Meta's Ad Model Will Drive Up Your CAC
Summary
When everyone bids on the same low-funnel users, costs soar and margins shrink. Meta’s shift means you're forced to chase a shrinking slice of your audience—ignoring demand creation and losing scale. Bottom-funnel obsession will get expensive fast.
Transcript
We're already seeing with the number of brands where the next marginal dollar you invest in the channel is always typically going to return a lower ROI than your previous dollar, because you're having to expand your audience further and further and get further and further up the funnel. But if brands are all competing on a conversion metric, it's going to naturally force everyone to be going after a very small subset of the addressable market, which is actively in-market and likely very low in the funnel.
This is going to be the only impression that they can serve that hits their target metric. Otherwise they're going to just serve it to another company where that person is more likely to buy from this other company. I think it presents a lot of risk, both in terms of margin erosion and your ability to scale on the platform.
And it takes away everything that generates demand and helps increase demand, because you're circling the drain with these very bottom of funnel prospects and a very small sliver of your target audience meets that criteria, it's going to get very expensive to do that.