This was my first video focused on marketing. Curious - what did you think? Do you want more? Also, don't miss my new video on Startup Metrics & KPIs ► ruclips.net/video/tuXILsUljKc/видео.html
Hi Eric! I've binged a couple of your videos today and absolutely have to say thank you so much for this info! You're really breaking down these concepts into bite sized pieces and its really valuable. Thanks!
Thank you so much for this - I did a lot of digital marketing (and 4+ other roles) for a small shipping container business but given the variance in prices and over-the-phone final sales it was difficult to quantify things. For example, how to label a final sale as paid, organic, or blended and from what channel, level of the funnel, etc., making it hard to express the value I brought in current interviews. I'm crushing interviews now and am much better at quantifying what exactly I did and am able to do. Thank you!
Thank you soooo much, I'm starting a position as a junior performance marketer and I didn't understand anything about marketing! Thanks to your thorough videos I'm finally on the right track, please keep it up!!
This is awesome stuff man because you break everything down to the essentials, I've recognised that this is the main skill that smart people use to differentiate themselves from the average ones, keep rolling!
Thank you so much for sharing valuable information and calculations to evaluate digital marketing performance. I have enrolled for marketing certification, and your videos are helping me more than the textbooks provided by the online university. Thank you 😀.
Hi Eric, great video :) I have a question - where do you take the data for Google and FB from (Spend, Revenue etc.)? From Google Ads and Facebook Ads panel or Google Analytics?
Very very useful! Looked into it because have a maketing interview for a new job coming up and needed to brush up in some topics! Hope I get it! Thank you for the help
Hi Eric! Amazing content. I love the case study portions of this video. Extremely informative! Can you have more Strategic Marketing related content? Would love to see these kinds of videos from your channel! :)
Hey Elijah, thanks and glad it was valuable! I can definitely create more content on the performance marketing side. My background is in finance as well as growth marketing so I'll try to teach more marketing going forward, thanks for the suggestion 😎
Really appreciate the effort you have put in explaining the concepts in your videos. Very good quality content that's extremely helpful in my current role. Good luck !
Hi Eric, Thanks for the great video. Very well explained. Could you please make more videos on other KPIs. I have a small question though, in your video you showed Paid Revenue and Paid Purchase. What is the difference between both ? As far as I understood, Paid revenue is the dollar amount I earned with my paid Ads and Paid purchases are in terms of quantity (how many were sold in total). Am I correct? Thanks
This seems to be good but I suggest you, how about adding few more metrices like cpc or ctr and impressions etc. This help in understanding what ratio we can expect while running a ad on top funnel or bottom funnel irrespective of market place like facebook or Google.
Hey yes 100% agree those are also very important I have another video that gets more into paid ad metrics here: ruclips.net/video/Je_sl8YTjoU/видео.html And I go deeper on combining all of the metrics between those two videos into a marketing dashboard that you could use in a weekly growth meeting here: ruclips.net/video/KUXbOzgLU_s/видео.html Hope that helps!
Hey, I loved your video! Just a quick question: how do you define a Lifetime purchase? How long is lifetime? and with campaigns which normally run for like 4-6 weeks, how can you calculate that kind of formula? Thank you!
You're welcome! Lifetime is just the average amount of time that a customer continues to actively make purchases. For some businesses customers just purchase one time and for some businesses customers purchase for years, you have to look at your customer purchase data and cohortize it to understand it. Check out some of my videos on customer retention and customer lifetime value and we go into it in a lot more depth. The main thing you want to measure when you have a marketing campaign is the customer acquisition cost, separately you need to understand what your customer lifetime value is and then compare them to each other. The specific length of your campaign is basically irrelevant and unrelated to lifetime value.
Thank you so much for the video. It is super useful and it helps me so much!. I have a bit of a question. How do you identify which customers come from which channels? I am having a hard time tracking this.
