Market Core · Marketing Channels · Module
Channel economics
What each channel truly costs and returns, including production, management time and the effect on other channels.
The idea
How it works
Reported cost per acquisition is the media spend divided by the conversions the platform claims. Production, management time, agency fees and the credit taken from other channels all sit outside it and frequently exceed it.
Payback period makes channels comparable when they operate on different timescales. A channel with a higher cost and a faster payback can be worth more than a cheaper one that takes a year to return, particularly when cash is the constraint.
Working with it
In practice
- 01
Load the cost fully
Media, production, management time and tooling. The reported figure is usually half the real one.
- 02
Report payback, not just cost
How long until the customer has repaid the acquisition. It is the number that connects marketing to cash.
- 03
Note the effect on other channels
Brand-building channels raise the performance of activation channels, and the credit lands in the wrong place.
- 04
Compare against contribution, not revenue
A channel acquiring low-margin customers efficiently is not performing well.
One level in
The components of channel economics
A component is something that exists afterwards which did not exist before — a deliverable or a mechanism, not an intention.
Report payback period alongside acquisition cost. It is what connects a channel decision to cash.
The other modules in marketing channels
Channel selection
Which channels are used and why — matched to where the audience actually is and to what the message requires, rather than to what is available.
LearnThe mix
How channels combine and in what sequence — because channels interact, and a mix managed as a set of independent lines will misread all of them.
LearnTesting and incrementality
Whether a channel contributes demand that would not otherwise have arrived, established by withholding it rather than by observing it.
Learn