Why the Customer Acquisition Cost (CAC) Increases Non-Linearly in a Web Campaign
During a web campaign, the Customer Acquisition Cost (CAC) increases in a non-linear way as the advertising budget or campaign efforts intensify. Initially, the CAC is often relatively low, as the first clients acquired are typically the most receptive to the offer or the easiest to reach through targeted strategies. However, as the campaign develops, reaching larger or less targeted segments becomes more complex and expensive.
This effect is due to several factors:
- Target Market Saturation: As the campaign reaches the most engaged users, it becomes necessary to expand targeting to less directly interested audiences, thereby increasing the cost of acquiring these new customers.
- Diminishing Returns: The best results are often achieved early in the campaign when the ads are still fresh and engaging. Over time, ad effectiveness diminishes, requiring more investment to maintain performance.
- Increasing Advertising Bid Costs: In auction systems like Google Ads or social media, increased competition can lead to higher costs per click or conversion, directly impacting the CAC.
In summary, the increase in CAC is not proportional to the effort or spending, as the more the campaign progresses, the more expensive it becomes to convert new customers.