How to combat growing customer acquisition costs in 2022

A new study conducted by shopping experience platform SimplicityDX has found that the cost to acquire new customers has risen by 220% since 2013, with sellers losing 29 USD for every customer acquired, as opposed to 9 USD. 

Further research reveals customer acquisition costs have jumped by 60% in the last five years alone.

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Targeting challenges and ease of market entry have contributed to the rise in customer acquisition costs

• Although the challenges of COVID have slowed, and brick-and-mortar stores have reopened, eCommerce sales are still growing. This means that direct-to-consumer (DTC) competition is rising. eCommerce growth is expected to reach $5USD trillion in 2022.

Whilst it’s easier than ever to enter into the eCommerce sector, it’s created a steep increase in competition. The eCommerce industry expects to grow by $11USD trillion between 2021 and 2025.

• Online businesses are spending more on ad platforms, fostering a fiercer than-ever paid marketing environment. As a result, companies are beginning to close the gap between organic and paid marketing spending. 
• Tracking has become more difficult. Privacy laws and the threatened death of third-party cookies will make it even more difficult to target ads. Marketers will have to increase their ad budget for much less of a return. A recent study found that cost per click for paid search ads has increased by 15% from January to July this year alone.

In addition, the app tracking transparency feature on the new iOS 14 now asks users for approval to track their online activity when installing apps on their phones.

Why are targeting limitations such a big deal for eCommerce stores?

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