In digital marketing, Customer Acquisition Cost (CAC) is a crucial metric that helps businesses measure the efficiency of their marketing efforts. Simply put, CAC refers to the cost associated with acquiring a new customer, factoring in all the expenses spent on marketing and advertising to convert a lead into a paying customer. 

For businesses, understanding CAC is key to determining how much investment is needed to grow their customer base, and whether their marketing strategies are yielding a profitable return. In this blog post, we’ll compare the CAC across various digital marketing channels, exploring how different factors—such as the type of business, marketing channels used, and industry trends—impact this essential metric. 

What is Customer Acquisition Cost (CAC)?

Customer Acquisition Cost is a key metric used to determine the cost of acquiring a single customer. Essentially, it answers the question: How much does it cost to turn a potential lead into an actual customer?

For example, if your business spends $10,000 on digital marketing efforts over a month and acquires 100 new customers, the CAC would be $100. This means it costs $100 to acquire each new customer.

For businesses, knowing their CAC helps them plan how much to allocate toward marketing campaigns and how to adjust their strategies for optimal cost-effectiveness. If your customer acquisition cost for apps or average customer acquisition cost in e-commerce is high, you may need to adjust the strategy or the channels you’re using.

Companies should aim to keep their CAC lower than the customer lifetime value to ensure long-term success. If the cost to acquire a customer exceeds the revenue generated from that customer, the business may struggle to keep sustainable growth.

How to Calculate CAC

The formula for calculating CAC is simple:

CAC=Total Marketing Costs ÷ Number of New Customers Acquired  ​

This formula takes into account all the marketing and sales costs associated with bringing in new customers, including advertising spend, content creation, marketing software tools, and any other expenses that directly contribute to customer acquisition. By dividing these total costs by the number of new customers acquired during the same period, you get the average cost per customer.

Key Factors That Impact CAC Across Channels

Customer Acquisition Cost varies significantly across marketing channels due to several factors. Let’s see the most important ones: 

1. Audience Targeting

By reaching the right audience—those most likely to engage with your product or service—you can minimize wasted ad spend and improve conversion rates. For instance, using tools like lookalike audiences or interest-based targeting ensures your marketing budget is directed toward potential customers rather than a broad, less relevant audience. This precision is particularly vital in highly competitive spaces, such as apps or e-commerce. 

2. Conversion Rates

The higher your conversion rate, the lower your acquisition cost. For example, if you spend $1,000 on a campaign that brings in 50 customers, your CAC is $20. However, if optimizations increase your conversion rate, resulting in 100 customers for the same spend, your CAC drops to $10. Optimizing landing pages, improving ad creatives, and streamlining the user journey can significantly boost conversions, ultimately reducing CAC.

3. Marketing Goals

Your marketing campaign goal—whether it’s brand awareness, lead generation, or direct sales—plays a significant role in determining CAC. Campaigns focused on brand awareness typically have a higher CAC initially because their primary goal isn’t immediate conversion but fostering familiarity and trust. 

Conversely, direct sales or lead generation campaigns can produce quicker returns, often with a lower CAC. Balancing short-term and long-term objectives is essential to have sustainable growth and profitability.

4. Competition

In industries with high competition, businesses frequently face increased costs for ad placements due to bidding wars. For instance, acquiring subscribers in competitive niches can lead to a higher subscriber acquisition cost as businesses vie for limited audience attention.

5. Ad Spend and Bidding Strategies

Overbidding on keywords or audience segments can inflate costs, while underbidding may limit visibility and performance. Employing smart bidding strategies, such as cost-per-acquisition (CPA) bidding or automated bidding tools, can optimize ad spend to achieve better results. Additionally, channel-specific factors like seasonal trends, ad format performance, and auction dynamics can further impact CAC. 

6. Seasonality

Seasonal trends and special events can significantly impact CAC. For instance, during holiday seasons or sales events, competition for ad placements surges, leading to higher costs. Conversely, off-peak periods may offer reduced advertising costs, creating opportunities for cost-effective customer acquisition.

7. Industry-Specific Variables

The nature of an industry plays a substantial role in CAC variations. In B2B sectors, for example, the sales cycle is often longer, requiring a higher investment in nurturing leads, which increases CAC. On the other hand, B2C industries with shorter decision-making processes may achieve lower CAC but face more intense competition in saturated markets.

Average CAC by Advertising Channel in 2024

The SEO agency FirstPageSage provided these benchmarks based on high-performing campaigns conducted by their team between October 2021 and September 2024. These figures represent a three-year average, which typically includes a 4–6 month learning period during which the CAC tends to be significantly higher.

1. Email Marketing

B2B CAC: $510

B2C CAC: $287

Email marketing leads the pack as the most cost-effective channel for acquiring customers. Its relatively low CAC stems from its reliance on existing contact lists and the minimal cost of sending campaigns. Factors like list quality and effective segmentation further contribute to keeping costs low. Despite its affordability, the success of email marketing hinges on personalization and keeping subscriber engagement.

