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Predictive Lifetime Value: The Key To Long-Term Online Retail Success

Advertising your products to customers is one thing. Advertising your products to the right customers is another matter entirely. What’s the point of investing in advertising if the people those ads attract don’t spend money, or only spend a little and then never again?

At Nanigans, we are enabling direct response advertisers to target the audiences who are most valuable in the long-term, using Predictive Lifetime Value (PLTV) algorithms and tools.

What is PLTV?

LTV breakdown - PLTV BlogLifetime value is the revenue or associated value a customer generates over time. Nanigans offers the only performance marketing platform that measures, predicts and optimizes ad spend for lifetime value across social and mobile. By harnessing the power of PLTV to inform more intelligent and efficient media buying, you can move away from proxy metrics like clickthrough rates and cost per action to true ROI.

 

Ecommerce Example

PLTV example chart -PLTV Blog

Let’s say you’re serving an ad for your t-shirts to two Facebook users, Damien and Rachel. Damien’s cost per acquisition (CPA) is $9, while Rachel costs $12 to acquire. Damien may have been cheaper to acquire, but he only buys one $10 shirt, and then never shops with you again. Rachel, on the other hand, continues to purchase from your business. In the following weeks she buys $50 worth of shirts, and continues to shop on your site over time.

So while Rachel may be 33% more expensive to acquire than Damien, she purchases 400% more and generates 28X greater ROI than Damien. In the long run, customers like Rachel are more valuable to your business, even though they cost more to acquire. Predictive Lifetime Value lets you find and remarket to lifelong profitable customers like Rachel.

PLTV is the future of media buying

PLTV Evolution - PLTV Blog

Media buying has shifted from primarily branding-based (cost per impression), to primarily direct response-based (cost per click or cost per action). PLTV takes all this a step further by giving advertisers the ability to predict the long-term ROI of clicks and installs with tools like Maturity Curves, Cohort Analysis and Affinity Modeling. Because it’s rooted in downstream behavior (or what happens after an ad is clicked and a user is acquired, as represented by the gray area in the image above), Predictive Lifetime Value provides online retailers with the ability to buy media with a focus on sustainability and future success.

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