Customer Acquisition Cost (CAC) is the spend required to acquire a new customer over a defined period, computed as total acquisition spend / new customers acquired. A defensible numerator goes beyond paid media to include agency fees, creative production, affiliate and influencer payouts, and the loaded cost of in-house acquisition staff.
The distinction operators most often blur is paid CAC vs. blended CAC. Paid CAC divides paid media spend by customers attributed to paid channels; blended CAC divides total acquisition spend by all new customers, including organic, referral, and direct. Blended CAC is always lower, and treating the two interchangeably hides channel economics. Measured paid CAC is also sensitive to attribution window: a 7-day click window credits fewer conversions to paid than a 28-day window, mechanically inflating CAC. Post-iOS 14.5, measured paid CAC drifted upward across the industry as platform attribution windows shortened, even where underlying unit economics were unchanged.
CAC alone is not a profitability signal. A workable CAC is one where LTV exceeds it by a margin that funds operations, returns, and profit. The LTV:CAC ratio (often benchmarked at 3:1, though the right number depends on gross margin) is the operative metric, complemented by payback period — the months of contribution margin from a new cohort needed to recover CAC. Track blended CAC for the business, paid CAC for channel decisions, and read both against LTV.