Customer acquisition cost (CAC) is an important business metric used to evaluate the cost of acquiring a new customer. Facebook digital advertising algorithms have in the past dominated the digital advertising space, and provided a cost-effective way to pinpoint a desired demographic for a consumer product or service. Not only has the price of CAC been inexpensive, but the FB algorithm also was head and shoulders above anything else that could be used by an emerging company with limited funds to acquire customers.
However, the Facebook model has been disrupted by Apple. There has been a clash between the Apple brand of iPhone customer privacy protection, and the Facebook brand of selling the information provided by its users (i.e., customers). By placing restrictions on the Facebook algorithm, Apple not only enhanced customer privacy but also wiped out the entire digital advertising algorithm that enabled inexpensive ways to add customers. And so, the price of engaging a customer has increased. Without Facebook, the algorithms have become more difficult. And expensive.
This may now cause cutbacks in staffing at companies, and it’s going to be difficult for companies to raise cash to pay for increased CAC. Company balance sheets will take a hit.
