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Inside Airbridge
Mastering predictive LTV for swift marketing decisions
November 30, 2023
by
Moonkyung Hong

Navigating the complexities of performance marketing involves a constant evaluation of your expenditure against the revenue generated. A straightforward approach is to scrutinize your ad spend in relation to the income it generates. If your revenue surpasses your expenses, you’re on the right track; if it doesn't, it may be time to reconsider your strategy.

Consider this scenario: a campaign with an initial user acquisition cost (CAC) of $100 or less. If the users acquired through this campaign contribute an average spend of over $100 per month, it’s a strong indication that the campaign is worth maintaining. This strategy allows you to not only manage your ad budget efficiently but also ensures the continuation of high-converting campaigns with proven success.

However, a crucial challenge arises— not all users acquired through ads remain engaged with your service throughout the entire month. Moreover, adapting your marketing strategy swiftly is challenging, as you can only evaluate a user’s spending behavior after the fact. To overcome this hurdle, you need to anticipate how frequently ad-acquired users will return to your service and the potential value they can bring. This is precisely where predictive features come into play, it's the reason why Airbridge started supporting Predictive Lifetime and Predictive LTV in the reports.

Predictive Lifetime and pLTV to identify users ahead of time

Accurately predicting the future may be impossible, but estimating user behavior based on comprehensive data is within reach. Through its Prediction feature, Airbridge offers a swift estimate of how often a user will return to your service and the corresponding value they'll generate, derived from the data we meticulously collect.

Two key metrics are provided by Airbridge through the Predictive feature: Predictive Lifetime and Predictive LTV (pLTV). Predictive Lifetime, available in the Retention Report, serves as an estimate of the number of days a user is likely to return to your service in the future. For instance, when the predictive lifetime of a cohort is 9.5 days, you can expect users in the cohort to return for 9.5 days on average during your specified timeframe.

pLTV, on the other hand, represents the Lifetime Value estimated from the predictive lifetime. If the calculation period is set to Day 30, and pLTV of a cohort is $300, it signifies that a user in the cohort is likely to generate $300 in revenue for 30 days.

However, no one can precisely predict the future. This leads to the fundamental question: How can you effectively leverage predictive lifetime and pLTV to gain a proactive edge with your users?

Predictive metrics can give you more insight into your marketing campaigns

On the Airbridge dashboard, various metrics, including GroupBy, Filter, Cohort, and more, allow you to define user groups effectively. Tracking your campaign performance is made even more insightful with metrics such as predictive lifetime and pLTV.

Case 1

Consider this example with three user groups, each characterized by predictive lifetime and pLTV:

  • Group C is identified as the longest-returning user based on predictive lifetime alone.
  • Group A, however, holds the highest expected value when considering pLTV.

For a service emphasizing user engagement, like a community, targeting Group C in a campaign might be beneficial. Conversely, if short-term revenue is a priority, Group A, with the highest pLTV, could be a strategic choice. Depending on your service’s conditions and current state, refining your target audience using predictive lifetime and pLTV becomes a valuable strategy.

Case 2

Let’s see another case. Running multiple campaigns with pLTV can serve as a quick indicator of their success. Examining three campaigns, for instance:

  • Campaign A, with a pLTV surpassing its CAC, stands out as a solid performer worthy of continuation.
  • Campaign C, with a pLTV smaller than its CAC, might warrant consideration for discontinuation.

While these metrics alone may not be sufficient to make a definitive decision on campaign viability, they provide a swift reference for analyzing performance. Airbridge further streamlines this process by presenting pLTV and CAC together in the Revenue Report, offering a quicker and more comprehensive snapshot of your campaigns.

Airbridge is here to help marketers make faster, more accurate decisions

In an uncertain future, many marketers face challenges in finding the right answers. Airbridge is dedicated to continually enhancing its features and metrics to empower marketers with swift and precise decision-making. The new forecasting feature is a testament to this commitment. Explore the guide below to experience the benefits of Airbridge's predictive lifetime and pLTV.

👉 Check how to enable Predictive lifetime calculation on the Retention report

👉 Check how to enable pLTV calculation on the Revenue report

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Moonkyung Hong
Product Manager
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