Customer Acquisition Cost (CAC) measures how much a brand has spent to acquire a new customer via paid advertising channels within a certain time period.
The goal of CAC is to properly account for all first time customer purchases that are being driven by spend directed toward acquiring new customers. Because CAC can be measured in different ways depending on the availability and quality of data, Decile offers three “market standard” CAC models, along with our proprietary ‘CAC – Decile Model.’
Measuring CAC is notoriously hard due to:
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Limitations in first party (1P) transactional data channel attribution
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Noisy and inaccurate paid advertising platform conversions reporting
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Difficulty in allocating and assessing platform spend directed toward new customer acquisition
In this white paper, we’ll address each of these limitations individually and present our solutions to each.