It's not easy anymore now that data tracking is getting more restricted. The best place to start is looking at the last click conversion data in Google analytics, that is at least a starting point. Make sure use are using UTMs on any paid campaigns so you can track them. Each channel you may have to track a little differently though. I made a new marketing dashboard video about a month ago that should help you! ruclips.net/video/KUXbOzgLU_s/видео.html
Hi Eric, thank you for this information, it was so clearly explained and I enjoyed learning from you. I have a question - when you work out the AOV and average frequency of purchase, do you typically omit outliers and only include those within 75th percentile etc?
I think it depends a bit. If I was just selling one product or a similar bundle of products all the time I would just take the overall average. But if you have various product lines with different marketing funnels and products (with different price points) sometimes I would look at AOVs and marketing data separately. Have to use your best judgement.
you explained it so easily, i easily understood with almost with no knowledge on marketing. as a beginner (i have a degree on international business) what topics should i study to apply for a job as a digital marketing agent in the future? thank you in advance
Hey - I'm really glad to hear this video got you interested in marketing. I work as a growth marketer as well as in finance, and honestly I think there are more job opportunities in digital marketing than finance, and it's also a really fun industry. If you're starting as a beginner, you need to learn about all the different areas of digital marketing first because you'll ultimately be focusing on one specific thing (for example, some people focus on search engines, some people focus on paid advertising, some people on email marketing, etc). Here is an incredible free article (sort of like an ebook) that covers basically all of online marketing, I suggest you sit down for a few hours and read the whole thing to learn about how it all works and where you might want to focus: www.quicksprout.com/the-beginners-guide-to-online-marketing/ I personally run paid ad channels like facebook and there are lots of online courses & videos on each area of marketing. Anyway, so I'd start by reading that guide and you can decide from there where to dive into next. Cheers
Hi Eric, amazing video!! I had a question, if i want to start a marketing agency, is your digital marketing series enough to cover the basics of tracking metrics etc, ? (Not including Google seo, I just wanna know how to track marketing campaigns on social media)
Hey! I think the series is definitely enough to get started and build the types of dashboards your clients would like. Obviously each platform is sort of a rabbit hole so some clients might want additional metrics around facebook ads, etc (like CPM, CTR, CVR, or different attribution windows, or ad-level or ad set-level metrics), but in general yes these will definitely get you off to a good start.
just look at what % of your free users convert into paid and what those paid users are worth over their lifetime. If 1 out of 20 freemium users converts to a paid user worth (for example) $300 in gross profit over their lifetime, then a freemium user is worth $300 / 20 = $15. That would be how much you can invest in marketing to get a free user.
Thanks! This is my first video and I already know I'm gonna love this channel. The only thing that I'm not sure here is if the general LTV is the best metric considering that cashflow is crucial for ecomm businesses. Maybe 60 day LTV would be better?
What's up Damian!! For cash flow you need to build an actual financial model with all expenses and this channel is absolutely packed with financial modeling videos 😅. The LTV will just tell you if you are acquiring customers that you will eventually make money on, but to calculate those up front losses you'll need to build a full financial model. Check out my e-commerce financial model, marketplace financial model, and three statement financial model and you'll be a pro 👍
Loved the video, thank you!! But one thing I can’t get my head around is paid revenue from Fb. If like in this example we use Fb ads for the top funnel, that brings google clients who then convert, how do we calculate the revenue from Fb when it’s used for the top funnel, not to convert the clients? Hope that makes sense?
Sure, so in general revenue is calculated on either a "first click" or "last click" attribution. Meaning, we give revenue credit to either the first place the customer interacted with our brand, or the last. These days we are relying more on last click because of the user tracking issues. So if we are using last click, facebook will have some conversions, but google would have a lot more per dollar spent on ads. Depends on the product as with some things facebook can convert pretty well even at the top of the funnel, especially for cheaper products. Hope that helps.
@@eric_andrews would this mean that CAC or other KPIs like CPA should not be used to assess marketing campaigns? or would there be instances where CPA should be focused on?
@@mangowolf5 No, CPA is by far the most important metric for marketing. But first you need to understand your LTV to understand what an acceptable CPA target is. From there, CPA is everything once you have defined what you can afford. For example, if LTV is $150, we know CPA absolutely must be lower than $150, but we may have more specific targets like 1/3 of LTV or $50 CPA.
