You may have heard this idea before, but a few good marketers believe that you shouldn’t trust EPC and your short-term profit when it comes to advertising online on Google and other search engines. The concept of customer Life-Time-Value (cLTV) does make sense on the paper. After all, taking into account the total income that you get from a customer during the life of relationship should matter.

But most PPC marketers focus on short-term profits than long-term. Here is why:

• LTV is hard to calculate: you may be able to forecast a LTV value for each of your customers, but there are a lot of uncertainties involved in the process. Unless you have been in the business for a long-time, you are not going to have enough data to conclude who is more profitable than whom.
• cLTV is dangerous: I am an optimistic person, always trying to see the positive in every situation. But LTV is a dangerous metric to play with. You can get ahead of yourself and expect “X” amount of profit from a customer just to have the conditions change drastically against your business. In other words, it’s easy to overshoot by going with LTV. A lot of companies have gone bankrupt because of solely relying on this metric. Now, what LTV is good for if you are out of business?
• cLTV can lead to expensive decisions: let’s say a company such as Capital One can spend $50 per click for the word “credit card.” They simply know that every conversion is going to cost them $500 on average but since their average cLTV is $1000, they are making a profit. But a small business can go in the red by using the same analogy. You need to have a strong cash flow to be able to play the cLTV game.

My goal with my campaigns has always been to get the customers for the lowest CPA possible. That’s why I am not a strong believer in cLTV. Why would you want to throw cash at a problem that can be solved in other ways? cLTV may work if you hit a wall with your advertising campaigns, but for most of us, it provides no significant value.