AI Is Inflating Customer Acquisition Costs. Here’s the Fix.

You’re not imagining things. Lead acquisition costs more than it used to. And AI is both part of the problem and part of the solution.

Yes, it can make targeting more efficient so that your ads and content are getting in front of the right potential customers. But it’s also changing the way people engage with brands online. That has an increasingly clear impact on the number of those potential customers who actually follow through after each impression.

To fix that, you have to add another strategic layer to your digital marketing efforts. You also have to supplement them by leaning harder into channels that are less affected by this change.

My company, Roof Maxx, is a good example of how you can do both. As one of the nation’s largest roof maintenance and longevity experts, digital marketing is a cornerstone of our growth strategy. But our flagship product is a tangible solution for restoring asphalt shingle roofs, which means we’re ultimately in the business of providing real-world services for human beings.

Here’s the paradigm shift we’ve applied to our marketing mix to insulate ourselves from rising CACs, and why you might want to follow in our footsteps.

What’s making lead prices so expensive?

Imagine that you spend $300 on a PPC ad for your business. Even if that ad contains a URL and a QR code, the reality is that most of the people who see it are more likely to Google your business name than they are to scan the code or click the link directly.

Four years ago, that wasn’t an issue. Googling your name would take your prospective customer to a search engine results page (SERP) where they would see your website at the top of their results. That is, of course, assuming you had been investing in SEO to make sure your website and content were earning search rankings for keywords related to your business.

But today, SERPs look different. Now, the first thing a prospective customer sees after Googling your company name is more likely to be an AI overview. That overview might include a link to your website, but it inserts an extra step for the user before they wind up there. And it might include links to other sites as well, including a few run by your competitors.

If seven out of every 10 people are seeing that AI overview instead of a direct link to your website, they’re getting lost in some sort of digital vortex instead of ending up in your pipeline. That means the number of conversions you earn from that $300 ad is a lot lower than it was a few short years ago, before these changes to search.

Digital solutions for digital problems

Fortunately, you can fight fire with fire here to some extent. As I said earlier, AI is also making certain aspects of digital marketing vastly more efficient, and this can compensate to some degree for the way it’s driving up acquisition costs.

I mentioned links and QR codes earlier. These should no longer be considered optional when creating digital ads. Yes, it’s true that a lot of users will still Google instead of using them. But anyone who does click that link or scan that code in your ad will bypass the problem I outlined above and be taken straight to a page dedicated to bringing them into your pipeline.

You should also adjust your digital marketing spend to focus on being cited by AI instead of just appearing in search results. Remember, the more you’re appearing in AI Overviews for specific searches, the less room there is for your competitors. So even though AI adds an extra step for users here, it also adds an extra opportunity for your brand to earn visibility.

Bottom line: SEO hasn’t become less valuable; it’s actually more valuable than ever — as long as it’s effective at making you appear in the right places. Roof Maxx has been careful to work with digital marketing professionals who are not only experts in traditional SEO, but AIO (Artificial Intelligence Optimization) as well.

Finally, consider OTT (Over The Top) marketing to reach users directly via streaming platforms and smart devices. The tech exists to produce segments for platforms like Amazon Prime, where someone on a smart TV can simply click a button and go right to your conversion page. These are effective because someone watching TV on the couch is vastly more likely to click their remote than they are to get up and run a Google search in the middle of their favorite program.

Maximizing value by multiplying the leads you already have

The techniques above are more efficient ways to acquire leads via technology, so you can offset the extra costs technology has created. But there’s also a fundamental strategic shift you should consider if you want to beat these rising prices.

You already have leads. And each of those leads represents a customer who probably knows other people a lot like them. That means the rising costs of acquiring new leads can be offset by focusing on referrals.

A referral can turn one lead into two — or more — with no extra cost on your end. So it’s not just about finding cheaper lead sources; it’s also about wringing the most value possible out of each lead you have.

Social proof and testimonials are a huge part of this. People trust brands that their friends and neighbors also trust, and they’re more likely to recommend you to others if they’ve had a good experience. I’ve written about this in more detail in a previous Entrepreneur article. Check it out here to learn more about my approach.

You’re not imagining things. Lead acquisition costs more than it used to. And AI is both part of the problem and part of the solution.

Yes, it can make targeting more efficient so that your ads and content are getting in front of the right potential customers. But it’s also changing the way people engage with brands online. That has an increasingly clear impact on the number of those potential customers who actually follow through after each impression.

To fix that, you have to add another strategic layer to your digital marketing efforts. You also have to supplement them by leaning harder into channels that are less affected by this change.