@@mangowolf5 CPA is actual one of high priority marketing KPI. CPA is different for a B2B than ecommerce. There are lot thing come into play when hit saturation point of market. CPA would change exponentially. Especially for higher ticket B2B service it is very complicated to predict actual CAC when are competing against well established market who are already solution aware and top vendor they have on thier priotiy list. Marketing much more complex than formulas.
The video is amazing and I got most of the info very easy, but I got confused in the Blended CAC calculation, because you are saying you have to take the total new clients and then divide by total spend, but google says you have to take the total spend and divide it by the total customers acquired, so is backwards and it made me very confused. I am new in all these and that particular part is what confused me so much. But is very good overall.
Hi Priscilla, so there are a few ways to calculate the blended CAC, the best way always depends on the situation. The reason we like paid CAC is because usually most of our marketing spend is directed towards getting new clients so it gives us a metric to measure how expensive that is for us over time. For a business that gets all of its sales from people buying for the first time (once and never again) then Google's way or this way would give you basically the same number. But if you were a company that had 80% of its sales coming from repeat customers, and all your marketing was focused on getting new customers, then it doesn't really make sense to include those repeat customers in your CAC because your marketing spend was not focused on them. Anyway, you can do it different ways, there is no right / wrong. Hope that helps.
If the Ltv already factors a gross profit margin in, wouldn’t taking the difference between the Ltv & CAC be double counting the Cac? The advertising & other customer acquisition costs will be part of the primary expenses for an e-commerce business so Cac will Already be accounted for in the gross margin. I guess if a certain company includes advertising as SG&A expense then your method would make sense but if not we should be starting with pure revenue right? Am I thinking about this correctly or where am I of?
No, CAC is not included in the gross margin. Marketing costs always go in the operating expenses, that's an accounting rule. So it is not double counting.
Eric can you please tell me how to know how much content to create per clients budget and how often to release it? If for instance a client comes to me with $1,000 budget per month and asks me to create a marketing plan and tell him how many Instagram posts, Facebook posts, PPC ads and SEO articles i can provide for him and how often will they be released. How can I possible come up with that strategy? No one ever talks about that in any videos. I need to build a template for that plan for a client and still account for my profit. And this question would apply the same way for a $5,000/mo client or $10,000. I need to have a content count and release duration strategy. Is this some kind of secret or is there a formula or what? Do you know of videos or courses that discuss this in detail? Thanks.
Sure, that is just revenue and the associated purchases that you are able to prove came directly from paid advertising...a lot of purchases come from "organic" or free activities like word of mouth, so you want to try to differentiate where possible.
Is Facebook a good TOF channel for a product like office furniture. Isn't Furniture searches intent driven? Wouldn't customers find us more on Google more and less on FB?
Probably google would make more sense, but with google you are limited to the number of people searching. With office furniture facebook probably wouldn't be a great tool, but with other types of furniture or other consumer goods facebook can be a great way to get in front of people who fit certain demographics / interest groups if you can get the creative right
Hello - I am looking for marketing funnel performance bench arks for law firms (From visitors, to leads, to MQL to SQL to clients). are you familiar with such benchmarks? Thank you.
Hey - so these metrics are more oriented towards technology businesses instead of service businesses, but I would recommend you look at the google keyword planner and research some searches related to "law firm" to see what the CPCs (cost per clicks) are, that would give you a good starting point on the cost of paid traffic, and you could probably assume a conversion rate and try to estimate CPA from there. Hope that helps!
