Foundation · 2 min
What you need to know
What is customer acquisition cost?
Customer acquisition cost is the eligible acquisition spend divided by the number of newly acquired customers under a stated attribution and time-window rule. It is not the same as cost per order.
How is CAC calculated?
Divide included sales and marketing acquisition cost by the number of new customers acquired in the same defined period. State whether salaries, agency fees, creative and brand spend are included.
What is ROAS?
Return on ad spend is attributed conversion value divided by advertising spend. It is a revenue-efficiency measure unless the conversion value itself uses margin or profit.
How is ROAS calculated?
Divide the attributed conversion value by the corresponding ad spend, using the same currency, date basis and attribution settings. A result of 1 means reported value equals spend, not break-even profit.
ROAS vs ROI: what’s the difference?
ROAS compares attributed conversion value with ad spend; ROI compares net return with the investment cost. ROI requires relevant costs and profit, while ordinary ROAS usually uses revenue.
Can a campaign have high ROAS but low profit?
Yes. High-ROAS sales can still have low margin, discounts, returns, shipping subsidies, fees or overlap with sales that would have occurred anyway. Recalculate using incremental contribution.
How should CAC and CLV be used together?
Compare CAC with conservative contribution-based CLV for the same customer cohort and maturation period. Leave room for overhead, uncertainty and delayed payback rather than spending the entire predicted value.
How do returns affect advertising profitability?
Returns reduce realized conversion value and add operational cost, so platform-reported ROAS may overstate campaign economics. Evaluate return-adjusted contribution by acquisition cohort.
A quick store check
Recalculate one campaign using new customers, contribution, returns and repeat behavior instead of attributed revenue alone.
Foundation · 2 min
Frequently asked questions
Can CAC be compared across channels directly?
Only when customer, cost, attribution and time-window definitions match and downstream value is considered.
Is platform-reported ROAS enough for budgeting?
No. Reconcile it with store orders, margin, returns, overlap and incremental evidence.