From Ad Bids to Orange Juice on Altamount Road - Talking About CAC

This week, let’s start with the video explaining CAC - since we’re not going to talk about what CAC is. That would be incredibly preposterous of us, wouldn’t it - to tell experienced business owners how to do dhanda (business)?

https://www.instagram.com/p/CkQ2JLaN0hl/ ?

This week, let’s learn how easy it is to get a good CAC.

Well, there’s a crazy amount of things people follow to calculate an ideal CAC. When it comes to digital marketing, most platforms say that your ad’s bid is calculated by?

The amount you pay

X

The rating that [the platform] gives your link

The more you score and pay, the more results your ad delivers. Note, your platform rating completely depends on the way your platform perceives your website/post, how much it adheres to that platform’s guidelines and so much more. Simply put - content quality and amount of cash you’re ready to shell out.

When you have a print ad/billboard, it gets slightly more complicated. There is no way to measure your CAC accurately, but a simple division of revenue earned in ad-based demographics with the cost of said ads gives you a vague-ish CAC number. So what is the main driver between a bad OOH/print campaign and a good one? Quantity of conversions, which now completely depends on the demographics you target and how good your communication is.

Damn these - would you buy orange juice for 40 rupees or fresh-pressed, organic, sugar-free orange juice for 240 rupees??

So in the end, while there are multiple things that affect how well your ad works, a few things constantly need to be on point for you to have a low CAC. These are:

1. Content quality: Content is always king, no matter whether you’re shouting ‘Bhaandi!’ (‘Utensils!’) on the street or selling communications tech with subscriptions worth millions. If you miss your mark on content, you’re definitely missing out on potential.?
2. Demographic: Are you selling to the right group? No matter how good your communication is, you can’t sell summer shirts to people in Greenland and on the other hand, you can’t sell bearskin winter jackets to people in Mumbai. Unless they’re a SoBo guy at a nightclub.
3. Interdependence: Well, let’s talk about the orange juice example mentioned above. ‘orange juice’ for 40 rupees and ‘fresh-pressed, organic, sugar-free orange juice’ for 240 rupees. Now, if you’re set up in, let’s just say, Dharavi, you might struggle to sell any of these.?

Try the same exercise in Andheri East, about 11 km to the north of Dharavi, you’ll see thirsty office-goers gulp up liters of the 40 rupee juice.?

Now go about the same distance down south, you’ll see Altamount Road people in jogging outfits and fitness trackers checking how many calories they consumed in their organic, ‘consciously priced’ fresh-pressed orange juice.

Now, if you had to run a newspaper ad about orange juice, which one would you promote? This is why you don’t see orange juice ads in newspapers.?

So what’s the lesson here? Simple - no one factor will ever drive your CAC down. It will always depend on those million things, and, unless you’re a marketing mastermind or you hire one you have no way of hitting ‘perfect’ CAC except extensive trial and error.?

Phew, too much negativity for today. Let’s end this with a few fun facts about CAC.

• The highest CAC isn’t paid by luxury cars or multi-million-dollar art - it is paid by boring old insurance. No joke. https://www.scorpion.co/expert-tips/marketing/how-much-do-google-ads-cost-a-quick-pricing-guid/ ?
• CAC via YouTube can have a humongous difference for different locations. For example, delivering a YouTube ad to a person in Monaco costs you almost $4. The same ad in Yemen would cost you $0.04. Now if you’re not converting in Monaco, well… I’m sorry.
• The ideal CAC:LTV (Lifetime Value) ratio across the world is usually 1:3. Brands like Coke have seen 1:300 conversions as well.

That’s all for this week, my friends. Next week, let’s talk about what we’ll talk about next week. Till then, shabba khair :)?