From your tools like the Facebook Ads Manager and Google analytics. It's significantly less accurate now since 2021 when Apple released iOS 14 and started restricting the ad platforms ability to collect data
You gotta depend a lot on Google analytics right now, it's all last-click but it still gives you a decent idea. Also a good test to do is to pause your Facebook ads for a few days and see what the impact on your revenue is. The post iOS 14 world is really tough
Hey there Eric! I've been finding your videos very helpful and I'm looking forward to more of them. Just to be sure I understood correctly, could you confirm this please? Thank you! Say, A - No. of new paid customers B - No. of new organic customers C - No. of returning paid customers D - No. of returning organic customers and R(A) - Revenue from new paid customers R(B) - Revenue from new organic customers R(C) - Revenue from returning paid customers R(D) - Revenue from returning organic customers Paid ROAS = {R(A) + R(C)}/ Total ad spend Blended ROAS = {R(A) + R(B) + R(C) + R(D)}/ Total ad spend Paid CAC = Total ad spend / A Blended CAC = Total ad spend / (A + B)
Not quite, but great to see you digging in to this most people don't take the time. Paid roas is paid rev / ad spend Paid cac are ad spend / paid purchasers Blended roas is all rev / ad spend Blended cac is ad spend / all purchasers If you run ad accounts (FB / google, etc) you would see they report out their own "conversions" and "rev" so that is what you consider the paid part.
@@eric_andrews Thanks a ton Eric. This is the information I was looking for - "If you run ad accounts (FB / google, etc) you would see they report out their own "conversions" and "rev" so that is what you consider the paid part." I guess it will bring more clarity once I work on these numbers for real. However, the formula you used for CAC calculations in the excel sheets is ad spend / purchases and not purchases / ad spend. Also the term 'new' is vital to CAC calculations right? So paid CAC would apply to paid NEW customers and Blended CAC would apply to organic NEW + paid NEW customers. Is that right?
@@PriyamvadaGoel Sorry, I was writing that previous comment too fast and swapped the data. I corrected it just now and yes to all your questions. CAC is just the average marketing cost per customer, just conceptualize that idea rather than focusing too hard on the formulas.
This was my first video focused on marketing. Curious - what did you think? Do you want more?
Also, don't miss my new video on Startup Metrics & KPIs ► ruclips.net/video/tuXILsUljKc/видео.html
Hi
Please I Have A Question For You
Thanks you so much..
Yes! Moooore🎉
You nailed it bro! All covered in 23 minutes. Kudos!
🚨 Who's interested in being a part of my Finance for Startups program? www.ericandrewsstartups.com/financeforstartups
Hi Eric! I've binged a couple of your videos today and absolutely have to say thank you so much for this info! You're really breaking down these concepts into bite sized pieces and its really valuable. Thanks!
My pleasure I'm glad they're valuable for you
I have a small question though, in your video you showed Paid Revenue and Paid Purchase. What is the difference between both ?
This video just answered all my questions about KPI. Thank you Eric!
Thank you so much for this - I did a lot of digital marketing (and 4+ other roles) for a small shipping container business but given the variance in prices and over-the-phone final sales it was difficult to quantify things. For example, how to label a final sale as paid, organic, or blended and from what channel, level of the funnel, etc., making it hard to express the value I brought in current interviews. I'm crushing interviews now and am much better at quantifying what exactly I did and am able to do. Thank you!
for data analyst role?
Thank you soooo much, I'm starting a position as a junior performance marketer and I didn't understand anything about marketing!
Thanks to your thorough videos I'm finally on the right track, please keep it up!!
New to the channel. You are gifted at making this videos easy to digest. Keep them coming.
Appreciate the comment! Will do, working on my next video tomorrow
This is correct, but you have to consider that if you increase the spending amount, your CAC naturally will too. But great exercise Thanks!
This is awesome stuff man because you break everything down to the essentials, I've recognised that this is the main skill that smart people use to differentiate themselves from the average ones, keep rolling!
Appreciate that and really glad this video distilled this stuff down for you 😎...more to come !!
Thank you so much for sharing valuable information and calculations to evaluate digital marketing performance. I have enrolled for marketing certification, and your videos are helping me more than the textbooks provided by the online university. Thank you 😀.
I love to hear it, you're very welcome!!
Hi Eric, great video :) I have a question - where do you take the data for Google and FB from (Spend, Revenue etc.)? From Google Ads and Facebook Ads panel or Google Analytics?
Awesome 🎉 how do you figure out how much time a customer needs for coonsideration and how to best track it? 🙏
This is very insightful and so well explained. Well done !
tysmmm for thisss!!! this is soooo valuable!! lots of info in a single vid!! 😭🫶🏻🔥
this video was extremly usefull for me! It was absolutely the best what I have seen aboutthis topic!
