How To Lower CAC

Average chief marketing officers (CMOs) cut costs and expect to lower their customer acquisition cost (CAC).

Seasoned CMOs obsess over return on investment (ROI) and constantly rethink where and how to put their marketing dollars. Essentially, they must find smart ways to increase customer lifetime value (LTV)—i.e., revenues, and lower customer acquisition cost (CAC).

In uncertain economic times, companies are strapped for cash, so CMOs have extra pressure to do more with less. That is, drive growth with a 10-20% smaller marketing budget.

How can CMOs cut costs and outgrow competitors at the same time?

The answer lies in creative—more precisely, how to:

• Get creative done the right way—creative efficiency.
• Get creative that does the right thing—creative effectiveness.

As shown in the formula below, CAC is the sum of the total cost of sales and marketing efforts divided by the number of customers acquired.

Creative efficiency lowers CAC

For the purpose of this playbook, we’re focusing solely on marketing costs. In a tech/SaaS company, these can be split into four buckets:

1. Labor costs (20%)
2. Professional services (15%)
3. Advertising spend (60%)
4. Tools and other (5%)

Creative efficiency targets two key cost areas: professional services and advertising spend.

Creative performance lowers CAC

The main digital channels to acquire customers are:

• Direct
• Branded search
• SEO content (non-branded search)
• Paid campaigns
• Organic social
• Other

Standout creative that performs helps you earn more customers with your direct, branded search, paid campaigns and organic social channels.

Attacking CAC from both sides

Creative is the most critical variable to drive both efficiency (lower marketing costs) and effectiveness (increase the number of customers acquired), lowering CAC from both sides of the equation.

The playbook below presents five tips to lower CAC by reducing creative production costs (1 & 2) and increasing creative performance, speed and scalability (3, 4 & 5).

Typically, tech companies allocate 15% of their marketing budget toward Professional Services, hiring agencies and freelancers. Agencies, however, operate under a rigid retainer model, charging hefty invoices to compensate for their operating costs.

There is an escape from these overpriced, outdated agency structures—a new, subscription-based model called Creative-as-a-Service (CaaS). It provides access to high-quality creative services, at scale and without breaking the bank.

CaaS offers transparent and predictable creative services. You can select a plan that covers the range of design services you need and the anticipated number of hours you'd spend each month. As opposed to the inflexible use-it-or-lose-it retainer pricing, unused subscription hours can be carried over to the subsequent month without wasting a dollar.

With CaaS, you’re not just subscribing to a more efficient way to get creative done—you're plugging efficiency into your end-to-end creative process and ecosystem.

Take Amazon as an example—they managed to cut down the cost per asset by 50% across thousands of assets after signing up for Superside's flexible creative plans.

Approximately 60% of a typical marketing budget is devoted to advertising, spanning both brand and performance marketing. The more significant chunk is spent on the latter, focusing on ad creative and media buying in digital channels.

The Click-Through Rate (CTR) indicates the percentage of viewers who engage with an ad by clicking on it. It’s a crucial metric for performance marketing that works like this:

• The more users interact with your ad—reflected by a higher CTR—the higher your ad rank.
• The higher your ad rank, the more it gets clicked at lower costs.
• The lower your cost per click (CPC), the lower your cost per action (CPA).

In simpler terms: With a high CTR, you need to spend less on ads to acquire the same number of customers.

But what makes an ad attractive for users to click on?

In today's digital landscape, where users are overwhelmed by the plethora of visual stimuli, the answer is twofold:

• Ads coming from sources users recognize.
• Ads whose unique visual makeup interrupts the user's scroll.

Think standout creative.

How your ad, video, email, etc., differentiates itself from the competition in your industry is instrumental in securing that valuable click, which eventually lowers your CAC.

Take San Francisco's PointCard for example. The fintech company augmented its internal creative team with Superside to create nearly 30 creative ad concepts, turning them into 441 static and motion social media ads. As a result, they increased their CTR 3.5X.

Prospects type your brand directly on their browser or search for it on Google when:

1. They're familiar with it—brand awareness, and
2. They resonate with it—brand affinity.

In a digital landscape filled with generic marketing and average copycat design, cutting-edge creative is the key to crafting a unique, memorable and standout brand.

B2B companies increasingly augment their internal creative capabilities with top-notch illustrations, compelling motion design, video and AR/3D to build a distinctive brand identity that sparks interest, catches the eye, and leaves a lasting impression on the minds of their audience.

The more attractive your brand is, the more prospects will seek it organically (direct and branded search organic traffic), which ultimately results in more customers acquired and lower CAC.

Checkout technology company Bolt created an electric brand awareness video with Superside to support their re-brand, using dramatic wide-angle lenses, energetic movement, a powerful color palette, and a slight nod to surrealism.

In the world of digital advertising, where ad lifespans are shrinking, and costs and performance are engaged in an unending tug-of-war, testing shows you what's effective.

The only way to know if something will work is to put it out there. And the faster you A/B test your ads:

• The quicker you learn.
• The better your ads perform.
• The higher your CTR.
• The lower your CAC.

Most creative marketing teams are incapable of experimenting at the required rate. Their designers are already overloaded and adding heads isn't an efficient option.

The trick, then? Supplement.

High-performing companies partner with CaaS teams, who act as an extension of the brand, learning it through and through and working autonomously to provide creative teams with the variations they need to test at scale.

Rapid experimentation with high volumes of top-quality creative increases creative performance, ultimately bringing more customers and lowering CAC.

Take Salesforce for example, who achieved 70% reduction in turnaround times for digital ads by partnering with Superside.

The most effective types of social media content to increase word-of-mouth and virality are short-form videos and user-generated content (UGC).

Short-form videos are concise, to the point, digestible and easy to share. The buzz around your videos means more people talk about your brand, saving you advertising dollars and organically bringing more people to your website.

UGC is perceived as genuine—it’s content that people trust and resonate with. When brands showcase UGC-style videos, they appear more relatable and trustworthy, spreading word-of-mouth even further.

How do you get short-form videos and UGC-style videos at the scale social media requires?

Large-scale video production used to be slow, costly and complex. However, CaaS has radically shifted this paradigm:

• You can use your design subscription hours to create videos.
• You can receive expert advice on the right type of video for your objectives and channels.
• You can dynamically expand or shrink your video production, which is cost-effective and tailored to your fluctuating creative needs. The sky—and your augmented creativity—is the limit!

When you lead with video, prospects experience your brand more and become more familiar with it, so you need to spend less money to bring them on board.

At Superside, we eat our own dog food. We experimented with a UGC-style video shot on an iPhone and received 4,600+ clicks, 590,000+ impressions and nearly 1,200 leads in just one month!

The Playbook
The flowchart below illustrates five ways to lower CAC by increasing creative efficiency and effectiveness.

Reducing CAC goes beyond bold cost-cutting. It’s about eliminating inefficient spend and increasing the effectiveness of marketing campaigns.

Embracing CaaS—the better way to get creative done, helps your company lower CAC in 5 key ways.

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