How to calculate CAC by channel
Blended CAC hides which channels are efficient and which are burning cash. CAC by channel breaks it apart, so you can invest in what works and cut what does not.
The discipline is attributing both spend and customers to the right channel consistently. Once you do, CAC by channel becomes the sharpest tool for allocating acquisition budget.
- Channel spend / channel customers The formula
- Reveals efficiency Beyond blended
- Guides budget Its main use
Short answer
CAC by channel is the acquisition cost within each marketing channel. For each channel, divide its spend by the customers it acquired in the period. If paid search cost 100,000 dollars and won 40 customers, its CAC is 2,500 dollars. Comparing CAC by channel reveals which channels acquire customers efficiently and where to shift budget.
Step by step
Attribute spend to channels
Assign spend to each channel, including channel-specific team and tool costs for a fully loaded per-channel CAC.
Attribute customers to channels
Assign new customers to the channel that acquired them, using a consistent attribution model.
Divide spend by customers per channel
CAC by channel equals each channel's spend divided by the customers it acquired. Compute it for every channel.
Judge with LTV and payback
Compare each channel's CAC to the LTV and payback of the customers it produces. A higher-CAC channel can still be best if its customers are more valuable or retain longer.
Worked example
Paid search: 120,000 dollars spent, 40 customers, CAC 3,000 dollars. Content: 60,000 dollars spent, 30 customers, CAC 2,000 dollars. Events: 100,000 dollars spent, 20 customers, CAC 5,000 dollars.
Blended CAC across all three is 280,000 / 90 = about 3,111 dollars, which hides that content is most efficient and events most expensive. If event customers have higher LTV, events may still be worth it, but only channel-level CAC beside LTV reveals the truth.
How Ardovo handles it
Ardovo computes CAC by channel from attributed spend and customers, beside each channel's LTV and payback. Rook flags channels whose CAC is rising or whose customers churn fast, so budget flows to the channels that produce the best customers.
Frequently asked questions
What is the CAC by channel formula?
For each channel, its spend divided by the customers it acquired in the period. Use fully loaded spend and consistent attribution, and compare each channel's CAC to the LTV and payback of the customers it produces.
Why calculate CAC by channel instead of blended?
Because blended CAC averages efficient and inefficient channels together, hiding which to invest in. CAC by channel reveals where acquisition is cheap and where it is expensive, so you can allocate budget to what works.
Is the lowest-CAC channel always best?
Not necessarily. A higher-CAC channel can be best if its customers have higher LTV or retain longer. Always judge channel CAC against the value and payback of the customers it produces, not CAC alone.