Social Media MarketingvsCustomer Acquisition Cost (CAC)

Social Media Marketing involves creating and sharing content on platforms like Instagram, LinkedIn, and TikTok to achieve branding and marketing goals. It requires balancing organic brand-building with paid targeted campaigns, aiming to generate an Engaged Follower Rate above 3% and drive direct measurable conversions.

CAC is the total cost of convincing a potential customer to buy your product. This includes all marketing spend, sales team salaries, tools, and overhead directly tied to acquiring new customers. The formula: CAC = Total Sales & Marketing Spend ÷ New Customers Acquired. A company spending $50K/month on marketing and sales and acquiring 100 customers has a $500 CAC. CAC varies dramatically by channel — paid ads might be $300 CAC while organic content is $30. VCs obsess over CAC because it determines unit economics: if CAC exceeds LTV, every customer you acquire destroys value.

The most common trap is chasing vanity metrics (likes and followers) without a clear attribution model to revenue. Earning 100,000 views on a viral TikTok video means nothing if it drives 0 qualified signups because the audience doesn't match the customer profile.

The most dangerous mistake is calculating 'blended CAC' by averaging all channels together. This hides the fact that your Google Ads channel might have a $200 CAC while organic has a $5 CAC. Blended CAC at $100 looks fine — but if you scale by doubling ad spend, CAC doesn't stay at $100; it approaches $200 because you're scaling the expensive channel. Always track CAC per channel. The second trap: excluding sales salaries from CAC. If you have 4 sales reps at $10K/month each and they close 40 deals/month, that's $1,000 in 'hidden' CAC per customer on top of marketing spend.

Run an audit classifying all social posts into three buckets: Brand Awareness, Lead Generation, and Community Engagement. Ensure at least 30% of posts have a clear call-to-action (CTA) with traceable UTM parameters to calculate true customer acquisition from social channels.

Calculate CAC by channel: Paid CAC, Organic CAC, Referral CAC, Outbound CAC. For each: total spend on that channel ÷ customers from that channel. Kill channels where CAC > LTV/3 (not LTV/1 — you need margin for overhead). Track CAC trend monthly — increasing CAC often means market saturation or competitive pressure and requires immediate investigation.