during the customer’s journey down the “purchase funnel” from awareness through consideration to the purchase, there can be many moments of truth. For modern consumers, who spend a large portion of their day online, or at least “connected” via a mobile device, many of these moments of truth are “electronic” – in other words, electronic moments of truth – EMOTs. Understanding EMOTs through the purchase funnel can lead to greater efficiencies in advertisers’ marketing programs to drive customers expeditiously through the funnel. 

For example, when a customer goes online to do research – an EMOT electronic moment of truth — if they can’t find you, you don’t exist.  Many many factors contribute to being “findable” online. Proper search engine optimization (SEO) can ensure a brand has web pages that show up near the top of the results on the first page of search engine results. Also, using brand names that are not common words like “open” (american express small business brand) or “tag” (male deodorant from P&G) means they can more easily be found. For example GE’s “ecoimagination” or Subway’s “footlongs.”  (see “made-up words” post) are easily found. 

Other EMOTs could include a person standing on the street (in New York City) and needing a restaurant recommendation in the vicinity, immediately! They use their mobile device and search for restaurants in the area around their current GPS location. When they search on their mobile device, if the website is not mobile compliant and does not display properly or cannot be used by a primitive mobile browser (no graphics, no javascript, no flash, etc.) the user would not be able to find what they are looking for. So this EMOT was a FAIL for the customer. 

The brands  that will be the most successful are the ones who can deliver value at every EMOT of their target customer. If the customer goes online to search and research, the brand’s information should be findable – even better, the specific bit of information being sought should be findable. If the customer needs recipe help while standing in the store (“what ingredient or how much should I buy?”) the information should be findable, specifically through a mobile device.  Ultimately by delivering value at each EMOT, brands can answer customers’ missing links and thus efficiently move the customer down the purchase funnel towards the purchase.

how do we judge the relative merit and effectiveness of different types of advertising? By finding a common parameter that can be used to compare “apples to apples.” We argue that cost of customer acquisition is a great candidate for such a parameter.

For example, if television advertising cost $50 million to produce and air, and 1,000 people came to the acquisition website, and 10 people applied for and received credit cards then the CCA — cost of customer acquisition would be $5 million ($50 million / 10 people who got the credit card). Of course television advertisers would claim that the “impressions” from TV would have “branded” millions more people and they would eventually get a credit card from the company. That’s possible. But for the purposes of this exercise, if there is no absolute end-to-end tracking, we don’t count it. Because, for example, many other possible scenarios can also occur, like the person saw this ad for a credit card but ended up getting a card from a different bank, they saw and remembered the ad but they already had several credit cards from the company, etc.

With “online” we can easily see lift in search activity around the time that brand/awareness advertising is in-flight. This is one of the best indicators of interest — the person saw the TV ad, and was inspired enough to go online to do more research to inform their own purchase decision. Modern consumers will typically search and then click through. In rare instances, they will type the URL, but it is usually the domain name, not the special URL — domain_name.com/special_url — just because of pure laziness or simply because they forgot the /special_url portion.

Now let’s look at a print example: a print ad cost $5 million to produce and traffic in targeted magazines. About 1,000 people came to the website and 10 people ended up purchasing the advertised product. So the CCA is $500,000 per customer acquired.  There may be more people who saw the ad and eventually came in to buy a product. But again, there is a problem of attribution. 

Now a final example from “online” marketing.  Search ads were run using Google Adwords and a $1 CPC (cost per click) was paid. Of those people who clicked through 1 in 20 purchased a product. So it took 20 clicks at $1 each to achieve 1 sale – so the cost of customer acquisition is $20. 

OK, so what about prodycts not sold online? We can use a proxy which has a known conversion to sales. For example, once a coupon is printed from the website, from historic data the advertiser knows that 30% end up using the coupon – i.e. redeeming with a purchase. So, again, if we used a $1 CPC and 1 in 20 ended up printing the coupon and 30% of those “converted” to an offline sale, the CCA would be $66.67  ($20/0.30).  

So to recap

Television – $5 million CCA

Print – $500,000 CCA

Paid Search – $20 CCA

Paid Search + Offline Sale – $67 CCA