Digital Marketing and Customer Acquisition
Channels, funnel, and payback
Acquisition questions usually test whether you can match a channel to a funnel stage and judge it on the right metric. Upper funnel: display, video, social, influencer, PR - measured by reach, CPM, and brand lift. Mid funnel: paid and organic search, shopping feeds, affiliate, retargeting - CTR, CPC, add-to-cart rate. Lower funnel: email and SMS to existing lists, cart-abandonment flows, loyalty - conversion rate, repeat rate, revenue per recipient.
Metric literacy is the main filter. CTR = clicks / impressions. CPC = spend / clicks. CVR = orders / sessions. CAC = spend / new customers. ROAS = revenue / ad spend. ROI = (revenue − cost) / cost. Attribution: last-click favors brand and bottom-funnel terms; first-click favors discovery; data-driven models and incrementality tests (holdouts, geo tests) answer whether the spend caused the order.
Traps: quoting a blended ROAS while making a channel-level decision; treating paid brand search as incremental; excluding organic and email when computing blended CAC; comparing conversion rates across traffic sources of very different intent.
Rule of thumb: breakeven ROAS = 1 / gross margin. At 40% margin, breakeven ROAS is 2.5; anything below that loses money before fixed costs.
Worked example: $12,000 spend produces $30,000 revenue at 40% margin → ROAS 2.5, gross profit $12,000, contribution roughly zero before fixed costs. Profitability requires a higher AOV or margin, or a lower CPC - not simply more of the same spend.