A company is launching a mindfulness and meditation app. A limited version of the service will be offered to consumers as a free download. Users must pay 14.99 to upgrade to the full version of the service. To support the launch of the service, the company is planning to run ads on Facebook. This includes both ads on the regular site (i.e., online ads) and ads on the mobile application (i.e., mobile ads). The company received 9 million impressions online at a CPM of 2.80, with a CTR of 1.0%. The company received 1.7 million impressions on mobile at a promotional price of CPM of 1.15. These impressions led to 5,000 clicks. Through both channels 50% of the customers who clicked on the ad eventually download the service. 5% of the customers arriving from the online channel upgrade to the full version after downloading the app. Customers who arrive from mobile are younger and more engaged in meditation; therefore, 8% of these customers upgrade to the full version. If an upgrade occurs, it usually occurs within the first few days of downloading the free version.

a) Which channel has a lower cost-per-click?

b) What is the acquisition cost per paying (upgrading) customer through each channel? Do either of these channels justify the cost of acquisition?

c)Provide at least two possible reasons for also using the channel with higher cost per acquired customer