How Does the CLV Metric Work in iGaming and why is it needed?

Welcome, community! Every affiliate must pay attention to metrics to effectively analyze the performance of an advertising campaign. However, there are metrics that deserve our attention more than others. And we’re not just talking about CR or ROI.

Today we dedicate the topic to the CLV metric in the context of the iGaming vertical. What does it represent? What does its indicator affect? How is all this applied in practice? Find out from the material we have prepared for you.

We also remind you that we have already reviewed the iGaming vertical, which we also recommend you check out. iGaming.

CLV is a comprehensive metric that includes several indicators:

• Amount of the first deposit, otherwise known as FDP;
• Repeat deposit: all subsequent funds from the client that were made after the first;
• Client activity level: how often they visit the platform;
• Client engagement level: how much time the lead spends on the platform;
• Average revenue per user: how much the lead spends over the total period of interaction with the platform;
• Churn rate: how quickly customers lose interest in the platform and leave it.

Understanding the CLV metric is extremely important. It helps you understand when your campaign is working stably and efficiently, and when you need to intervene to improve the metrics. Advertisers also pay special attention to CLV, but not always understand that this indicator depends not only on the affiliate but also on the platform itself. However, this is already an affiliate reflection.

How is the CLV metric calculated in iGaming?

There are numerous formulas through which CLV is calculated. Their variability is due to the fact that this indicator is relevant not only for iGaming but is also necessary in marketing and business in general.

Let’s discuss how to calculate CLV in our case.

Cohort Analysis

A well-known research method that involves dividing clients into several groups (cohorts) can help us in calculating CLV.

The analysis is based on the average profit per user. But at the same time, this indicator is assessed for different categories of players. The basis for their distribution is the period when they made their first deposit. For example, one category is clients who made their first deposit in September, another made it in December. As a result, we see the income we get from different groups of players over the entire period of their interaction with the platform, and the data only needs to be averaged.

Analysis should be conducted as follows:

• Segment users by certain features, using either their behavior, FDP, or other characteristics as the basis – everything depends on the specific campaign;
• Choose the testing period: the interval can be weekly, monthly, or even annually for large campaigns;
• Monitor engagement, churn, and the current value of the lead. Analyze them to find patterns or, on the contrary, significant differences;

Draw conclusions from the analysis and apply certain measures to enhance the efficiency of the campaign.

You can also use other metrics in cohort analysis. In particular – the engagement rate, which is calculated using the formula:

(a / b) x 100

Where a is the number of users at the beginning of a certain period, b is their number at the end of the period, all multiplied by 100.

Based on Average Revenue Per User (ARPU)

When calculating CLV, we can use another metric – ARPU, the average profit per user. It is calculated quite simply: the total profit is divided by the number of clients, from which we obtain the average profit we get from a player.

CLV = (a x b)c

Then – apply the formula, where CLV will equal the average conversion value (a) multiplied by the average number of conversions over a certain period (b), all multiplied by the average lifespan of the user (c).

How is the CLV metric maintained at a high level?

Actually, it is quite difficult for an affiliate to influence CLV because it depends more on the platform itself. For example, if an online casino does not update its games, the person will go to another. And it is very difficult for the affiliate to influence this. Unless they contact the advertiser and point out his mistakes.

However, sometimes you can use various promos and bonuses to encourage players to stay on the platform for a longer period. These should be provided by the advertiser, and the affiliate only needs to distribute these promos among the players.

You can also simply communicate with the players to retain them. If such interaction does not distract you from the main work, then you can definitely increase the CLV. However, no one prohibits automating this process, although the effect will be worse than with live communication and interaction.

In Summary

The CLV metric is an important indicator that vividly demonstrates how much clients are “drawn” into the advertiser’s project. It not only shows the effectiveness of your campaigns and the platform itself but also allows you to even understand whether it is worth working with a particular offer. After all, if you are not satisfied that users are running away from the advertiser’s project, why would you want to spend money on campaigns?

How do you use CLV in your work, and do you pay attention to this indicator at all? Share your own experience in our Telegram community, where the best Ukrainian affiliates are gathered!

Respectfully, Your Geek!