ROAS for a long time has been the core metric a lot of businesses use to decide if you’re marketing is worthwhile. However, let me introduce you to CAC – or Customer Acquisition Costs.
So, what exactly is CAC? Simply put, it’s the total cost of acquiring a new customer—your ad spend, marketing efforts, discounts, and anything else that goes into getting someone to make that first purchase. Unlike ROAS (Return on Ad Spend), which measures how much revenue you generate for every dollar spent on a certain platform, CAC takes a more holistic approach. It looks at how much it actually costs to bring in new buyers. While a great ROAS might make you feel like your ads are crushing it, high CAC can tell a different story—one where you’re spending too much to acquire each customer, which can quickly eat into profits. A balanced approach ensures you’re not just making sales but making sustainable sales.
CAC is the key to determining how all your marketing efforts work together to bring in a customer, and what that looks like for your brand moving forward.
Looking Beyond CAC
CAC alone won’t tell you if you’re making money. You also need to consider Customer Lifetime Value (LTV) to understand whether those customers are worth the cost to acquire them. If they’re only buying once and never coming back, that’s a problem. Conversion rate (CVR) plays a huge role too—are your ads driving actual sales, or just a bunch of expensive clicks? And of course, there’s Return on Ad Spend (ROAS), which tells you if your ad spend is actually profitable. A low CAC is great, but not if it means low-quality customers who never convert again. Looking at the full picture, and really understanding what’s happening here is key.
Refine Your Targeting
If your ads are showing up for the wrong people, you’re wasting money. Fine-tuning your targeting can make a world of difference. Start by leveraging your data—your email list, website visitors, and past purchasers are goldmines. Testing lookalike audiences based on your best customers can also help you reach more of the right people. And while you’re at it, let’s test excluding low-intent audiences—people who always browse but never buy. Meta’s algorithm is smart, but it’s not that smart. Helping it find the right people from the start can lower your CAC significantly.
Review Your Ad Spend Across Platforms
While we’re talking about targeting, if you’re running ads on multiple platforms, it’s worth stepping back and reviewing where your spend is going. Are you double-dipping by targeting the same audience across Meta, Google, and TikTok? Overlapping spend can drive up costs unnecessarily. Instead, define the role each platform plays in your funnel. Meta is great for discovery and retargeting, Google Shopping can capture high-intent buyers, and TikTok excels in top-of-funnel awareness. Mapping out your strategy properly ensures each channel works together rather than against each other, helping you lower CAC while maximising results.
Make Your Offer Irresistible
An incredible offer converts better, which means you spend less per purchase. Try bundling products to increase AOV (average order value), offering a first-purchase incentive (without training customers to expect discounts), or adding urgency with limited-edition drops or pre-order perks. The goal? Higher conversion rates, lower CAC.
Improve Your Ad Creative
A well-crafted ad does more than just grab attention—it gets people to buy. If you’re seeing high CAC, it might be time to tweak your ad creative. UGC-style content can feel more authentic and relatable than overly polished ads. Make sure your messaging is crystal clear—is your message obvious within three seconds? The first few frames of your ad are crucial; if they’re not grabbing attention, you’re losing potential customers. And don’t be afraid to experiment with different formats—carousel ads, Reels, static images—until you find what works best.
Optimise Your Ads For Conversions
Your ads can be working perfectly, but if your website isn’t set up to convert, you’ll still struggle with high CAC. Start by reviewing your entire customer journey—from the moment they land on your site to checkout. Speed is everything, so make sure your pages load quickly. Navigation should be seamless, with clear categories and product pages that make shopping easy. Your CTA buttons should be obvious, well-placed, and action-driven. Reviews, testimonials, and UGC help build trust, while a smooth checkout process reduces abandoned carts. A well-optimised site means a higher conversion rate, lower ad costs, and more profitable customers. Aim for a minimum of 2% if you can, but higher is always better here!
Leverage Retargeting & Email Sequences
Leverage Retargeting & Email Sequences
Acquiring a customer doesn’t always happen in one click. Retargeting high-intent visitors—cart abandoners and engaged site visitors—can help bring them back. Running lead generation ads to collect emails before asking for a sale can nurture relationships without relying on ads. A solid email strategy can convert those who didn’t buy the first time—without paying for another ad impression.
Always Be Testing
If you’re not constantly testing, you’re leaving money on the table. Running experiments with different ad angles—emotional storytelling, problem-solution, or straight-up product features—can reveal what resonates best with your audience. Trying various audiences, like broad versus specific or new versus retargeting, can also uncover hidden opportunities. And don’t forget to explore different placements—Instagram Reels, Facebook Feeds, and Stories all perform differently. Even a small increase in click-through rate or conversion rate can have a big impact on CAC.
Lowering CAC isn’t about cutting corners—it’s about optimising the entire customer journey. From better targeting to stronger offers and higher-converting pages, small tweaks can make a huge difference. Before you panic and slash your ad budget, take a closer look at where your money is actually going. A more strategic approach means lower costs, better customers, and long-term profitability.
Need help optimising your ads? Let’s chat. Because spending smarter beats spending less every single time.
