Midterm question

Midterm question

Katherine McGovern 18 Mar 2009 04:49

Hi Professor,
I have been working on C. 1 & 2 for some time. I am trying to figure out where to go. I am pretty sure I am doing this incorrectly. I have been trying to figure out how I can come to a formula to figure out the customer acquisition cost for each. So far I have just arrived at how much each would make from a single team with each option. ( For $5 :1,000 pages impressions or $0.40: a single click). Going at a rate of $5:1,000; they will make $…. and same for the other. Please help. Thanks.

Re: Midterm question

RDSeabrook 18 Mar 2009 11:30

It looks like you are approaching this the wrong way. This is a simple question but perhaps you're trying to over-complicate it.

This question has nothing to do with teams or how much the site would make in advertising revenue. It's only concerned with the advertiser's cost to make a sale (the customer acquisition cost). The easiest way to do it is just to forget about formulas and use your common sense. For 1c.1, work out how many page impressions will be needed before someone buys something, using the click-though and conversion rates given (this is "the funnel" - see Lecture 6). For 1c.2, work out the clicks needed to make a sale (this is even easier). Since you know the cost per thousand impressions (1c.1) and the cost per click (1c.2), you can work out the customer acquisition costs.