The challenge
Palladium was appointed to undertake digital due diligence on a leading global wall art provider. The business had experienced rapid international growth, driven by investment in paid media channels. CAC had been decreasing, particularly from the start of 2020, and our client wanted to assess the sustainability of CAC over the forecast plan period.
Our approach
As part of a focused due diligence Palladium:
- Analysed digital performance vs international competitors, comparing traffic volumes, website engagement rates, channel mix and branded vs unbranded traffic
- Analysed the business plan to review the contribution of digital channels to forecasted sales targets
- Triangulated channel headroom analysis against plan forecasts to validate market volumes required to meet business plan targets
- Analysed the drivers of CAC across paid search, paid social and influencer marketing to establish the risk to CAC inflation based on historic performance and market trends
- Assessed the maturity of qualitative drivers of CAC including best practice account setup and marketing strategy
- Developed an indicative CAC forecast model for the plan period based on digital volumes and cost
- Identified key considerations required to support management’s plans to onboard onto Amazon
The result
Our work supported a successful acquisition by providing our client with comfort across the key diligence areas:
- Established that the drivers of historic CAC supported a sustainable CAC forecast
- Evidenced a mature digital marketing capability, particularly in performance and influencer marketing, and identified opportunities to improve performance in organic search
- Validated the feasibility of management’s projected CAC against a Palladium forecast model
