How to Optimize Your Retargeting Strategy and Calculate CAC


CAC (Customer Acquisition Cost) is a crucial metric in any digital marketing strategy. Knowing how much it costs to acquire a new customer is essential for making informed and effective decisions.

In this article, we delve into the estimated CAC and other important aspects of an effective retargeting strategy.

How Do I Calculate My Customer Acquisition Cost?

Calculating the estimated CAC (Customer Acquisition Cost) involves considering various factors and making an estimate based on your marketing data.

Step 1: Define the Time Period

Decide on the time period you want to analyze. CAC is usually calculated on a monthly, quarterly, or annual basis.

Step 2: Gather the Necessary Data

You'll need information about marketing costs and the number of new customers acquired in the chosen period. Make sure the data is consistent in terms of time and currency. The data to collect includes:

Cost of Marketing (CM): This includes all expenses related to your marketing efforts during the selected period. It can encompass online advertising, promotional events, marketing team salaries, and other related expenses.

New Customers Acquired (NC): Determine how many new customers you acquired during the same time period.

Step 3: Calculate the Estimated CAC

Once you have the data, you can calculate the estimated CAC using the following formula:


Let's say that during the month of August, your company spent $10,000 on marketing strategies and acquired 100 new customers.

CAC = $10,000 / 100 = $100
The estimated CAC for August would be $100.

Step 4: Analyze and Refine

Once you have calculated the estimated CAC, analyze the result. A lower CAC is usually better, as it means you are acquiring customers at a more efficient cost.

However, it's important to note that what constitutes a "good" CAC varies by industry and business type.

Factors Influencing My Estimated CAC

App Vertical

The type of app, whether it's e-commerce, retail, streaming, etc., significantly affects CAC. Some niches are more competitive than others, which can increase acquisition costs.


The geographic location of your target audience also plays a significant role, as advertising costs can vary considerably by region or country.

Brand Awareness

The perception of your brand within its industry or sector will influence CAC. A strong brand can often attract customers at a lower cost.

Audience Size

The larger the audience you're targeting, the more opportunities you're likely to have for conversions and, therefore, a potentially lower CAC.

Daily Campaign Investment

Daily advertising investment is a critical factor. Investing too little can slow down the algorithm's "learning" process and ultimately make it challenging to achieve an optimal CAC.

Audience Segmentation

The audience you're segmenting will also affect CAC. Some users may require more effort to convert, which could increase the cost.


Creative ads are crucial for retargeting. Promotions, featured products, and specific messages can influence CAC.


The time of year also plays a significant role. During high-demand seasons like Christmas or Black Friday, advertising costs usually increase, affecting CAC.

But how long does it take to reach a target CAC?

This will depend on the daily investment and the number of conversions you obtain.

  • Generally, it takes between 3 and 5 weeks to achieve an optimized CAC in mobile campaigns.

Advantages of retargeting

The relationship between Customer Acquisition Cost (CAC) and retargeting strategies is important and direct, as retargeting is one of the tactics that can significantly influence CAC.

One of the advantages of retargeting is its ability to reduce CAC.

When you retarget users who have already interacted with your brand or app, they are more likely to convert compared to completely new users. This is because they have already shown interest in your product or service. As a result, the cost of acquiring a customer through retargeting tends to be lower compared to other customer acquisition strategies.

Furthermore, retargeting allows you to focus on users who are closer to make a purchase decision. This increases the efficiency of your marketing efforts since you are not spending resources on cold audiences that are not yet interested in your offering. Consequently, CAC tends to be more efficient when an effective retargeting strategy is implemented.

Retargeting enables you to optimize your marketing spend by targeting specific audiences that are more likely to convert. This means you are investing your marketing budget more effectively, thus reducing overall customer acquisition costs.

Retargeting strategies often include personalized messages and offers, which can improve conversion rates. When users see relevant ads tailored to their needs and previous behavior on your site, they are more likely to take action and become customers, ultimately reducing the CAC.


Which audiences can I retarget to improve CAC?





Retargeting in apps offers the opportunity to target various audiences that have previously interacted with your app.

1. Users Who Abandoned the Shopping Cart

If you have an e-commerce app, you can retarget users who added products to their cart but didn't complete the purchase. You can remind them of the products in their cart and offer incentives to finalize the purchase.

