Marketing Report
[Marketing Week] Bob Koigi: The price brands pay to acquire customers column

[Marketing Week] Bob Koigi: The price brands pay to acquire customers

Escalating customer acquisition costs are impacting e-commerce profitability for brands and retailers.

A study by edge experience company, SimplicityDX, has shown that in 2013, merchants lost on average $9 for every new customer acquired, but today merchants lose $29, a 222% rise in the last eight years. Customer acquisition costs and higher rates of product returns account for virtually all of the difference.

Customer acquisition costs have increased by as much as 60% in the last five years according to industry estimates, but key factors have compounded the challenges for brands, including the introduction of iOS 14.5, the demise of third-party cookies and increased consumer privacy legislation such as CCPA and GDPR.

With 25% of digital ad spend forecast to be spent on social media this year, all brands have been exposed to increased customer acquisition costs due to reductions in the changes to targeting precision.

This comes as buyers continue to identify their digital advertising quality concerns and understand their attitudes towards industry standards, and different types of inventory.

A study by IAB Europe showed that 84% of all buyers said that they are willing to pay a premium price for higher quality, trusted inventory whilst 92% said that they prefer to spend their advertising budget with suppliers that adhere to industry standards.

In advertising, advertising investment is forecast will grow by 8.7% globally in 2022, according to the latest dentsu Global Ad Spend Forecast report.

The twice-yearly report which combines data from close to 60 markets globally, anticipates US$738.5 billion will be spent globally in its July ‘reforecast’. 

And in partnerships and mergers this week, WPP has announced that it is acquiring Corebiz, a Latin American ecommerce agency specialising in VTEX implementation, one of the largest enterprise digital commerce platforms in the region.

Sourcepoint, the privacy compliance platform of record for the digital marketing ecosystem, has partnered with Horizon Media to provide their clients with access to Sourcepoint’s privacy measurement technology, Privacy Lens.

Sourcepoint’s proprietary platform allows advertisers to ensure media quality by analyzing how media inventory suppliers comply with consumer privacy regulations like CCPA and GDPR.

At the same time, Nexstar Digital, the digital division of Nexstar Media Inc., a wholly owned subsidiary of Nexstar Media Group, Inc. , and Teads, the global media platform, have announced a new exclusive partnership to deliver Teads’ flagship ad format – inRead advertising technology – to Nexstar Digital’s 125 websites and 239 mobile apps.

The new partnership covers a majority of Nexstar Digital’s portfolio including local station websites and apps, NewsNation, and The Hill. This allows Nexstar Digital to scale its online inRead inventory, while increasing video and display ad monetization.

And Hogarth, the WPP global creative content production company, has announced its partnership with Final Pixel, the global creative studio specializing in virtual production for film, TV and advertising.

The partnership will establish Hogarth Final Pixel as a worldwide leader in using virtual production to power end-to-end content creation, bringing to life this new approach for creating and making, for both clients and WPP agency partners.

In other news, Inter has launched its brand new digital ecosystem in collaboration with DEPT, to serve as a digital home for fans to engage with the club and brand.

 Inter’s new website and app bring fresh content on a daily basis to fans, and introduce new ways of following the teams closer than ever before.

And finally advertisers from around the world can now activate customized programmatic digital out of home (DOOH) campaigns across Volta’s dual media and electric vehicle (EV) charging network in the US

Volta is an electric vehicle (EV) charging company with high-impact, eye-catching digital screens embedded directly into its charging stations.

Hivestack’s partnership with Volta further expands advertisers’ access to impactful programmatic DOOH inventory and enables brands to reach audiences on a sustainable media platform that is driving forward a lower-carbon transportation future.

Bob Koigi is an editor at Marketing Report EU