Traffic Acquisition and The Comparative Cost of Customer Acquisition

Traffic acquisition is only part of the equation; another important part is customer acquisition. It's all very well to have the traffic, but how much of it actually converts into customers? If you can't answer that question, then you're in even more trouble!

Let's start at the beginning.

Traffic acquisition in web site terms is the act of getting eyeballs to a specific web property (page, video, blog post, etc.) It can be achieved through PPC campaigns, paid search placement, SEO techniques, social marketing, and so on - all of which have a cost.

Knowing that cost (essentially the price paid divided by the number of visits) enables you to work out the TAC. But there's also been a lot of talk recently of something else - the CAC, or Customer Acquisition Cost.

That's the cost of acquiring a single customer, on average, and needs to compare favorably with the average lifetime value of your customer base, if you are to remain solvent.

If your CAC exceeds the revenue generated by the customer base, you will begin to lose money. Typically, your CAC is equal to the TAC plus the cost of any additional resources that have been used to convert the visitor into a customer.

This is usually where the trouble starts. How do you know what your conversion rate is? How do you increase your conversion rate? How do you get inside your visitors mindset to work out why they do or don't choose to buy from you?

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All of these topics (and more) are covered in the Traffic Acquisition Insider newsletter, where we expand on the topics talked about on the blog, and give you real advice and step-by-step guides that you can use today to boost traffic, conversions, and expand your bottom line!

How do you Calculate Traffic Acquisition Cost

One question that is often at the forefront of people's minds when it comes to generating traffic is how to calculate traffic acquisition cost. Every method of traffic acquisition, be it paid or free, has an underlying cost.

Clearly, free methods, such as using Twitter, a blog, or even a service such as Traffic Swarm are attractive because there is no direct financial cost. However, the traffic that is acquired may not be highly converting, and there is an investment in time, which has an inherent cost.

Let's take a quick example. If we assume that you spend 30 minutes crafting a short Traffic Swarm advert, then another 30 minutes to set it up, and then 60 minutes generating some credits by clicking on other people's adverts, you have spent 2 hours of time.

A copywriter can earn upwards of $200 in that short fraction of a day!

So, any traffic that is acquired has a cost of $200. And that's not the end of the story, because, if you generate 100 credits, that only means that your advert will be displayed 100 times. What percentage of those displays will generate visits? 1%? 2%? 10%?

There is an upside - over time, the investment might be worth it, but only if the cost of other traffic acquisition services are higher.

AdSense CPC Explained

One way to pull in traffic is buy buying clicks through a PPC (Pay Per Click) broker. Google's AdSense is such a service - you can pay them to display your advert whenever certain keywords are displayed on a given page.

(Get the inside scoop on AdSense here with the Keyword Cracker's Free AdSense Report.)

The CPC (Cost Per Click) is the amount of money that you (and competing content providers) are willing to put down for each person that clicks your advert. This can be as low as $0.05, but as high as $50!

Clearly, it is easy to calculate traffic acquisition costs in this case. If you want 100 visitors, based on a keyword that costs $1 per click, it will cost you $100. Now, this compares favorably with the analysis we did above for Traffic Swarm, but there's a problem.

Highly converting keywords often cost much more than $1 per click.

In such cases, free and low cost traffic acquisition models will be more favorable, but in order to figure it out, you need to know how to calculate the cost of traffic acquisition. Something you now know how to do.

A final note : if you are selling a high ticket item, like a used Ford SUV, then the commission on that sale might make PPC worth your while. If you're selling a $17 eBook, it surely will not be, unless you find a highly converting, long tail keyword phrase, at a low cost.

The Keyword Cracker was designed with that in mind, and is highly recommended by all who have used it to better their traffic acquisition strategies.