You're very welcome!
Killer video Eric. Great content. You've earned yourself a subscriber!
KPIs all day! 🙌💯
What gets measured gets managed!
Very very useful! Looked into it because have a maketing interview for a new job coming up and needed to brush up in some topics! Hope I get it! Thank you for the help
Hope you get it, cheers!
Excellent video. Exactly what I wanted and perfectly explained. Instant subscribe.
🙏
Hi Eric! Amazing content. I love the case study portions of this video. Extremely informative!
Can you have more Strategic Marketing related content? Would love to see these kinds of videos from your channel! :)
Hey Elijah, thanks and glad it was valuable! I can definitely create more content on the performance marketing side. My background is in finance as well as growth marketing so I'll try to teach more marketing going forward, thanks for the suggestion 😎
Really appreciate the effort you have put in explaining the concepts in your videos. Very good quality content that's extremely helpful in my current role. Good luck !
Hi Eric, Thanks for the great video. Very well explained. Could you please make more videos on other KPIs.
I have a small question though, in your video you showed Paid Revenue and Paid Purchase. What is the difference between both ? As far as I understood, Paid revenue is the dollar amount I earned with my paid Ads and Paid purchases are in terms of quantity (how many were sold in total). Am I correct? Thanks
This was really helpful. Thanks for putting these together.
This is one of my favorite channels 😌
This seems to be good but I suggest you, how about adding few more metrices like cpc or ctr and impressions etc.
This help in understanding what ratio we can expect while running a ad on top funnel or bottom funnel irrespective of market place like facebook or Google.
Hey yes 100% agree those are also very important I have another video that gets more into paid ad metrics here: ruclips.net/video/Je_sl8YTjoU/видео.html
And I go deeper on combining all of the metrics between those two videos into a marketing dashboard that you could use in a weekly growth meeting here: ruclips.net/video/KUXbOzgLU_s/видео.html
Hope that helps!
You explained this so well thank you!
Glad it was helpful!
Very helpful thank you as no one has explained that to me before and I’ve made that Google mistake!
😎🙌 awesome!!
So happy I stumbled upon you channel! This is really good content and you've done so well with demystifying marketing buzz words!
Glad to hear it 🙌
This was fantastic! Exactly what I needed, thank you. Subscribed!
Awwwesome! That's what I like to hear
Great video.Thank you.
Brilliant explanation, thank you!
I'm glad to hear it was helpful!
Thank you for your shaing. Your video is so helpful to my business
I'm really glad to hear that Alyssa thanks for leaving a comment to let me know !!
Thanks Eric for this great video.
Glad you enjoyed it!
Hey, I loved your video! Just a quick question: how do you define a Lifetime purchase? How long is lifetime? and with campaigns which normally run for like 4-6 weeks, how can you calculate that kind of formula? Thank you!
You're welcome! Lifetime is just the average amount of time that a customer continues to actively make purchases. For some businesses customers just purchase one time and for some businesses customers purchase for years, you have to look at your customer purchase data and cohortize it to understand it. Check out some of my videos on customer retention and customer lifetime value and we go into it in a lot more depth. The main thing you want to measure when you have a marketing campaign is the customer acquisition cost, separately you need to understand what your customer lifetime value is and then compare them to each other. The specific length of your campaign is basically irrelevant and unrelated to lifetime value.
Thank you so much for the video. It is super useful and it helps me so much!. I have a bit of a question.
How do you identify which customers come from which channels? I am having a hard time tracking this.
It's not easy anymore now that data tracking is getting more restricted. The best place to start is looking at the last click conversion data in Google analytics, that is at least a starting point. Make sure use are using UTMs on any paid campaigns so you can track them. Each channel you may have to track a little differently though. I made a new marketing dashboard video about a month ago that should help you!
ruclips.net/video/KUXbOzgLU_s/видео.html
Hi Eric, thank you for this information, it was so clearly explained and I enjoyed learning from you. I have a question - when you work out the AOV and average frequency of purchase, do you typically omit outliers and only include those within 75th percentile etc?
