Goal

Provide best practice recommendations on how to use your Predictive Lifetime Value (pLTV) metrics in Meta Ads. The beginning of this document contains a consolidated view of best practice optimizations by pLTV KPIs followed by a deeper dive into each.

Expectations

Every brand has different goals and a different account structure. The below best practices are built using the assumption that a brand’s goal in Meta is to acquire new and high value customers, not just any customer. pLTV measurement will be especially important for brands who care about improving their CAC:LTV ratio.

Most brands have weekly, monthly, and quarterly targets to hit in Meta. This may be increasing sales volume, staying above a certain ROAS floor (e.g. don’t drop below a 2x ROAS), or acquiring customers at a certain cost per result level. It’s important to set these goals for pLTV specifically as they are different from standard purchase metrics.

If Meta is your source of truth, these goals are limited to Meta’s attribution model which trains off of and reports only on short term revenue/purchase volume. This paired with Meta’s inability to effectively match a purchaser to a Shopify profile means your view is limited AND you’re inflating your prospecting KPIs with returning customers. pLTV can help you break out of this and optimize your campaigns and creative to find new customers who will be repeat buyers.

Consolidated Best Practices by KPI

pLTV ROAS

Allocate more budget to campaigns that are driving repeat customers who are more valuable to your business.
Analyze the content that is attracting new, high-value customers and share these insights with your creative team.
Evaluate which influencers or branded content are generating new and valuable customers with the highest pLTV ROAS. This will help you focus on the most effective influencer partnerships and discontinue those that underperform.
Examine which interest-based prospecting or custom retargeting audiences are bringing in valuable customers, and create tailored content for these groups.
Perform A/B tests on different ad creatives, audiences, and landing pages to identify the best-performing combinations based on pLTV ROAS.
Set a business goal to maintain a pLTV ROAS above a specified threshold.

Cost per High pLTV Customer

Allocate more budget to campaigns that are bringing in repeat customers at the lowest cost.
Analyze the content that is attracting new, high-value customers, and share these insights with your creative team.
Evaluate which influencers or branded content are generating new, valuable customers with the lowest Cost per High pLTV Customer. This will help you focus on the most successful influencer partnerships and discontinue those that are underperforming.
Examine which interest-based prospecting or custom retargeting audiences are attracting valuable customers at the lowest cost, and create tailored content for these groups.
Perform A/B tests on different ad creatives, audiences, and landing pages to identify the best-performing combinations based on the lowest Cost per High pLTV Customer.
Set a business goal to keep the Cost per High pLTV Customer below a specified threshold.

Avg. pLTV

Effectively track changes in Avg. pLTV over different periods to understand how business decisions and campaign launches influence future order value.

pLTV Metric Overview

Overview:

Meta’s standard purchase event includes both high-value and low-value customers. High-value customers typically have a high average order value (AOV) on their first purchase and a strong likelihood of making repeat purchases, while low-value customers exhibit the opposite characteristics. Meta only permits reporting and optimization based on all purchasers, regardless of their value. If a brand’s objective is to improve its LTV:CAC ratio, the standard purchase event is not an effective solution to accomplish this goal.

Using your past purchaser data, Black Crow’s machine learning (ML) identifies the behavior patterns of customers with high lifetime value. This intelligence enables accurate predictions of future lifetime value for every new customer after the initial purchase. Black Crow then dynamically passes this event information into Meta through the Conversions API as a custom event for both optimization use and use in reporting columns. pLTV is calculated only for new customers and includes their predicted revenue over the next six months.

There are many use cases but on the surface, this unlocks the capability to:

Judge your campaign, ad set, and ad performance on future value as opposed to short term gain.
Make Meta more profitable of a channel for you by giving it a success metric that equates to your best customers as opposed to any customer.
Allow you to focus on the creative and have your creative team build content that is driving high value customers to your site.
Allow you to judge influencer relationships on which creators are bringing in your best customers.
Better define your audience definitions based on those that are bringing in repeat customers as opposed to one time purchasers.

