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Old 07-20-2007   #1
NewKidOnTheBlock
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Ltv

Does anyone of you guys compute liftetime value for their PPC campaigns? I've heard two opinions about this, which were rather negative (as in not necessary/doesn't work) and understand that for most keywords/in most markets it's probably unnecessary (you just find keywords that are profitable and if you get the LTV on top of that even better), but how about competitive markets?

Any opinions on this? just curious
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Old 07-20-2007   #2
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I look at LTV, although generally not on a individual keyword basis. I look at LTV by PPC program on a product-by-product basis.

You're right in that if your PPC is profitable, LTV becomes less important, but just because Google or Yahoo or whatever PPC program is profitable doesn't mean each individual product is profitable. It's those cases where LTV gets a closer look from me.

Interesting question!

Melissa
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Old 07-20-2007   #3
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I guess I think about it the same way as you do (though I dont know all that much about LTV, yet):

If I had 2 ideas for products to promote and both seem to be about equally profitable..and I had multiple upsell ideas for one of them, but none for the other product, it would be obvious which one I'd choose.

However, I was wondering..say in very competitive markets..if one was able to really determine the lifetime value of a customer (that one acquired through PPC) or rather the confidence level of a customer's LTV (at a high statistical signifiance), one could find keywords that are profitable, though they don't look profitable to the competition..because they're only profitable b/c of the LTV not a single product sale (maybe even pretty profitable b/c of LTV?).

Thus the competition lets those keywords slip, whereas somebody who can do that could make a profit out of them and reinvest that money in the PPC campaign again (and thus have an edge).

Am I overcomplicating things?lol
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Old 07-20-2007   #4
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Quote:
Originally Posted by NewKidOnTheBlock
However, I was wondering..say in very competitive markets..if one was able to really determine the lifetime value of a customer (that one acquired through PPC) or rather the confidence level of a customer's LTV (at a high statistical signifiance), one could find keywords that are profitable, though they don't look profitable to the competition..because they're only profitable b/c of the LTV not a single product sale (maybe even pretty profitable b/c of LTV?).

Thus the competition lets those keywords slip, whereas somebody who can do that could make a profit out of them and reinvest that money in the PPC campaign again (and thus have an edge).
Yes, this is absolutely possible and is one of the ways astute marketers can win at the PPC game.

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Originally Posted by NewKidOnTheBlock
Am I overcomplicating things?lol
Ha, a little, maybe! I did have to read your post twice, but it makes sense.

Melissa
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Old 07-20-2007   #5
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If that would really work, I have to say I'd like it, b/c the more complicated something is/the more obstacles there are, the easier it is for somebody really trying to outperform the competition.

I assume not many people are doing this as most people shy away from doing a lot of analytics or simply have the opinion that it's better to just sell one product?

But then again, I wont really have to bother about something like that anytime soon, as I probably wont have to bother about doing PPC in very competitive markets anytime soon and will just consider a possible LTV as a bonus, I guess (at least for now)
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Old 07-20-2007   #6
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Originally Posted by NewKidOnTheBlock
I assume not many people are doing this as most people shy away from doing a lot of analytics or simply have the opinion that it's better to just sell one product?
I think most people don't even have the data to analyze. I'm constantly surprised by how many businesses don't even know where their conversions came from. If they don't have that info, there's no way they can tie future orders back to that initial sale - which is necessary to compute LTV. If you don't have that system in place, you'll never know your LTV.

And it's not easy to do the analysis even if the data is available, which I would guess is why most people aren't doing it. Just a guess though.

Melissa
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Old 07-20-2007   #7
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Thus the competition lets those keywords slip, whereas somebody who can do that could make a profit out of them and reinvest that money in the PPC campaign again (and thus have an edge).
Actually, I have to ask about this statement I made.

I really just concluded that from something I read w/o thinking about it thoroughly enough..the interview of (you)Aussiewebmaster by Aaron Wall:

He (you) said something along the lines that you do bid on the smaller engines, too, because not bidding on them would allow your competitors to take that profit and reinvest it on Adwords/Overture, etc. (if I remember this correctly?).

What I don't really understand is this:

How can reinvesting money you make from such unexplored opportunities into the PPC campaign help the PPC campaign in general? Of course making money from unexplored opportunities is always great (whether it be smaller engines or keywords that have great lifetime value but nobodys bidding on them as they dont seem profitable in the short run), but how does reinvesting that money give the PPC marketer an edge?

I have to say I'm a bit lost..maybe that's just because I don't fully understand how PPC works, yet? Does the ability to be able to spend more money than on a PPC campaign help its effectiveness?

cant wait for the answers, as I find this an extremely interesting topic!
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Old 07-26-2007   #8
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Re: Ltv

Successful PPC is like a money machine.... you put $20 in and it gives you $40 back.... do you stop after the first go through?
I see it as you keep putting the money in until it no longer gives you more than $20 back.
If you walk away while it is still profitable your competitors get to make the money and can then reinvest it and be bigger competitors.
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Old 07-26-2007   #9
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Re: Ltv

thx for the reply, I'm trying to analyze a few possible scenarios in my head right now hopefully Ill have no more questions afterwards
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