Okay here’s the deal. Right now the average display campaigns get a .1% click-through rate and a 5% click-to-conversion rate. This means that for every 100,000 impressions an advertisers can expect to get 100 clicks and 5 conversions. If an advertiser is spending $2CPM, the impressions cost $200, clicks $2 and conversions $40. Therefore their customer acquisition cost is $40… Let’s hope that the LTV (lifetime value) or better yet the AOV (average order value) is more than that. The sad reality is that most of the time this is not the case.

To be continued…