Why DTC Founders Are Bringing Growth Marketing In-House To Cut CAC and Increase Profit Margins

DTC founders are bringing growth marketing in-house to cut customer acquisition cost (CAC) and protect profit margins. Bringing your growth marketing team in-house is the fastest route to reducing CAC and increasing your profit margin. By default, agency fees increase with your paid ads spend. Having your own in-house growth marketing team with a fractional growth marketing consultant training and developing in-house skills and capability is the best route to reducing CAC long-term.

I have spent 16 years in growth marketing, with luxury ecommerce and in-store brands, as well as small DTC ecommerce brands. I also run my own Shopify ecommerce store. The patterns I experience is the same across 600k-page ecommerce websites and a 40-page DTC ecommerce founder led website. Founders can easily get blindsided by the increase in revenue, but behind the scenes, customer acquisition often eats heavily into profit margins. This then results in an increase in revenue which does not have any correlation with an increase in profit margins. There are a few factors to consider when trying to reduce your CAC and increase profit margins.

Agencies focus on marketing metrics like CPA and ROAS

In my experience most agencies report on less important metrics like return on ad spend (ROAS), reach, cost per click, cost per lead and cost per acquisition. Whilst these are important metrics to track campaign effectiveness, i.e. they show that the ads are working. They do not immediately connect to important commercial metrics, meaning they do not show that the business is making money from these campaigns or how much.

As a founder, you need to focus on two key commercial metrics:

1. Customer acquisition cost (CAC): what you pay to win any customer, and
2. New customer acquisition cost (nCAC): what you pay to win a new customer who has never bought from you before.

The gap between how much you spend on existing customers and new customers directly impacts your cost and profit margins. If your paid ads keep paying for existing customers who should normally come to you via organic traffic and email automation, that increases your overall cost. As a founder, I recommend structuring your growth marketing strategy on increasing the number of new customers acquired and redirecting spend on existing customers towards new customers to reduce waste and lower your overall CAC. As a founder, I want you to ask yourself one question: are your marketing analytics dashboards tracking nCAC and CAC?

Why is your CAC and nCAC always increasing?

Some things will be out of your control, while other things you are able to influence within the next one week. Paid ad platforms, like Google and Meta, are publicly traded companies that need to increase shareholder value in the form of dividend payments: one of the ways they do this is by increasing ads cost. WordStream studied 16,446 US search campaigns from April 2024 to March 2025 and discovered that the average cost per click rose by 12.88% in this period, with 87% of industries paying more. In my experience of reducing CAC for my clients, the following reasons sit behind every increase in the cost of customer acquisition:

1. Broad campaign targeting. Agencies assign less experienced executives to manage Ggoogle Ads accounts. Due to a general lack of experience and understanding of important commercial metrics, these individuals chase after traffic volume as opposed to quality acquisition. Volume looks good in a report, but if the traffic converts at a very low rate this will invariably increase your cost.
2. Paying for customers you already have. I recently audited a Google Ads campaign that was structured to acquire existing customer. These customers were funneled through branded Google Ads campaigns, which meant they clicked on Google Ads when they searched for my client’s website rather than clicking on the organic ads. I restructured the entire ad campaign and eliminated the wasted spend which created a £3,000 increase in daily profit for the DTC client. I also identified that the previous agency set up Bing ads pointing traffic to the homepage for product specific campaigns and this account was bleeding £400 per day. This wastage was ongoing for many months because nobody remembered to check and actively monitor the campaign. I switched off this leak, and this added extra £400 per day to the profit margin. Small step – big win.
3. Another reason why your CAC is increasing is due to agency obsession with putting inexperienced, junior account executives in charge of large accounts. Agencies pitch to clients with senior staff, whilst junior staff often run the account operationally. The worst case I have seen was a graduate with less than a year of work experience running several accounts, one of which spent about £120,000 a month. Don’t get me wrong – everybody needs to start somewhere, and there is nothing inherently wrong with junior agency staff learning on the job. The problem is that senior oversight of this work is often lacking rigour and consistency – this is something you should be looking out for as a client, to ensure your financial investment in this work is appropriately safeguarded.
4. Targeting cheap customers via inexpensive ad platforms. Some teams buy the cheapest clicks they can find and hope some convert. Cheap customers rarely stay, so you keep having to pay to replace them with new customers. At some point (at least theoretically) the well will run dry.
5. Some competitors have bigger budgets, and they can easily bid on your brand terms to steal your existing customers – the ones that type your brand terms into their search. This invariably increases your customer acquisition cost compared to competitors.

Agency fees and retainers are variable costs

Most agencies charge retainers plus a percentage of your paid ad spend, which means your agency fees will inevitably increase as you scale paid ads and spend more. The same applies to your CRO, Email, TikTok and Meta ads agency fees.

