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Assume that JoeMarketer.com is running an email campaign to acquire new customers. It is considering the two options listed below. In either event, the actual campaign management will be outsourced to an interactive agency.
Option A would use a high quality rental list of 100,000 email addresses. Direct costs under this option would be the rental list at $250/m and creative, program management and reporting costs will be $10,000. If the email campaign brings in 623 new customers, what is its customer acquisition cost?
Option B would rely on banner advertising at $20 CPM, which has a predicted click-through rate of 1.5 percent. The campaign is designed to reach 100,000 viewers, and its creative, program management and reporting costs will be $10,000. How many customers will it bring in and what is the customer acquisition cost?
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