2. LinkedIn Ads

B2B CAC: $982

B2C CAC: N/A

LinkedIn advertising offers highly targeted campaigns for professional audiences, which explains its higher CAC compared to email marketing. This platform is particularly effective for B2B campaigns and high-ticket services, where reaching the right decision-makers justifies the higher cost. While LinkedIn’s precise targeting capabilities drive results, advertisers must carefully manage their budgets to maximize ROI.

3. Organic Social Media

B2B CAC: $658

B2C CAC: $212

Although organic social media doesn’t involve direct ad spend, its CAC reflects the costs of content creation, community management, and maintaining consistent engagement. This channel’s efficiency depends on building a loyal audience over time, making it less immediate but potentially rewarding in the long run.

4. Meta Ads

B2B CAC: $N/A

B2C CAC: $230

Meta Ads come with a higher CAC due to increased competition on the platform and the broader audience it targets. While Meta Ads offer exceptional reach and detailed targeting options, achieving a low CAC requires optimizing ad creatives, managing budgets carefully, and focusing on high-converting campaigns.

5. Google Ads

B2B CAC: $802

B2C CAC: $290

Although FirstPageSage doesn’t bring specific values for Google Ads, the SEO company presents the average value for PPC. The competitive nature of keywords and bid-based pricing can drive up costs, but the platform’s ability to target users actively searching for solutions often offsets the expense. Businesses in competitive industries, such as e-commerce or legal services, may experience higher CACs compared to less competitive niches.

6. SEO

B2B CAC: $1,786

B2C CAC: $1,201

SEO offers one of the most sustainable paths to acquiring customers. Although initial investments in content creation and optimization can be substantial, the long-term benefits of organic traffic lead to reduced CAC over time. This makes SEO an attractive option for businesses focused on sustainable growth and consistent lead generation.

Average CAC by Industry in 2024

FirstPageSage also shared the average CAC for e-commerce companies by industry in 2024:

• Advertising Specialty/Promotional: $64
• Automotive Parts: $78
• Beauty/Personal Care: $61
• Cannabis/CBD: $72
• Consumer Electronics: $76
• Household Goods: $58
• Fashion/Apparel: $66
• Food & Beverage: $53
• Furniture: $77
• Jewelry: $91
• Medical: $87
• Sporting Goods: $67
• Toys/Hobbies/DIY: $59

Average Customer Acquisition Cost for SaaS in 2024

FirstPageSage also shared the average CAC for SaaS companies by industry in 2024:

• AgTech: $712
• AdTech: $560
• Building Management & IoT: $574
• Chemical & Pharmaceutical: $816
• Cleantech: $674
• Construction: $610
• Design: $658
• E-commerce: $274
• Education: $806
• Engineering: $551
• Fintech: $1,450
• Hospitality: $907
• Industrial: $542
• Insurance: $1,280
• Legaltech: $299
• Medtech: $921
• Project Management: $891
• Proptech: $518
• Security: $805
• Staffing & HR: $410
• Telecommunications: $694
• Transportation & Logistics: $483

How to Reduce Your CAC

Optimizing customer acquisition cost requires a strategic approach and constant refinement. Implementing these best practices can help marketers improve efficiency across channels.

A/B Testing and Experimentation

Running A/B tests allows marketers to compare different approaches, whether it’s ad creatives, audience segments, or landing pages. By analyzing results, businesses can identify the most cost-efficient campaigns and channels, reallocating budgets toward strategies that yield the best ROI.

Optimizing Conversion Rates

Improving conversion rates is one of the most effective ways to lower CAC. Tactics like streamlining website navigation, enhancing mobile-friendliness, and using compelling calls-to-action ensure more clicks translate into conversions. Regular performance audits and iterative improvements can significantly impact acquisition costs.

Retargeting Strategies

Retargeting ads target users who have previously interacted with a brand but haven’t converted. Since these audiences are already familiar with the brand, retargeting typically results in higher conversion rates and a lower CAC. Personalizing retargeting campaigns based on user behavior can further improve results.

Integrating Multi-Channel Strategies

Using multiple channels in a cohesive strategy can help reduce CAC. For example, combining PPC with content marketing can drive immediate traffic while building long-term brand authority. Cross-channel insights also enable better budget allocation and audience targeting, ensuring campaigns complement rather than compete with each other.

Conclusion

Understanding and optimizing CAC across different channels is critical to maximizing your business marketing performance. By tracking CAC, testing new strategies, and adopting a data-driven approach, businesses can reduce costs and improve their ROI.

Take Action: Evaluate your current marketing channels and identify areas for improvement. Experiment with different approaches and strategies to find the perfect balance that lowers your CAC while driving sustainable growth.