SA360
Let’s talk about Lifetime Value.
Calculating, and effectively predicting lifetime value is not necessarily an easy feat. Here’s a BCG study on responsible marketing using first party data. Let’s move on to understanding what Lifetime Value (LTV) is, and how to get thinking about it.
Lifetime value can be described as the overall value generated from a single user, by understanding and evaluating how he interacts with the brand, within a certain timeline.. Quote me on this.
Let break that description down into sections;
How do you determine interaction with the brand?
- Calculation metrics: Determine what type of customers are most valuable to you. (Profit, Repeat orders, offline purchases etc)
What is overall value, and How can overall value be generated?
Overall value can be a single or combination of various factors such as average order value, profit margin, demographics, items in basket, product satisfaction, churn rate, products bought, frequency of purchase and more.
Capturing information to calculate LTV can be as simple, or as complex as you can think of it to be. Common methods include using:
1. Formula Columns: Use multiple data points to create a unified data to optimise toward
2. Custom Floodlight Variables : Utilise extra information within ‘u variables’ to capture varying audience segments
3. API Offline Uploads : Offline data points incorporation, where LTV model is calculated in another platform, and then its linked back into SA360 to the original purchase.
4. Tensor Flow/ Auto ML/ Machine Learning : Utilising Cloud features to integrate lots of different products to calculate value.
What timeline should be included?
Simply put, are you looking at short/ medium/ long term solutions?
So why would you want to use LTV data?
Alongside capturing the monetary value of a conversion, if we are also able to insert Lifetime value associated with that conversion, it acts as a truer data point for bidding algorithms.
This allows you to use that data point to optimise toward conversions (i.e users) that would generate more value/revenue for the brand.
In a gist, better data helps both short, and long-term goals by:
- Driving Growth: Optimise toward long term growth, and not just short-term revenue
- Improved Budget Planning: Plan budgets more effectively to drive performance against key revenue driving segments
- Channel selection & Forecasting: Identify which channels drive the most valuable customers.
Agency Within Uses LTV Bidding in SA360 to Increase PetFlow’s Paid Conversion Value 3x
Pivoting to a LTV driven marketing strategy allowed PetFlow to focus on its highest value customers and that improved business results. This enabled PetFlow to promote repeat purchases, and helped make them the sole source of pet food for many new customers.
Read about the case study here
DV360
Custom Bidding in DV360
Automated bidding in DV360 has been around for a while, but now Google are making automated bidding more powerful via Custom Bidding, a new way to incorporate your unique insights about what drives your business into your bidding strategies.
With Custom Bidding, your ability to optimise is opened up and can be tailored more towards your specific goals. If it's measurable within a Floodlight Activity or a goal in Analytics 360, you can choose it as a signal for your bidding algorithm to optimise towards. Essentially, you build a script that uses these signals to assign scores to ad impressions in order to define how much each impression is worth to you, based on its expected ability to drive your chosen KPI. Once the campaign starts, Display & Video 360 will use the scoring model built on your script to predict the value of each impression and adjust each bid accordingly.
While Custom Bidding is now available to all DV360 accounts, Analytics 360 goals as signals will be supported in the coming months. See this link for more information on automated & custom bidding: https://blog.google/products/marketingplatform/360/new-automated-bidding-solutions-display-video-360/.
Campaign Manager
Marketing Retention
You may already use Campaign Manager to capture audience lists based on people who have bought or even triggered soft conversions through your activity, we use these for remarketing to typically identify users who have been to our site or interacted with you activity, but have not converted, which is a viable strategy but, do you remarket to those who have already converted?
Whilst keeping new users coming to site is vitally important, so is taking care of those who have already affiliated themselves with your brand, as such, how do you remarket via display to users who have already purchase from you, without becoming overbearing?
Option 1 would be to capture 2 user lists, one based on the last 540 days, with the other capturing users in your lookback window (e.g. if you typically see a journey last 60 days, then have your second list capturing users in the last 60 days). You will target the users you have captured in the last 540 days, whilst negating the users captured in the last 60, in essence remarketing to users that have converted, but once again have not done so for some time. This strategy may not be as effective for the likes of selling vacuums or holidays but may be a strategy if your items are bought on an on-going basis (like make-up or clothing). Naturally, with one list of users being captured over 540 days, this can be a slow grower, but can be maintained quite easily once up and running.
Option 2 would look deeper into using Custom Variables, though depending on your product inventory may not be required. Try capturing users that convert and dissect this using the u-variables you are picking up on site, for example capturing someone who converts on “product A”, instead of capturing users that convert across all products. In doing this you can build bespoke audience lists based on users that have converted on particular products, which you can then use in your remarketing efforts so that users converting on “product A” can now be targeted with ads for “product A accessories”, whilst users converting on “product B” can now be targeted with ads for “product B accessories”. This could be used for adding “extras” to a booking if you’re a travel client, marketing clothes that go perfect with those Shoes your client just bought and many more.
If you want to look further into retention, but would like to talk this through prior to understand the pro’s and con’s, get in touch with one of our team members at tp@iprospect.com