you have defined your goals and segments and used attribution models and tools, you can calculate and compare your CAC for different search ad campaigns and channels. To calculate your CAC, you need to divide your total marketing and sales costs by the number of new customers acquired in a given period. For example, if you spent $10,000 on search ads and acquired 100 new customers in a month, your CAC is $100. You can then compare your CAC with your average revenue per customer (ARPC) or lifetime value (LTV) to determine your return on investment (ROI) and profitability.

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4 Optimize your search ad campaigns

Based on your CAC analysis, you can optimize your search ad campaigns to improve your results and lower your costs. For example, use relevant keywords and negative keywords to target your ideal customers, compelling ad copy and landing pages to increase click-through rate and conversion rate, ad extensions and features to enhance visibility and value proposition, remarketing and retargeting to re-engage previous visitors and leads, and A/B testing and experimentation to test different elements of your search ad campaigns. These steps can help you make informed decisions about your search ad strategy and achieve better results for your business.

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Safeer Ahmed

I Help Scale eCommerce Brands with Google Ads | 9+ Years of PPC Experience | Google Ads Specialist | PPC Media Buyer | SEM @ Logical Gecko | Google Ads Professional
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In e-commerce, attributing values to each keyword, ad group, or ad related to sales is straightforward. However, for lead-driven businesses, it's more complex. It requires importing offline conversion data with correct gclid attribution to understand the value derived from each keyword, ad group, or ad. With this information, you can confidently conduct A/B testing, analyze conversion value versus cost, conversion rates, and other metrics.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the best ways to measure search ad impact on customer acquisition costs?

1

2

3

4

5

1 Define your goals and segments

2 Use attribution models and tools

3 Calculate and compare your CAC

4 Optimize your search ad campaigns

5 Here’s what else to consider

Advertising

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What are the best ways to measure search ad impact on customer acquisition costs?

1

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3

4

5

1 Define your goals and segments

2 Use attribution models and tools

3 Calculate and compare your CAC

4 Optimize your search ad campaigns

5 Here’s what else to consider

Advertising

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