CAC, customer acquisition cost, is the total cost of acquiring one new paying customer, calculated by dividing all acquisition spending over a period by the number of new customers it produced.
Definition
CAC, customer acquisition cost, is the total cost of acquiring one new paying customer, calculated by dividing all acquisition spending over a period by the number of new customers it produced. "All acquisition spending" should be fully loaded: media spend, affiliate commissions, creative production, the acquisition team's cost, tools, and bonus cost attributable to acquisition — not just the ad bill.
CAC is only meaningful next to LTV. A CAC of $120 is excellent if those customers are worth $400 over their lifetime and terrible if they are worth $80. The LTV-to-CAC ratio, and the payback period (how long until a customer's cumulative contribution covers their CAC), are the numbers that actually indicate whether acquisition is healthy.
In context
In iGaming, CAC is tracked and targeted per channel, per GEO and per source, because a blended CAC hides enormous variation. Organic and brand-search customers have a very low CAC; Tier-1 paid social customers have a high one; affiliate CAC depends on the deal type and the qualifying event.
Operators set a maximum allowable CAC for each segment derived from its segmented LTV and a target payback period, then hold acquisition to those ceilings.
A useful discipline is to distinguish CAC from cost per FTD or cost per registration. Cost per registration is an early, noisy proxy; cost per FTD is closer; true CAC per retained, verified, depositing customer — after removing self-excluders, fraud, bonus abusers and immediate churners — is the number that should govern spend.
Rising CAC in a channel, with LTV flat, means the channel is saturating and budget should shift; falling CAC with LTV holding means there is room to scale. The common errors are under-counting costs (leaving out bonuses or team cost), using registration-based CAC as if it were customer-based, and reacting to a single month's CAC instead of a cohort-based trend.
Worked example
An operator's blended CAC is $85, which looks fine against a $190 LTV. Segmented, brand search is $18, SEO affiliates $70, and one paid-social campaign $240 against a $150 LTV for that segment — a loss.
Cutting the paid-social campaign raises blended CAC slightly but improves overall acquisition profit.
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