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Predictive Lifetime Value

PLTV_CrystalBallNanigans 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 Predictive Lifetime Value® to inform more intelligent and efficient media buying, the advertising industry is moving away from proxy metrics like clickthrough rates and cost per action to true ROI.

Understanding Lifetime Value

Lifetime value refers to the revenue or associated value a customer generates over time.

PLTV_definitions

Many digital advertisers try to minimize how much they spend to acquire a customer (cost per action, or CPA). However, cost represents only one side of the ROI equation.

By understanding the other determining factor of ROI – the lifetime value of various audiences – marketers can ensure they find their best customers and improve ROI over the long term.

A Historical Perspective

Predictive Lifetime Value is rooted in downstream behavior – what happens after an ad is clicked and a user is acquired, as represented in the shaded area of the below diagram.

PLTV_historicalperspective

Where does Predictive Lifetime Value fit in the evolution of media buying? The industry has moved from paying for eyeballs and views (cost per impression, or CPM), to clicks (cost per click, or CPC), to immediate action such as an install or registration (cost per action, or CPA).

With advertisers demanding the ability to measure ROI, Nanigans is moving the industry forward with Predictive Lifetime Value by introducing the ability to buy media based on expected immediate and lifetime value.

An Example

Let’s take a basic example of serving an ad for clothing to two customers: Steve, a single 20-year-old male, and Mary, a 35-year-old female with a family.

PLTV_example

Steve costs $9 to acquire while Mary costs $12 to acquire. Both engage with your ad and immediately purchase a $10 t-shirt. If you were focused on just low cost or immediate value, you would move to find more customers like Steve.

However, when monitoring purchase behavior over time, Steve never again engages with your brand, while Mary continues to purchase over time – in the coming weeks purchasing in total $50 of clothing for her family, and becoming a lifelong customer.

Mary is 33% more expensive to acquire than Steve, yet Mary purchases 400% more and thus generates 28X greater ROI than Steve. Predictive Lifetime Value ensures you continue to find and remarket to profitable, lifelong customers like Mary.

Learn More

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You can also learn more about the power of Predictive Lifetime Value in our free ebook:

Finding Profitable Customers with Predictive Lifetime Value [eBook]