The cost to acquire customers is perhaps the most important expense for ecommerce firms. But with work-from-home (WFH) and competitive marketplace, acquisition costs are actually increasing.

The U.S. economy may be in a deep recession but digital ad spending increased 13% in 2020. More brands are competing for attention especially on social and mobile. According to Shopify’s The Future of Ecommerce 2021 report, paid-search spending increased 26% while social spend grew 25%.

It’s prudent to explore under-the-radar channels for promoting goods and services.

If you’re an online seller, there wouldn’t be an advantage in promoting on Facebook, Google and other huge channels if rivals are pursuing the same strategy. You’d have a similar cost structure and that limits your ability to differentiate in terms of pricing.

Here are ideas for lowering customer acquisition costs in today’s landscape.

Look at Mobile Ad Spend and Strategy

Mobile ad spend would be a way to increase audience reach and, therefore, stretch a marketing budget.

Marketers should optimize mobile campaigns by adjusting messages (i.e., making sales copy clear and succinct), improving checkout, allocating resources, and prioritizing social platforms that are better suited for mobile audiences (as opposed to desktop).

“Due to the high growth of ecommerce, small brands can scale to seven and eight figures in sales in one year,” says Josh Sturgeon, cofounder of EmberTribe. The North Carolina-based agency specializes in paid traffic and works with direct-to-consumer (D2C) businesses. “The pandemic has led to the downfall of retail. D2C has shown to improve margins by cutting out traditional gatekeepers while unlocking value and creating jobs.”

Given emerging trends, Sturgeon advises marketers and business owners to tailor campaigns for mobile devices.

“Users who switched from desktop to mobile have doubled during the pandemic. Shopping behaviors on smartphones are different from desktop computers. For example, the checkout experience needs to account for smaller screen sizes and slower internet speeds. There are best practices to follow here but ultimately, each store needs to split-test for the right mix of content and navigation.”

Experiment With Emerging Platforms

Higher demand for limited ad space is resulting in surging costs. In Q2 2020, the average cost per 1,000 views (CPM) across all social media was $4.33 with a clickthrough rate (CTR) of 1.3%. CPM moved closer to $6 at year-end.

To contain acquisition costs, online businesses should (1) experiment with underutilized platforms (2) prioritize customer retention, and (3) strategize ways to increase order amounts such as showing accessories, related items and most popular purchases during checkout.

Lower CPM Rates

Since September 2020, the two most popular platforms with a mobile audience are YouTube (72.8% reach) and Facebook (72% reach), according to Comscore. On average, Facebook costs north of $7 per 1,000 impressions. Brands may want to see if Snapchat can deliver similar performance at lower CPM.

If you want to gain market share, competitors are probably already using huge platforms like YouTube and Facebook. Where can you attract eyeballs at lower cost?

Sites with a smaller number of users (compared to Facebook and Twitter) include TikTok (689 million), Telegram (500 million), Snapchat (498 million), Reddit (430 million) and Quora (300 million). (These are stats as of January 2021.)

Instead of promoting on YouTube, would it make sense for your brand to advertise on Hulu or Spotify?

YouTube costs $9.68 per 1,000 impressions but that depends on your specific vertical, whereas Hulu CPM has steadily declined. You may also find favorable rates on Twitch compared to YouTube.

Sales growth is important but profitability is crucial. A growing online business can improve its bottom line by advertising on social channels that provide thousands (or millions) of impressions at lower cost.