What Is Customer Acquisition Cost (CAC) in Marketing?
Marketing CAC is what you spend on marketing alone to win one new customer. The most important metric in performance marketing.
Key Takeaways
- Marketing CAC = Marketing Spend ÷ New Customers from Marketing.
- Separate CAC by channel to identify your most efficient growth sources.
- CAC must be compared to CLV to determine marketing economics.
Marketing CAC defined
Customer Acquisition Cost in a marketing context measures how much you spend on marketing activities to acquire one new customer. It is calculated by dividing total marketing spend by the number of new customers acquired through marketing in the same period. Unlike the broader business CAC (which includes sales team costs), marketing CAC focuses specifically on marketing expenditure.
Why channel-level CAC matters
Blended CAC across all channels obscures performance. Your Google Shopping campaigns might acquire customers at £25 CAC. Meta prospecting campaigns might acquire at £90 CAC. Email referral might acquire at £12 CAC. The blended number of £42 gives no actionable information. Channel-level CAC tells you exactly where to scale and where to cut.
The attribution problem
Accurately measuring marketing CAC requires knowing which marketing touchpoints led to each acquisition. Multi-touch attribution models attempt to credit each touchpoint in the customer journey. Last-click attribution (crediting the final touchpoint before purchase) is the default in most platforms but overstates the contribution of lower-funnel, retargeting activity and understates brand and awareness spend.
CAC and CLV together
A £90 CAC for a customer who spends £30 per order twice a year (CLV £60 over 12 months) is deeply unprofitable. The same £90 CAC for a customer who spends £150 per order four times per year (CLV £600) is excellent. Always evaluate CAC in the context of the lifetime value of the customer segment being acquired.