The cost of customer acquisition (CAC) has become one of the biggest challenges in retail. With increasingly fierce competition, market saturation, and changes in ad platform algorithms, acquiring new consumers has become more expensive, necessitating more effective strategies to optimize long-term return on investment (ROI).
The rise of digital commerce has intensified this battle for attention and advertising space. Today, retailers compete not only with big players in traditional retail but also with marketplaces like Amazon and Mercado Livre, which impose high fees for sales on the platforms and heavily invest in marketing. Additionally, the cost of digital tools, essential for conversion and personalization, also impacts companies’ budgets, making the situation even more challenging.
What is the result of such a complex equation? The final profit margin — the so-called bottom line — has been increasingly squeezed in retail as managers strive to balance investments in growth with operational efficiency. Consequently, brands face high operational costs, increased competition, and a constantly evolving consumer, making it difficult to maintain viable operations.
However, it is possible to achieve more profitable margins with strategies that increase conversion and reduce customer acquisition costs. One of the most effective ways to do this is through the intelligent combination of paid media and organic strategies like SEO and content marketing. But at this point, attention is crucial: the way these approaches are used makes all the difference in the results. Misdirected paid media can become an expensive and unsustainable investment.
I like to bring an analogy from the fitness world: exclusive dependence on paid ads is like an athlete using steroids without a proper training and nutrition routine. Growth may be fast, but not sustainable, and the cost in the end is very high. In retail, this translates to excessive investments in Google Ads and social media sponsorships without efficient control, resulting in a high CAC and compromising profitability, both in the short and long term.
On the other hand, organic marketing is a long-term strategy aimed at solid, efficient, and sustainable growth. Investing in SEO, relevant content, and organic ranking allows attracting qualified customers without the high costs of paid media, reducing the CAC and generating a continuous flow of leads, leading to more efficient conversion – like someone who decides to change their lifestyle and adopts a consistent exercise routine and a healthy diet.
In short, when we talk about such a competitive market like retail, an investment model focused on efficiency and sustainability is the key to constant and profitable growth. For this, managers must be aware that personalized communication, data usage, and automation to optimize the consumer journey, as well as retention strategies like loyalty programs, are essential to reduce waste in advertising campaigns and maximize the bottom line in a balanced way. The pursuit of profitability can be challenging, but with the right methods, it is possible to achieve and expand.
*Renato Avelar is a partner and co-CEO of A&EIGHT, a high-performance end-to-end digital solutions ecosystem.
