Paid Media
CAC (Customer Acquisition Cost)
Quick definition
Total marketing spend divided by new customers acquired in the same period.
What it actually means
CAC is the cost to acquire one new customer. For eCommerce, blended CAC is lower than paid-only CAC because organic, email, and referral traffic dilute the calculation. CAC payback period, how many months of customer revenue to recover the acquisition cost, matters more than raw CAC. Brands with strong retention, a high repeat purchase rate or a subscription, can spend more on CAC because LTV is higher.
Related terms
LTV (Customer Lifetime Value)
The total revenue a customer generates over their entire relationship with your brand.
ROAS (Return on Ad Spend)
Revenue generated divided by ad spend. A 4x ROAS means $4 in revenue for every $1 spent.
MER (Marketing Efficiency Ratio)
Total revenue divided by total marketing spend across all channels. The cleanest profitability proxy at the business level.