Ask HN: Conversion rates for ads?
How much should I be paying for customer acquisition via facebook/google ads? What has been your experience with facebook vs google ads? Facebook approved my ad very quickly (within an hour?) and Im getting about a .045% click through rate at a cost of about $1/click. About 20% of the click throughs are registering. Still waiting for google to approve-- they are slow! 1) What kinds of conversions do you normally expect? 2) What is the cost of acquisition that I should expect? There is a quora thread which suggest $5-$6 and that under $10 is good.
7 comments
[ 2.1 ms ] story [ 25.9 ms ] threadI'm currently writing a series of articles about advertising on Facebook and the first one is about CTR/CPC rates, I'll probably be posting it sometime next week. Just check my twitter (@imranghory) mid-week and it should be up on there.
Charles sells financial services and a conversion for him is worth $4000 dollars on average. Paying $100 per conversion is a great deal. Paying $500 per conversion still makes financial sense.
Tim sells ring tones and conversions are worth $1.50 for him. Paying $100 per conversion won't make sense here, but paying $0.15 wouldn't be too bad.
Figure out how much you will make per customer and set the upper limit of your conversion cost to 33% of that price and you'll be on the right track.
Given the above analogies, a ringtone service has a lower barrier to acquisition, since the average purchase price of the customer is much, much lower than, say, a financial service.
If you can get customers for $0.15, and your service costs $20 a month, you're doing a mind-blowingly good job. The cost of acquisition will generally rise as the cost of your service goes up, and that is expected. There are 'tipping points', which is to say, you might keep about the same cost of acquisition for a service that costs $10 vs a service that costs $15, but if that service goes up to $100, then you should expect your cost of acquisition to rise as well.
The magic is in finding the sweet spot, where the cost of acquisition per dollar sold ratio is the best you can get, but in order to truly measure that, you'll likely need to know the expected lifetime revenue of a given customer, which you're going to have a hard time measuring with early numbers.