Why Customer Acquisition Costs (CAC) Are Rising—And What Fashion Leaders Can Do About It

Fashion brands are facing a significant challenge: rising customer acquisition costs (CAC). As digital advertising becomes more expensive and consumer behaviors shift, brands are struggling to maintain profitability while attracting new customers. Without a strategic approach, brands risk overpaying for customers and reducing long-term revenue potential.

Why Are Customer Acquisition Costs Increasing?

Several factors contribute to rising CAC in the fashion industry. “It’s not necessarily new,” Lilly Fuhrman, Senior Account Director at Power Digital explains. “There’s always volatility, but the fundamental question is: are brands focusing their budget on the most incremental channels and tactics?”

Hanna Lane, Group Director, Fashion at Power Digital also points to macroeconomic factors. “Everything is more expensive—including digital advertising. If a brand was paying $20 for CAC in 2020, the cost will naturally be higher today due to inflation and rising competition.”

How Can Fashion Brands Combat Rising CAC?

Fashion leaders need to take a strategic approach to customer acquisition rather than simply increasing ad spend. Here’s how:

1. Diversify Your Acquisition Channels
   Over-reliance on paid media is a common pitfall. “Brands should explore alternative acquisition channels such as SEO, influencer collaborations, and direct partnerships,” Lane suggests. “A strong organic presence helps reduce dependency on paid efforts.” Sternberg adds, “We often conduct analyses to see if brands are spending unnecessarily on paid search keywords where they already rank well organically. Adjusting ad spend accordingly can lead to significant savings.”
2. Leverage Advanced Measurement
   “Typically we see misplaced paid investment as the #1 driver of inefficient acquisition costs” says Lane. “Ensuring you understand the actual incremental impact of channels gives you the best chance of acquiring customers at profitable costs.”
3. Strengthen Brand Storytelling and Creative
   Compelling brand storytelling can also make a difference. Lane explains:“Brands need to highlight what makes their products stand out—whether it’s sustainability, exclusivity, or quality—so customers see value beyond just price.” She also added “if your paid channels aren’t returning incremental results, I can almost guarantee you it’s because of your creative.”

The Long-Term Benefits of a Smarter CAC Strategy

By moving beyond a purely paid-media-driven approach, fashion brands can reduce acquisition costs while increasing customer lifetime value. The goal is to balance acquisition with retention. Brands that diversify their strategies are more resilient to market changes and less vulnerable to platform fluctuations.”

Fuhrman reinforces this point: “It’s about making thoughtful, data-driven decisions rather than just chasing trends. Fashion leaders who implement a multi-channel strategy will see stronger, more sustainable growth.”

If your brand is struggling with rising CAC and looking for smarter, more cost-effective solutions, Power Digital can help. Contact us today to learn how we can tailor a strategy that drives profitability and long-term success.