The free channels are often hard to scale up rapidly, so if the company wants to grow fast post-investment the obvious route is SEM.

The idea is to break down overall CPA into spend that attracts new customers, vs. bringing back old customers, and then to break down the major acquisition channels free vs. paid

It is important to think about CPA, not CPV (cost per visitor), as the conversion rate from visitor to customer often varies dramatically by channel.

Don’t include SEM spend on your brand terms within your SEM CPA. Clicks on your brand terms will have a much lower CPA, best to think about them in the same way as direct visitors to your site.

Differentiating between acquisition costs of new vs. returning visitors requires investing time and money into your web analytics system. When you are starting out you won’t have meaningful returning visitors so this doesn’t need to be a priority.

In an ideal world you would start with the moment where user pays, and track back all the marketing costs from there.

Usual compromise is to just compare ‘Cost per Sign Up’ across marketing channels.

What can I realistically reduce my CPA to in each channel in the next year (by getting more sophisticated in SEM, increasing conversion rates)?

What can I do to grow volume of acquisitions through my free channels? (pro tip: if you have a customer base the best place to start is CRM). What is a realistic target for this?

Typically CPA will start high, go down as you become more sophisticated, then start to creep up as you start looking for volume from less relevant search terms or with broader targeting.

Often the best value can be found by being first to optimize for a new audience (e.g. Instagram, Snapchat).

Start layering in paid acquisition, starting with the cheapest channels, until you hit your maximum budget or CPA creeps up too high.