Marketing Analytics and Performance Measurement
What this domain tests
Whether you can choose the right metric, compute it and interpret it against a decision: CLV, CAC, retention, ROMI, elasticity, attribution and experimentation.
Core rules
- Unit economics use margin, not revenue. CLV equals ARPU times gross margin percentage times average lifetime, and average lifetime is roughly 1 divided by per-period churn.
- An LTV:CAC near 3:1 is a common benchmark; CAC payback under 12 to 18 months is a common constraint.
- ROMI equals incremental gross profit attributable to marketing divided by marketing spend.
- ESOV equals share of voice minus share of market. In the Binet and Field analysis, sustained positive ESOV is associated with share growth, roughly 10 points of ESOV to about 0.5 point of annual share growth.
- Method follows data: multi-touch attribution for digital paths, marketing mix modelling for aggregate and offline effects, geo experiments for incrementality.
Worked example
ARPU 60 per month, gross margin 60%, monthly churn 2.5%, so lifetime is 40 months and CLV is 60 x 0.6 x 40 = 1,440. CAC of 500 gives LTV:CAC of 2.9 and payback of 500 / 36, about 13.9 months. Acceptable but thin. Cutting churn one point to 1.5% raises lifetime to 66.7 months and CLV to 2,400, so retention spend outperforms acquisition at this margin.
Traps
Using revenue-based LTV; comparing LTV and CAC over mismatched periods; reading ROAS as ROMI; short attribution windows that flatter retargeting; declaring an A/B winner without a power calculation or significance test.