Freemium Economics: Leveraging Analytics and User Segmentation to Drive Revenue (The Savvy Manager's Guides) by Eric Benjamin Seufert

Author:Eric Benjamin Seufert
Language: eng
Format: mobi
ISBN: 9780124166981
Publisher: Elsevier Science
Published: 2013-12-26T16:00:00+00:00

FIGURE 5.2 An advertising campaign performance overview.

In the figure, CTR is measured by dividing ad clicks by ad views. Similarly, install rate is calculated by dividing ad views by installs. CPA is calculated as a function of installs: it measures how much each install costs, given the ad’s performance. Performance marketing is conceptually grounded in achieving an acquisition price that is less than a product’s LTV; when this does not hold true, an advertising campaign is being run at a loss.

Once a user has been acquired, the estimated LTV used to acquire that user is no longer relevant to that user’s behavior; by its nature, LTV is predictive, and as a description of any particular user it is only useful in determining the price that user should be acquired for. But that user’s predicted LTV becomes relevant again once that user churns out of the product; it becomes a measure of how accurate the LTV prediction mechanism was in the first place. (See Figure 5.3.)

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