There are three core pLTV metrics our partners have found most impactful; available to you through the Paid Ads Growth Pack.

pLTV ROAS
Cost per High pLTV Customer
Avg. pLTV

pLTV ROAS

Definition:

New Customer ROAS with the full value of the customer taken into account, not just initial value.
Calculated as Black Crow LTV prediction Conversion Value / Amount spent

Tactics:

For each pLTV metric, treat them the same way you would their standard KPI equivalent, i.e. pLTV ROAS is simply your New Customer ROAS inclusive of the future six-month revenue. Increase ad spend on campaigns, ad sets and ads that are driving the highest pLTV ROAS, and pull back on campaigns, ad sets and ads that are lagging in this metric. Create and launch creative that is achieving the highest pLTV ROAS.

Example:

In the below example, we see that there are three ad creatives that standout from a pLTV ROAS perspective. For example, the highlighted ad in the middle has a New Customer ROAS of 1.22 and a pLTV ROAS of 3.24. This tells us that this ad is a top performer at bringing in repeat buyers. Over the next six-months, it is predicted to bring in ~$26.6k in revenue as opposed to the current short term New Customer ROAS which is reporting it to bring in only $10k. This ad, along with the other top performers will improve your LTV:CAC ratio if spend is shifted to focus on them.

By looking at pLTV ROAS, we can:

Allocate more budget to campaigns that are driving repeat customers who are more valuable to your business.
Analyze the content that is attracting new, high-value customers and share these insights with your creative team.
Evaluate which influencers or branded content are generating new and valuable customers with the highest pLTV ROAS. This will help you focus on the most effective influencer partnerships and discontinue those that underperform.
Examine which interest-based prospecting or custom retargeting audiences are bringing in valuable customers, and create tailored content for these groups.
Perform A/B tests on different ad creatives, audiences, and landing pages to identify the best-performing combinations based on pLTV ROAS.
Set a business goal to maintain a pLTV ROAS above a specified threshold.

Cost per High pLTV Customer

Definition:

CPA but for your top customers by pLTV.
Calculated as Amount spent / # of High pLTV Customers acquired.

Tactics:

For each pLTV metric, treat them the same way you would their standard KPI equivalent, i.e. Cost per High pLTV Customer is simply your CPA but for your best customers. Increase ad spend on campaigns, ad sets and ads that are driving the lowest Cost per High pLTV Customer, and pull back on campaigns, ad sets and ads that are lagging in this metric. Create and launch creative that is achieving the lowest Cost per High pLTV Customer

Example:

In the below example we see that the highlighted ad sets, which are targeting unique audiences, have the lowest Cost per High pLTV customer. This means that these are driving your best customers who have the highest potential to be repeat buyers to the site at the cheapest cost. Ad spend on these audiences should be scaled until efficiencies decline.

By looking at Cost per High pLTV Customer, we can:

Allocate more budget to campaigns that are bringing in repeat customers at the lowest cost.
Analyze the content that is attracting new, high-value customers, and share these insights with your creative team.
Evaluate which influencers or branded content are generating new, valuable customers with the lowest Cost per High pLTV Customer. This will help you focus on the most successful influencer partnerships and discontinue those that are underperforming.
Examine which interest-based prospecting or custom retargeting audiences are attracting valuable customers at the lowest cost, and create tailored content for these groups.
Perform A/B tests on different ad creatives, audiences, and landing pages to identify the best-performing combinations based on the lowest Cost per High pLTV Customer.
Set a business goal to keep the Cost per High pLTV Customer below a specified threshold.

Avg. pLTV

Definition:

A counterpart to avg. order value with the full predicted conversion value included.
Calculated as Black Crow LTV prediction Conversion Value / Black Crow LTV prediction

Tactics:

For each pLTV metric, treat them the same way you would their standard KPI equivalent, i.e. Average pLTV is your average order value (AOV) inclusive of subsequent purchase revenue. Similar to AOV, you can monitor Avg. pLTV over time to understand how shifts in strategy impact predicted order value.

Example:

The below example is looking at the last 30-day performance compared to the previous 30-days. For this brand, we can see that their realized first purchase AOV is ~$324 on average; when incorporating subsequent 6-month predicted revenue into the calculation this increases to ~$564 on average.

As an eComm manager, I can then monitor how changes to my business model (increasing/decreasing price, promotions, product line launches etc.) impact my Avg. pLTV.

By looking at Avg. pLTV, we can:

Effectively track changes in Avg. pLTV over different periods to understand how business decisions and campaign launches influence future order value.

Let’s continue the conversation. As you uncover further use cases for your pLTV metrics, Black Crow would love to hear about it!