Inside Trends 2019: Brands Prioritise LTV over Acquisition

Inside Trends examines the five key trends affecting the digital marketing industry in 2019. We provide an insight on each trend from spokespeople across our performance agency globally.

In discussion with Lavinea Morris, Associate Director

Watch the full interview here.

LTV, the Lifetime Value of customers, is the total profit that can be expected from a customer over the entirety of their relationship with a brand. This is an essential metric to find high value users that bring the greatest amount of return on investment in the long-term. It’s tempting for brands to focus on pure acquisition which is initially cheaper and easier, but it is also a short-term strategy that focuses on immediate profits. Changes in the market-place have caused a shift in competition and growth, meaning now, more than ever, brands are starting to focus on LTV as an effective solution.

The ability to adjust campaigns and prioritise spending based on LTV, has been difficult for brands simply because they don’t know the LTV of their customers. This can be caused by insufficient data on their consumers, or even having so much data that they don’t know what to do with it. As the modern consumer becomes more complex, marketers can become overwhelmed with the number of data points to tap into. Finding the LTV can be costly and time consuming so is often overlooked by brands.

Focusing solely on acquisition limits the opportunity for brands, whereas LTV gives a more holistic view of customers and how they engage. Without understanding the LTV, you won’t fully understand the effectiveness of your ad spend. Knowing how valuable ad spend is on certain channels helps to direct your marketing strategies, including assessing your goals and KPI’s.

Effective ad spend has always been a concern for brands and is now becoming more vital due to increasing competition and slowing growth. The digital economy has lowered the barriers to entry for new brands, encouraging start-ups to join the market, drastically increasing competition. While there are mounting brands to compete with, there is a smaller audience to target.

Global growth data has shown that world wide internet penetration has started to slow along with the number of people owning smartphones. As growth begins to stagnate further in 2019, we can expect the cost of acquisition to increase, with a limit to the number of new users you can reach. This year will see brands focus further on alternative methods, like using LTV, to maximise consumer spend.

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