How much does it cost to acquire new customers on Amazon?
It’s the elusive question that comes up frequently in discussions with our clients. Fortunately, one metric on Amazon helps us answer this.
In short, new-to-brand metrics determine whether an ad-attributed purchase was made by an existing customer or one buying a brand’s product on Amazon for the first time over the prior year.
With new-to-brand, advertisers receive campaign performance metrics such as:
Total new-to-brand purchases and sales
New-to-brand purchase rate
Cost per new-to-brand customer
New-to-brand (NTB) gives advertisers better visibility into more than 100 campaign reporting metrics. No longer will brands have worry over where their marketing dollars are going towards due to the vast number of performance metrics in which new-to-brand metrics provides.
“This is a great metric when you are buying category terms and going after new customers. As advertising gets more competitive on Amazon, I am always looking for new ways for our clients to measure success outside of the traditional return on ad spend,” says VP of Brand Marketing & Strategy Jacob Snelson, “what if you could have a smaller return on ad spend but your NTB percentage is 90% and my repeat purchase rate is 10x in one year. It’s ok to have a lower return on ad spend if it turns into X amount of dollars in the next year.”
Here’s how Amazon visually explains it:
Here are 3 ways NTB can help drive growth:
Measuring Expansion: Yes, we love our existing customers, but in order to grow we need to grow our customer base. Acquiring new customers can be costly, but if we know how much a new customer is worth in their lifetime, it may be well worth it. If your overall return on ad spend seems a little low, is it worth it because you’ve gained new customers with a high lifetime value?
Targeting the competition: If your NTB% is high, this means your ads are working and you’ve successfully taken some market share away from your competitors!
Loyalty and overall brand strength: Some of your customers may not be aware of your entire assortment. Maybe you sell travel luggage, but your customer had no idea you also sell hiking accessories. When they end up searching for “hiking backpack” and find your ad in the search results, like a loyal companion they buy from you.
Of all the major ecommerce platforms, only Amazon offers this metric, but we hope that others will soon offer this. Give us a call if your ready to get the most out of your ad spend.
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