I think it depends a bit. If I was just selling one product or a similar bundle of products all the time I would just take the overall average. But if you have various product lines with different marketing funnels and products (with different price points) sometimes I would look at AOVs and marketing data separately. Have to use your best judgement.
you explained it so easily, i easily understood with almost with no knowledge on marketing. as a beginner (i have a degree on international business) what topics should i study to apply for a job as a digital marketing agent in the future? thank you in advance
Hey - I'm really glad to hear this video got you interested in marketing. I work as a growth marketer as well as in finance, and honestly I think there are more job opportunities in digital marketing than finance, and it's also a really fun industry.
If you're starting as a beginner, you need to learn about all the different areas of digital marketing first because you'll ultimately be focusing on one specific thing (for example, some people focus on search engines, some people focus on paid advertising, some people on email marketing, etc). Here is an incredible free article (sort of like an ebook) that covers basically all of online marketing, I suggest you sit down for a few hours and read the whole thing to learn about how it all works and where you might want to focus: www.quicksprout.com/the-beginners-guide-to-online-marketing/
I personally run paid ad channels like facebook and there are lots of online courses & videos on each area of marketing. Anyway, so I'd start by reading that guide and you can decide from there where to dive into next. Cheers
@@eric_andrews thank you!!!
@@アレクサンドラ-y5l you're welcome!
This was great content I learned a lot!
Very welcome!
I needed to hear this, thank you, fantastic!
You are amazing! Content is amazing! Thank you!!
Excellent Video Eric.
Cheers vikram!
Hi Eric, amazing video!!
I had a question, if i want to start a marketing agency, is your digital marketing series enough to cover the basics of tracking metrics etc, ?
(Not including Google seo, I just wanna know how to track marketing campaigns on social media)
Hey! I think the series is definitely enough to get started and build the types of dashboards your clients would like. Obviously each platform is sort of a rabbit hole so some clients might want additional metrics around facebook ads, etc (like CPM, CTR, CVR, or different attribution windows, or ad-level or ad set-level metrics), but in general yes these will definitely get you off to a good start.
@@eric_andrews Thank you so much!!
Excellent. Thank you so much
Super insightful!! Thank you. May I know how would we be able to best source for lifetime purchases information?
Customer orders!
this is very informative, I was wondering if you can advise on the freemium business model and how do we calculate the value of free users
just look at what % of your free users convert into paid and what those paid users are worth over their lifetime. If 1 out of 20 freemium users converts to a paid user worth (for example) $300 in gross profit over their lifetime, then a freemium user is worth $300 / 20 = $15. That would be how much you can invest in marketing to get a free user.
Great breakdown here, very clear.
Glad it was helpful Matt. Appreciate the comment
What youd suggest if the ecommerce sells single iitems ans in bulk, which would demand a more relationship to build?🙏
Content aside, I just love his voice:) How about running a podcast? I'd listen))
😊 that's an awesome idea!! I will think about it
Hey Eric, do you mind going over a simple LBO model?
Thanks! This is my first video and I already know I'm gonna love this channel. The only thing that I'm not sure here is if the general LTV is the best metric considering that cashflow is crucial for ecomm businesses. Maybe 60 day LTV would be better?
What's up Damian!! For cash flow you need to build an actual financial model with all expenses and this channel is absolutely packed with financial modeling videos 😅. The LTV will just tell you if you are acquiring customers that you will eventually make money on, but to calculate those up front losses you'll need to build a full financial model. Check out my e-commerce financial model, marketplace financial model, and three statement financial model and you'll be a pro 👍
@@eric_andrews I will, thanks!
Thank you, it was really helpful
Amazing video!
🙌
Really good video , thanks !
You are welcome!
Thankyou, can you bring entire series on Marketing analytics please?
Let me think about this.... getting a lot of requests and would probably be pretty fun
@@eric_andrews yeah it would be so
well-explained thanks
excellent job man.
Thank you so much Eric
you are very welcome
Excellent content, thank you!
Happy to help!!! 😀
Really amazing content
Thanks Eric
Hello Eric do you have LinkedIn profile to connect more ?
Great Video! Thanks!
