Measurement is one of the industry's biggest challenges. The IAB State of Data 2022 report released Tuesday reveals that many executives are less prepared for the deprecation of third-party cookies than first believed, and there is a great deal of work to be done to mitigate the risks to revenue, brand visibility, and customer relationship management. The IAB called on the industry to form universal measurement standards during the company's annual leadership study, citing Meta's $10 billion revenue hit based on changes in privacy standards. The data concludes that advertisers “are on the brink of losing their ability to measure advertising campaigns.” As the industry’s sense of preparedness grows, implementations have made little progress.
In the last two blogs written by Michelle Houston, she covered the importance of using Contribution Per Order (CPO), instead of ROAS when evaluating the performance of marketing programs. At the end of one of those blogs, she talked about the importance of also assessing and understanding the significance of lifetime value (LTV) as part of the equation. I wanted to continue that thread and take it a step further by incorporating LTV as the last step of the proper analysis into the equation.
As covered in past discussions, LTV is an important metric to track as it will vary widely by acquisition source. When applied to the first order for a new customer, CPO is the equivalent to cost or profit per customer acquired. This will vary by acquisition source as well. When CPO is combined with LTV, those metrics are a powerful tool in driving your company in the right direction (or wrong direction if you’re not careful).
In the analysis below, we can evaluate the total effect that CPO and LTV have on the current and future business. That effect allows you to make educated decisions on where to place marketing budgets to set the business up for success. If evaluating acquisition cost/contribution in a vacuum, the data would indicate cutting all postal since it lost -$12 on the initial order and redistribute to SEM non-brand, email, and social, which are marketing channels that can leverage the additional marketing spend.
much more at source: https://cohereone.com/the-last-step-for-success/?utm_medium=email&_hsmi=90240338&_hsenc=p2ANqtz–9zmFiEtQe8OsNq_N9mTWn9LDyJNAxc8JKvcNau2SmvbxKDD043pScjVQzmVLOFF7jFcUxyXhlvfMuNk-XC7blfUg5VIfo35U3I1PNSGUJfuh0Lb4&utm_content=90240338&utm_source=hs_email