CAC keeps rising. Doubling down on your same channel mix won’t fix it. What will?
Ask almost any ecommerce brand what their biggest challenge is and you’ll hear a version of the same thing: “We’re growing, but it costs more every quarter to acquire a customer. It’s killing our bottom line!”
Most brands know they can’t simply spend more in the same places, but what should they do instead?
From what we see, brands with rising CAC tend to fall into one of two camps:
- Those investing in top-of-funnel marketing, but primarily on paid social platforms like Meta, TikTok, and LinkedIn.
- Those who don’t believe top-of-funnel marketing is worth the investment at all.
Yet, both types often struggle to scale while keeping acquisition costs under control. Here’s why:
For those who say “Google doesn’t create demand.”
If you’re investing in top-of-funnel marketing, chances are it’s happening on paid social, not Google Ads. But here’s what many marketers overlook: YouTube behaves much more like a social platform than a search engine.
Like Meta or TikTok, YouTube serves ads primarily based on viewer behavior and interests – not simply search queries. Someone watching videos about home renovation, for example, may see an ad for custom furniture because of their interests or recent browsing behavior, not because they searched for that product at that moment.
That’s why comparing YouTube Ads to Google Search Ads misses the point. They’re solving different problems. Rather than thinking of YouTube as an extension of Search, think of it as a social-style advertising channel that happens to live within the Google Ads ecosystem.
For those who say “ToF isn’t worth it.”
At any given time, roughly 3% of your TAM are actively looking to buy. What about the other 97%?
Most aren’t ready today, but many will be eventually. Getting in front of that broader audience is often significantly less expensive than competing for people already searching for a solution. Over time, building familiarity increases the likelihood they’ll search for your brand instead of a competitor when they’re finally ready to purchase.
Many advertisers stop at “they’re not buying right now, so they’re not interested.” The reality is they’re simply not buying yet.
So why YouTube?
One of YouTube’s most overlooked features is custom segments, which lets advertisers reach people based on searches they’ve recently performed. For example, if you sell custom furniture, you can target buyers who’ve recently searched phrases like: “where to buy custom furniture” or “custom furniture near me.”
In other words, you can continue reaching high-intent buyers after they’ve left the search results.
A common question we hear is: “Isn’t there lower ‘buying intent’ when we target this way, vs. Google Search and Shopping?” This is where YouTube Ads’ pricing is so important.
A typical non-brand search typically converts between 1% – 3% of the time, with clicks costing several dollars each. Now imagine being able to target the very same people later that day, or the next day while they’re on YouTube, for a fraction of the cost ($0.10 per view).
This is the opportunity many advertisers underestimate. While most visitors don’t convert on their first interaction, YouTube gives brands additional chances to stay visible throughout the buying journey, reinforcing awareness until customers are ready to act.
But if YouTube Ads are so effective, why isn’t everyone using them?
- Measurement hasn’t caught up.
For years, advertisers have relied on Multi-Touch Attribution (MTA), which is excellent at measuring clicks, but much less effective at measuring the impact of video. As channels like YouTube and Connected TV become more important, marketers are increasingly shifting toward approaches like Marketing Mix Modeling (MMM) and incrementality testing that better capture the value of awareness-driving channels.
Even Google itself is evolving Data Driven Attribution (a variant of MTA) to give credit for views in video-based campaigns like Demand Generation. The market is becoming more aware of the tradeoffs of MTA and the value of video ads.
Simply put, many advertisers aren’t measuring YouTube in a way that reflects its actual contribution. - Video requires more effort.
Search campaigns can launch with headlines and images. YouTube requires video creative.
That additional effort naturally discourages many advertisers from investing in the channel.
Ironically, that’s part of what makes it attractive today.
Think back to Google Ads 10 or 15 years ago, before nearly every advertiser was competing there. Lower competition created opportunity.
Today, Search is crowded.
YouTube still offers many brands an opportunity to reach qualified audiences before the channel becomes as saturated.
Final thought
As acquisition costs continue to rise, continuing to invest more heavily in the same channels often produces diminishing returns.
For brands looking to diversify beyond Search and Paid Social, YouTube deserves a closer look – not as a replacement, but as another lever for efficient growth.
If you’re exploring YouTube Ads, there’s more to consider around creative strategy, targeting, and measurement than we covered here. We’d be happy to help you think through what makes the most sense for your business.