The opposite happens with in-house growth marketing teams with fixed cost salaries. Your fixed cost salaries only increase with bonuses you approve, and these are usually linked to revenue and profit increases of your business. To get a bonus, each one of your team have to ensure they are hitting their targets. A fractional growth marketing consultant also works on a fixed fee. This is why so many founders are moving their growth marketing in-house with the support of fractional growth marking consultants like Femi Olajiga.

Accepting that paid ads are a rented channel

Most founders focus on performance marketing and heavily tilt towards Google and Meta ads, whilst at the same time neglecting organic channels and brand marketing. This inevitably increases customer acquisition costs in the long run.

As a founder, I recommend working with your team to understand your CAC and nCAC by marketing channel. Once you fully understand these costs you can structure your budget and marketing activities to focus on the most effective and efficient marketing channels from a profitability and LTV perspective. In my experience, organic channels are the best customer acquisition channels from a repeat purchase and overall profitability standpoint. Some paid channels are notorious with acquiring price sensitive and impulsive shoppers who often shop once and never return to purchase from you again. These customers never reach the lifetime value (LTV) or lifetime gross profit (LTGP) you need to make your marketing profitable.

Post-click impacts on your CAC and nCAC

Founders often ignore the post click experience that happens on websites, or they feel A/B testing is the best way to optimise post click journeys. I have seen CRO agencies who operate without a complete understanding of how platforms like Google, Bing and Meta ads work. This creates a misalignment between acquisition channels and landing page experiences.  As a founder, I recommend checking the conversion and exits rates of the following:

1. Your paid ads landing pages.
2. Your homepage.
3. Your product pages.
4. Your sales pages, listicles and advertorials.
5. Your blog.

Compare them. The weakest pages with the most paid traffic are where you need to test first.

Next, check your product images, your reviews and your trust signals. Then look at your value proposition and offers. I trained with MECLABS in 2012 on value proposition. This lesson has held up ever since: the strength of your offer has a direct effect on both CAC and nCAC.

Then check that each ad matches the page it sends people to. If your Meta ads, Google ads and organic traffic all land on the same page, this makes it impossible to align the landing page with acquisition channel intent. Also, check your abandoned cart and abandoned checkout emails. Many brands I have audited had none. When a shopper leaves your checkout, they often search again and buy from a rival. You paid for that visit. Your rival did not. Their CAC falls as yours rises.

Customer retention is the cheapest way to cut CAC and increase profit margins

The best way to lower CAC is to keep the customers you win. Aim for each new customer to buy from you three to four times in the next 12 months. Here is where to start:

1. Teach new buyers how to use what they bought: most post-purchase emails stop at thank you.
2. Use those emails to suggest the next right product, an upgrade or a subscription.
3. Set up your ads and email so part of the plan serves existing customers, but do not overspend on people who will return anyway.
4. Run win back campaigns for customers who have lapsed.
5. Reward referrals and test loyalty schemes and subscriptions. Referrals give you a cheaper route to new customers.

What bringing growth marketing in house looks like

Here is how I normally work with founders:

I join on a fixed fee for three to six months; I audit the accounts, find the quick wins and put them live.

I set up the campaigns and the tracking, then I train your team to run them.

If you want a longer retainer, it still costs less than an agency.

For one DTC brand, this cut CAC by 50%. It added as much as £3,000 a day in profit on top of what the company was already making.

The work covers more than paid ads. It links your marketing numbers to your commercial goals: CAC, nCAC, LTV and LTGP. Agencies often report on marketing metrics alone, and that gap is where profit leaks, never to be seen again.

Five questions to ask your agency this month

1. What is our CAC and our nCAC, by channel?
2. How much of our spend goes on customers who already buy from us?
3. Who runs our account each day, and how many years of experience do they have?
4. What is the conversion rate of each landing page that gets paid traffic?
5. What happens by email after someone abandons a cart, and after someone buys?

If your agency cannot answer these, you have a margin problem, not an ads problem.

The next step

Rising ad prices are out of your control. Waste, weak pages and poor retention are not. Bringing growth marketing in-house puts those levers back in your hands. It also turns a variable cost into a fixed one. I work with founders in the UK, the US, Canada and Australia. Book a 30-minute call with me and we will go through your data to identify where your CAC is leaking. You can then take the plan and run with it yourself, or we can work together over the medium to long term to make sure every pound or dollar you spend on your marketing is generating the absolute maximum return in your profit margin. The choice is yours. Book a 30-minutes Growth Marketing call with me: https://calendly.com/femi-olajiga/new-meeting