CDP:LTV::MTA:CTA
Customer Data Platforms (CDP) promise to bring next level thinking to Life Time Value (LTV), just as Multi-Touch Attribution (MTA) advances the thinking about Cost to Acquire (CTA). CDP and MTA solutions complement each other, solving different needs and enabling different actionable insights.
Customer Data Platform (CDP) is the new acronym in the marketing industry, and it is simultaneously an overhyped concept and a foundation for true insights into customer value and segmentation. The hype — to be avoided - is much like that around other “Big Bang” notions — projects that will be wildly expensive and lengthy, with massive promises coming at the end of implementation and testing. Sales Automation, then Customer Relationship Management (CRM) presented similarly-exaggerated potential, while also providing a basis for dramatic, tangible, achievable improvements.
Multi-Touch Attribution (MTA), on the other hand, collects data about advertising and addresses the intricate landscape of customer interactions across various touchpoints before conversion. MTA goes beyond simple first-touch or last-touch attribution models, acknowledging the complexity of today's customer journey. MTA tracks and assigns relative credit to each touchpoint a customer encounters, providing marketers with a clearer understanding of how different marketing channels contribute to a conversion. These insights are crucial in optimizing marketing budgets and strategies, as they enable businesses to allocate resources more effectively based on the actual impact of each touchpoint.
In the context of these two concepts, the analogy CDP:LTV::MTA:CTA draws a parallel between Customer Data Platforms and Life Time Value, just as it relates Multi-Touch Attribution to Cost to Acquire.
Customer Data Platforms (CDP) and Life Time Value (LTV)
A Customer Data Platform collects, organizes, and consolidates customer data from various sources, creating a unified profile that marketers can use for better personalization and targeting. This rich dataset empowers businesses to understand their customers on a deeper level, predict their preferences, and tailor marketing efforts accordingly. This newfound customer insight contributes to optimizing the Life Time Value (LTV) of each customer by nurturing long-term relationships, encouraging repeat purchases, and maximizing the value generated from each customer over their entire journey with the brand.
Fundamentally, CDPs enable marketers to understand a customer’s value, by segment, action or product line(s), and define or categorize the worth of that segment, action or product line.
Multi-Touch Attribution (MTA) and Cost to Acquire (CTA)
Multi-Touch Attribution (MTA) systems tackle the challenge of determining which touchpoints in the customer journey should be attributed credit for a conversion. By analyzing the influence of each interaction, MTA helps marketers understand which channels are most effective at driving conversions. This knowledge is invaluable for making informed decisions about marketing spend. In a similar vein, Cost to Acquire (CTA) measures the resources expended to acquire a new customer. It considers the cumulative costs associated with various marketing efforts, including advertising, promotions, and sales efforts. When coupled with MTA insights, businesses can optimize their acquisition strategies, focusing resources on the most impactful touchpoints and minimizing unnecessary expenses.
Fundamentally, MTA enables marketers to understand their advertising spend, and what it costs to acquire a customer.
So, there’s overlap and both MTA and CDPs can be components of a broader, universal marketing data set — but they really are best utilized for different insights and actions. MTA data could play a key role in a CDP’s understanding the costs associated with acquisition - perhaps providing a segment- or product-driven cost to acquire. Similarly, LTVs developed by segment or product from a CDP could inform an MTA’s output on which advertising channels impact which products.
Because MTA develops and presents insights on existing spend, MTA programs have a time-to-results advantage over broader-based CDPs. Building and acting on a unified understanding of a company’s large advertising spend presents ‘low hanging fruit’ savings to drive longer-horizon investments in customer and channel data.
