Wednesday Digestible - Why you're thinking about LTV all wrong.

Hey everyone,

Thanks for stopping by for another bite to chew on.

We know you’re busy with Black Friday and holiday shopping (us too!), so we’re going to keep this one short and sweet. 

Today we’ll share three things that caught our eye this week in the DTC community. The one phrase that will kept popping to mind when we were putting this together?

“It’s complicated.” 

Because answers are that clear, simple, and obvious in DTC are usually wrong. You’ll see what we mean…

As a bonus snack, we’ll give you our take on the new Jaguar brand campaign. 

On the menu 

• Do click through rates matter? 

• Some AppLovin love (early results) 

• A guide to how you should think about CAC:LTV 

• Jaguar’s “rebrand”

Before we get going, an expensive lesson from Obvi…

Ever launch a product that absolutely tanks? 

We have. More than once. 

We ended up freezing our entire product pipeline for a year just to clear out inventory and rethink our catalog.  

That's why we use Particl now.

Think of it as your personal market research team – except it works 24/7 and costs way less than a junior analyst. 

Here's what it actually does →

• Tracks real-time sales data across 10,000+ brands

• Shows you exactly what's selling (not just trending on social)

• Alerts you when competitors change prices or launch new products 

Why this matters right now →

• BFCM strategies are being deployed earlier than ever

• Holiday season reveals which products actually move

• 2025 planning needs to start with real data, not guesses 

We learned the hard way that launching products without market intelligence is basically gambling with your inventory budget. 

Don't make the same mistake we did.

Claim Their Black Friday Offer Now → Get 50% off your first month with Particl + access to their holiday trends dashboard (this alone is worth it 👀) 

Does CTR matter or not?

Mathias’ data says “not”. 

It’s easy to completely dismiss CTR when you look at this chart. Zero significance!

But then you think about it and (theoretically) it should matter a ton. The click is usually the FIRST thing that happens before someone buys, right? 

So what the chart is telling you isn’t that CTR doesn’t matter at all. It’s telling you that CTS is not the ONLY thing that matters. 

Yes, it’s good if someone clicks on your ad, all things being equal. But they usually aren’t.

If your ad isn’t served to the right audience, the click won’t matter. They’ll all bounce. 

If your ad is designed for virality or if your message is deceptive, you can get tons of engagement, but no actual purchase interest. 

If your post-click experience stinks, then you won’t make the sale. If it takes your site 25 seconds to load, ditto.

• Audience

• Relevance

• Cohesion

• UX

• Offer

The click is only a single step in a much longer chain ⛓️ 

It matters because of course it does. You want people to see your ad and visit your site! 

But it’s not a big enough factor on its own to drive something like ROAS. 

Early AppLovin Results

Just like everyone else these days we’re keeping our eyes on AppLovin. We’re all talking about it as an emerging DTC marketing channel, but very few marketers have any real experience with it. 

Luckily, Olivia was kind enough to share some early data indicating strong results. 

Let’s define some terms from her Tweet (or X post. Whatever they’re called now.)

• iROAS = incremental return on investment

• CI = confidence interval 

Incrementality is the new holy grail in marketing attribution. Ultimately, we as brands want to know if a campaign or channel is driving sales that otherwise would not have happened, right?

Find the stuff that’s driving incremental revenue X double down = profit. In theory anyway. 

The results are from a small budget sample and come with a relatively wide confidence interval, so take them with a grain of salt. But AppLovin seems to be driving significant incremental lift in this test. 

SEEMS. As always, be wary of new marketing channels sporting crazy good metrics. 

The holdout test results in the graph above also suggest a real impact so this has our interest for sure.

 But…always remain skeptical. Always test for yourself.

If we ever take the AppLovin plunge we’ll be sure to share our results with you. 

A guide to thinking about LTV:CAC

Alright, here’s your meal for today. Drew’s thread on LTV:CAC.  

The key distinction he makes is kind of something we also yell about all the time…

When considering LTV, you need to base it on customer contribution, not customer revenue. Because if you have an LTV to CAC ratio of 3:1, it doesn’t really tell you anything if your margin sucks. 

So the relevant consideration in this formula is contribution margin, not topline rev per customer. The latter is easier to calculate, but it can be grossly deceiving. 

As Drew notes, for contribution margin you need to include everything that goes into delivering your product to get an accurate sense of your business. 

Not just COGS, but packaging, logistics, payment fees, etc. 

Get that in order, and the LTV:CAC ratio actually becomes useful. 

As Drew notes → 

• 🔥 1.0x: Breakeven unit economics. Cannot grow without burning cash.

• 📈 2.0x: Can reinvest in acquiring one new customer for each existing customer. Linear growth.

• 🚀 3.0x: The "gold standard" for venture capital.

  • Each $1 spent on acquisition generates $3, leaving $2 for growth

  • Enables exponential growth → 1 customer → 2 new → 4 new → 8 new (hockey stick curve)

 Of course, timescale matters too:

A high LTV to CAC is great, but if it takes 10 years to realize it you probably want to trade some margin for a quicker lifecycle. 

Like we said…stuff is complicated.

BONUS SNACK - Jaguar’s New Brand

Bad. Very bad. No good. Bizarre. 🤮

If you want a bit more meat on the bone, click Ankit’s thread to find out how this MIGHT be on purpose and what Jaguar could be trying to accomplish.

In case you missed it

1. Me (Ash) on the 8 most important things you need to know about running Meta ads in 2025.

2. A podcast on how to leverage an under-utilized part of your website: FAQs.

3. Our rundown on the Obvi 2024 BFCM playbook and how we knew we had evolve our approach this year.

All the best,

Ron and Ash