Cheers David, glad to hear it 👍
Loved the video, thank you!! But one thing I can’t get my head around is paid revenue from Fb. If like in this example we use Fb ads for the top funnel, that brings google clients who then convert, how do we calculate the revenue from Fb when it’s used for the top funnel, not to convert the clients? Hope that makes sense?
Sure, so in general revenue is calculated on either a "first click" or "last click" attribution. Meaning, we give revenue credit to either the first place the customer interacted with our brand, or the last. These days we are relying more on last click because of the user tracking issues. So if we are using last click, facebook will have some conversions, but google would have a lot more per dollar spent on ads. Depends on the product as with some things facebook can convert pretty well even at the top of the funnel, especially for cheaper products. Hope that helps.
@@eric_andrews makes sense, thank you!
Thank you!
You're welcome!
Great video! thanks a lot
Hi Eric, great video. So does all marketing just depend on LTV at the end of the day? As CAC would be useless without knowing LTV?
That's exactly right. You got it
@@eric_andrews would this mean that CAC or other KPIs like CPA should not be used to assess marketing campaigns? or would there be instances where CPA should be focused on?
@@mangowolf5 No, CPA is by far the most important metric for marketing. But first you need to understand your LTV to understand what an acceptable CPA target is. From there, CPA is everything once you have defined what you can afford. For example, if LTV is $150, we know CPA absolutely must be lower than $150, but we may have more specific targets like 1/3 of LTV or $50 CPA.
@@mangowolf5 CPA is actual one of high priority marketing KPI. CPA is different for a B2B than ecommerce. There are lot thing come into play when hit saturation point of market. CPA would change exponentially. Especially for higher ticket B2B service it is very complicated to predict actual CAC when are competing against well established market who are already solution aware and top vendor they have on thier priotiy list. Marketing much more complex than formulas.
very helpful thanks
The video is amazing and I got most of the info very easy, but I got confused in the Blended CAC calculation, because you are saying you have to take the total new clients and then divide by total spend, but google says you have to take the total spend and divide it by the total customers acquired, so is backwards and it made me very confused. I am new in all these and that particular part is what confused me so much. But is very good overall.
Hi Priscilla, so there are a few ways to calculate the blended CAC, the best way always depends on the situation. The reason we like paid CAC is because usually most of our marketing spend is directed towards getting new clients so it gives us a metric to measure how expensive that is for us over time. For a business that gets all of its sales from people buying for the first time (once and never again) then Google's way or this way would give you basically the same number. But if you were a company that had 80% of its sales coming from repeat customers, and all your marketing was focused on getting new customers, then it doesn't really make sense to include those repeat customers in your CAC because your marketing spend was not focused on them. Anyway, you can do it different ways, there is no right / wrong. Hope that helps.
Thanks for the informative video~
Happy to help Grace 👍
If the Ltv already factors a gross profit margin in, wouldn’t taking the difference between the Ltv & CAC be double counting the Cac? The advertising & other customer acquisition costs will be part of the primary expenses for an e-commerce business so Cac will Already be accounted for in the gross margin. I guess if a certain company includes advertising as SG&A expense then your method would make sense but if not we should be starting with pure revenue right? Am I thinking about this correctly or where am I of?
No, CAC is not included in the gross margin. Marketing costs always go in the operating expenses, that's an accounting rule. So it is not double counting.
Nice video!
Dear sir, can you share this Excel sheet?
Many thanks about this interesting content
Yes it's available for free download in the description
Eric can you please tell me how to know how much content to create per clients budget and how often to release it? If for instance a client comes to me with $1,000 budget per month and asks me to create a marketing plan and tell him how many Instagram posts, Facebook posts, PPC ads and SEO articles i can provide for him and how often will they be released. How can I possible come up with that strategy? No one ever talks about that in any videos. I need to build a template for that plan for a client and still account for my profit. And this question would apply the same way for a $5,000/mo client or $10,000. I need to have a content count and release duration strategy. Is this some kind of secret or is there a formula or what? Do you know of videos or courses that discuss this in detail? Thanks.
very good
I have a small question though, in your video you showed Paid Revenue and Paid Purchase. What is the difference between both ?