2. Users Who Visited Specific Pages

If your app has multiple sections or features, you can retarget users who visited specific pages. For example, if you have a news app, you can show ads related to news topics the user has explored before.

3. Users Who Registered Accounts

If your app requires registration, you can retarget users who registered but did not complete a specific action, such as making a purchase or using a key feature.

Retargeting Models: dCPM, dCPC, and CPA

There are several retargeting models, each with its own advantages and disadvantages. Let's go through them.

dCPM (Cost per Thousand Dynamic Impressions):

In this model, you pay for every thousand impressions of your ads, regardless of whether users click on them or not.

Advantages: You can increase brand visibility and reach a wide audience.

dCPC (Dynamic Cost per Click) with CPA (Cost per Acquisition):

Here, you pay for every click users make on your ads. The target CPA is a dynamic cost goal based on the past performance of an advertising campaign. Optimization algorithms automatically adjust ad bids to try to achieve a specific or desired CPA.

If a company has a target CPA of $10 and the campaign achieves a CPA of $8 on one day and $12 on another, the optimization algorithm will adjust bids to try to stay close to the target CPA of $10.

The target CPA is effective when a company wants to maximize the volume of conversions within a specified cost range. It's more flexible and allows adaptation to fluctuations in campaign performance.

Advantages: You have more control over costs and only pay when users show active interest.

Which Is the Best Retargeting Model?

The choice of the best retargeting model depends on your goals and resources.

  • If you want to increase brand visibility and are willing to invest in reach, dCPM might be suitable.
  • If you want to control costs and pay only for demonstrated interest, dCPC is a solid option.
  • If you're looking for concrete conversions and are willing to pay for results, CPA might be the best choice.

Ultimately, the choice of model should be based on your specific retargeting goals and business strategy. It's important to test and adjust to determine what works best for you.

What's the Difference Between Google, Meta, and DSP Retargeting Models?

Retargeting on Google, Facebook (Meta), and DSP (Demand-Side Platform) are three distinct approaches to reaching users who have previously interacted with your app or other digital assets.

Retargeting on Google:

Google offers a retargeting option through its advertising platform, Google Ads. This allows you to display personalized ads to users who have visited your app, or interacted with your search or display ads on the Google network.


  • Extensive reach due to Google's popularity as a search engine.

  • Ability to retarget on Google Search and on sites within the Google Display Network.


  • Limited to Google's ecosystem, so it doesn't reach users outside of its network.

  • Competition can drive up advertising costs.

Retargeting on Facebook

Facebook allows retargeting through its advertising platform, Facebook Ads, and Instagram Ads. You can display ads to users who have interacted with your Facebook page, Instagram, or app.


  • Advanced targeting based on interests, demographics, and behavior.

  • Extensive reach on the Facebook and Instagram networks.   


  • Limited to the Facebook platform, so it doesn't reach users outside of its network.

  • Users may be less receptive to advertising on social networks.

Retargeting via DSP (Demand-Side Platform):

DSPs are platforms that enable advertisers to purchase advertising space on multiple websites and apps in real time. You can use a DSP to display ads to users who have interacted with your app across a wide range of online sites and apps.


  • Greater reach, as it can reach a wide variety of websites and apps.

  • More control over strategy and bids.


  • May require technical expertise to set up and optimize campaigns.

  • Costs may vary depending on the DSP platform and inventory.

Retargeting is a powerful strategy that allows you to reach highly specific audiences who have already shown interest in your app. Whether through Google, Facebook, or other retargeting platforms, you can re-engage inactive users, recover abandoned carts, and effectively increase conversions.

However, when it comes to retargeting in mobile apps, DSP platforms with good inventory can provide additional advantages. These advantages include a broader reach across a variety of websites and apps, greater control over your strategies, and the ability to optimize your campaigns more precisely.

Having the support of digital marketing experts who understand the intricacies of retargeting mobile apps is essential. Professionals can help you design effective strategies, properly segment audiences, and maximize your return on investment. Their knowledge and experience are valuable for successfully and sustainably growing your app.

Mobile app retargeting, supported by experts and quality DSP platforms, can be a key tool for the growth and success of your app. Leverage this strategy to optimize your conversions, improve user retention, and achieve your business goals.