Say that Netflix spent $500 million in marketing last year and added 10 million subscribers. They might calculate the CAC as $500M / 10M = $50, and use that $50 CAC to plow more money into acquisition.
But if a closer look reveals that 5 million of those subscribers were organic, whilst paid CAC turns out to be $500M / 5M = $100 (the 5 million organic customers would have subscribed regardless of any paid spend!), which changes the math dramatically.
All of a sudden, the entire marketing strategy might fall apart.
Now it’s important to track both organic and paid, in particular, make organic an important part of reducing your overall CAC (killer blow to the competition 🥊) but report them as separate metrics.