Sure, that is just revenue and the associated purchases that you are able to prove came directly from paid advertising...a lot of purchases come from "organic" or free activities like word of mouth, so you want to try to differentiate where possible.
You are very good
awesome video .. thanks alot
My pleasure, glad it was valuable Khaldoun!
would you be willing to share this spreadsheet, its excellent!
It's right there for free in the description 👍
thank you
Don't neglect the top of the funnel!
That is exactly right Duncan!
This is amazing, can I have the file?
Sure it's right there in the description for free
Is Facebook a good TOF channel for a product like office furniture. Isn't Furniture searches intent driven? Wouldn't customers find us more on Google more and less on FB?
Probably google would make more sense, but with google you are limited to the number of people searching. With office furniture facebook probably wouldn't be a great tool, but with other types of furniture or other consumer goods facebook can be a great way to get in front of people who fit certain demographics / interest groups if you can get the creative right
Customer Acquisition Cost is how much we spent to acquire ONE new customer?
Yes
Osom video
very good
Thank you! Cheers!
why google piad ROAS is decreasing when spend is increasing
Hello - I am looking for marketing funnel performance bench arks for law firms (From visitors, to leads, to MQL to SQL to clients). are you familiar with such benchmarks? Thank you.
Hey - so these metrics are more oriented towards technology businesses instead of service businesses, but I would recommend you look at the google keyword planner and research some searches related to "law firm" to see what the CPCs (cost per clicks) are, that would give you a good starting point on the cost of paid traffic, and you could probably assume a conversion rate and try to estimate CPA from there. Hope that helps!
Thankyouuu so much!!!@
You are very welcome
Where did you get the paid purchase?
From your tools like the Facebook Ads Manager and Google analytics. It's significantly less accurate now since 2021 when Apple released iOS 14 and started restricting the ad platforms ability to collect data
What about when you can't exactly break down what has come from Facebook ads or Google ads??
You gotta depend a lot on Google analytics right now, it's all last-click but it still gives you a decent idea. Also a good test to do is to pause your Facebook ads for a few days and see what the impact on your revenue is. The post iOS 14 world is really tough
Hey there Eric! I've been finding your videos very helpful and I'm looking forward to more of them. Just to be sure I understood correctly, could you confirm this please? Thank you!
Say,
A - No. of new paid customers
B - No. of new organic customers
C - No. of returning paid customers
D - No. of returning organic customers
and
R(A) - Revenue from new paid customers
R(B) - Revenue from new organic customers
R(C) - Revenue from returning paid customers
R(D) - Revenue from returning organic customers
Paid ROAS = {R(A) + R(C)}/ Total ad spend
Blended ROAS = {R(A) + R(B) + R(C) + R(D)}/ Total ad spend
Paid CAC = Total ad spend / A
Blended CAC = Total ad spend / (A + B)
Not quite, but great to see you digging in to this most people don't take the time.
Paid roas is paid rev / ad spend
Paid cac are ad spend / paid purchasers
Blended roas is all rev / ad spend
Blended cac is ad spend / all purchasers
If you run ad accounts (FB / google, etc) you would see they report out their own "conversions" and "rev" so that is what you consider the paid part.
@@eric_andrews Thanks a ton Eric. This is the information I was looking for - "If you run ad accounts (FB / google, etc) you would see they report out their own "conversions" and "rev" so that is what you consider the paid part." I guess it will bring more clarity once I work on these numbers for real.
However, the formula you used for CAC calculations in the excel sheets is ad spend / purchases and not purchases / ad spend. Also the term 'new' is vital to CAC calculations right? So paid CAC would apply to paid NEW customers and Blended CAC would apply to organic NEW + paid NEW customers. Is that right?
@@PriyamvadaGoel Sorry, I was writing that previous comment too fast and swapped the data. I corrected it just now and yes to all your questions. CAC is just the average marketing cost per customer, just conceptualize that idea rather than focusing too hard on the formulas.
@@eric_andrews Right. Thank you for taking the time to address the queries Eric. Appreciate it. :)
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