You see it blasted everywhere
“A 20% decrease in CAC in 90 days or your money back.”
Guarantees like these often seem detached from the realities of Paid Media. This post isn’t meant to condemn anyone but to help operators set the right expectations when considering CRO and its impact on customer acquisition costs.
Let’s break it down. Assuming we’re discussing channel-specific conversion rate (CVR) and the destinations used—does an increase in CVR guarantee a decrease in cost per acquisition (CPA)?
In my early CRO agency days, I would have confidently said yes. But now, as a brand operator with multiple funnel wins under my belt, my answer is more nuanced: “Not immediately.”
Several key metrics influence your CPA: cost per click (CPC), cost per thousand impressions (CPM), click-through rate (CTR), and more. These metrics are constantly in flux due to factors like seasonality, increased competition, traffic quality, and audience saturation. So, while your CVR might improve, it doesn’t guarantee an immediate lower CPA.
Why? Because CPA isn’t a solitary metric; it’s part of a dynamic ecosystem. For instance, a higher CVR means you’re converting more of the traffic that comes to your site. But if the cost of that traffic (CPC or CPM) increases due to bad ads or changes in traffic quality, your CPA might not drop as expected.
Here’s a simplified example: Theoretically, you should halve your CPA if your CVR improves from 2% to 4%. But your CPA remains unchanged if your CPC doubles because you’re competing in a more expensive ad auction.
However, this doesn’t mean you should stop investing in CRO. An improved CVR acts as a buffer against these fluctuations, allowing for higher efficiency and better utilization of ad spend over time.
In essence, improving your CVR is about playing the long game. It’s about building resilience into your marketing strategy so that you can weather the inevitable ups and downs of the paid media landscape. While you might not see immediate drops in CPA, the incremental gains from higher efficiency and better resource utilization will pay off in the long run.
