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Advertising

What is CAC (Customer Acquisition Cost)?

The total cost of winning one new customer — CAC = marketing spend ÷ number of new customers.

Detailed definition

CAC is a core KPI in e-commerce, SaaS and lead-generation models. For a healthy CAC, the LTV/CAC ratio should be above 3:1 — that is, customer lifetime value at three times the acquisition cost. Ways to reduce CAC: raise the conversion rate, retargeting, lookalike audiences and investment in organic channels.

Examples

  • 10K TL of advertising + 1K TL of tools + 50 new customers = 220 TL CAC.

Related terms

LTV (Lifetime Value) The total revenue a customer generates for the brand over their lifetime. A critical metric in subscription and e-commerce models. ROAS (Return on Ad Spend) The revenue returned by an advertising investment — ROAS = revenue ÷ ad spend. CPC (Cost Per Click) The advertising cost you pay for each click. It varies with the sector and the level of keyword competition. Conversion Rate The percentage of visitors to your site who complete the desired action (a purchase, a form submission). Performance Max (PMax) Google's AI-driven campaign type — it automates the whole inventory of Search, Display, YouTube, Shopping and Maps in a single campaign.
From the same category

Other terms in the Advertising category

Performance Max (PMax) Google's AI-driven campaign type — it automates the whole inventory of Search, Display, YouTube, Shopping and Maps in a single campaign. Google Shopping Ads E-commerce ads that appear in Google search results with a product image, a price and the brand. Lead Form Ads A format in which the user fills in the form inside the ad when they click it, without going to the site. Meta Pixel Meta's JavaScript code that tracks visitor behaviour on your site. Critical for audiences and conversion optimisation. CAPI (Conversions API) The method of sending conversion data to Meta from the server. The complement to the Pixel since iOS 14.5. Lookalike Audience A pool of new users whose demographics and behaviour resemble your existing customers — used on both Meta and Google.
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