Connect with us

Advertising

Calculating the Lifetime Value of a Customer

Published

on

Calculating the Lifetime Value of a Customer

Calculating the Lifetime Value of a Customer

What is one customer worth to a business, and what should a business be willing to pay to acquire the said customer?

It all comes down to a concept called “customer lifetime value”, which is used to describe the approximate value of one customer to a business. It is essentially the average amount of money made over the lifespan of an average customer, discounted by future cash flows.

The higher the value, the higher the marketing budget can be to acquire each customer. This is not only a key concept to understand in business, but also for investors that are looking to put money in consumer-oriented companies.

Original graphic by: KISSmetrics

Continue Reading
Comments

Advertising

This Giant List of 100+ Marketing Stats Reveals What Actually Works

This massive infographic uses 100+ marketing stats to highlight the tactics that are working in modern-day digital universe.

Published

on

In just the last decade, the marketing world has been dramatically transformed.

Spending on digital media surpassed television ads in 2017, and now global digital spend is anticipated to top $333 billion this year.

As a result, today’s entrepreneurs and small businesses are starting to think about marketing in almost exclusively digital terms – and to have a successful online strategy, it’s important to see the data on what tactics are actually working.

Visualizing 100+ Marketing Stats

Today’s infographic comes to us from Serpwatch and it highlights seven of the most important digital marketing trends to keep an eye on this year.

Along the way, it highlights over 100 useful marketing stats that help to reveal the strategies and tactics that maximize ROI in the online arena.

This Giant List of 100+ Marketing Stats Reveals What Actually Works

It’s well known that digital media tactics – such as using social media, SEO, search, email, and content marketing – all offer unprecedented levels of analytics, customization, and segmentation for the modern marketer.

However, with so much to think about when using these techniques online and at scale, they can also be quite overwhelming.

Luckily, the above list provides some marketing stats that stand out in potentially helping businesses make the most out of their digital campaigns.

Stats That Stand Out

Here are some of the marketing stats from the above list that we thought stood out the most, for each category:

  • Search:
    The top five search results for a keyword on Google get 70% of the clicks.
  • Social media:
    80% of B2B leads come in through LinkedIn vs. 13% on Twitter and 7% on Facebook.
  • Video marketing:
    Video will represent 82% of all internet traffic by 2021.
  • Cold email marketing:
    Emails sent between 10-11am have the highest open rates. Tuesday is the best day to send cold emails.
  • Paid advertising:
    The mobile ad blocking rate has increased 90% year-over-year.
  • Lead generation:
    61% of marketers say generating traffic and leads is their top challenge.
  • Content marketing:
    47% of buyers viewed 3-5 pieces of content before engaging with a sales rep.

Although the digital marketing space is vast, the useful statistics above may help create some clarity for marketers trying to get the most out of their efforts in 2019 and beyond.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Advertising

How the Tech Giants Make Their Billions

Collectively, the Big Five tech giants combine for revenues of $802 billion, which is bigger than Saudi Arabia’s economy. Here’s how it breaks down.

Published

on

How the Tech Giants Make Their Billions

At a glance, it may seem like the world’s biggest technology companies have a lot in common.

For starters, all five of the Big Tech companies (Amazon, Apple, Facebook, Microsoft, and Alphabet) have emerged as some of the most valuable publicly-traded companies in the world, with founders such as Jeff Bezos or Bill Gates sitting atop the global billionaire list.

These tech giants also have a consumer-facing aspect to their business that is front and center. With billions of people using their platforms globally, these companies leverage user data to tighten their grip even more on market share. At the same time, this data is a double-edged sword, as these same companies often find themselves in the crosshairs for mishandling personal information.

Finally, all of these companies have a similar origin story: they were founded or incubated on the fertile digital grounds of the West Coast. The company that has the weakest claim to such origins would be Facebook, but even it has been based in Silicon Valley since June 2004.

Sizing Up the Tech Giants

For all of their commonalities, it seems that there is less of a mold for how these tech giants end up generating cashflow.

But before we get to how Big Tech makes its money, let’s start by looking at the financials at a higher level. The following data comes from the 2018 10-K reports filed last year.

CompanyRevenue (2018)Net Income (2018)Margin
Combined$801.5 billion$139.0 billion17.3%
Apple$265.6 billion$59.5 billion22.4%
Amazon$232.9 billion$10.1 billion4.3%
Alphabet$136.8 billion$30.7 billion22.4%
Microsoft$110.4 billion$16.6 billion15.0%
Facebook$55.8 billion$22.1 billion39.6%

Together, the Big Five tech giants combined for just over $800 billion of revenue in 2018, which would be among the world’s 20 largest countries in terms of GDP. More precisely, they would just edge out Saudi Arabia ($684 billion GDP) in terms of size.

Meanwhile, they generated a total of $139 billion of net income for their shareholders, good for a 17.3% profit margin.

How Big Tech Makes Money

Let’s dig deeper, and see the differences in how these companies generate their revenue.

You are the Customer

In the broadest sense, three of the tech giants make money in the same way: you pay them money, and they give you a product or service.

Apple (Revenue in 2018: $265.6 billion)

  • Apple generates a staggering 62.8% of its revenue from the iPhone
  • The iPad and Mac are good for 7.1% and 9.6% of revenues, respectively
  • All other products and services – including Apple TV, Apple Watch, Beats products, Apple Pay, AppleCare, etc. – combine to just 20.6% of revenues

Amazon (Revenue in 2018: $232.9 billion)

  • Amazon gets the most from its online stores (52.8%) as well as third-party seller services (18.4%)
  • Amazon’s fastest-growing segment is offline sales in physical stores
  • Offline sales generate $17.2 billion in current revenue, growing 197% year-over-year
  • Amazon Web Services (AWS) is well-known for being Amazon’s most profitable segment, and it counts for 11.0% of revenue
  • Amazon’s “Other” segment is also rising fast – it mainly includes ad sales

Microsoft (Revenue in 2018: $110.4 billion)

  • Microsoft has the most diversified revenue of any of the tech giants
  • This is part of the reason it currently has the largest market capitalization ($901 billion) of the Big Five
  • Microsoft has eight different segments that generate ~5% or more of revenue
  • The biggest three are “Office products and cloud services” (25.7%), “Server products and cloud services” (23.7%), and Windows (17.7%)

The remaining tech giants charge you nothing as a consumer, so how are they worth so much?

You are the Product

Both Alphabet and Facebook also generate billions of dollars of revenue, but they make this money from advertising. Their platforms allow advertisers to target you at scale with incredible precision, which is why they dominate the online ad industry.

Here’s how their revenues break down:

Alphabet (Revenue in 2018: $136.8 billion)

  • Despite having a wider umbrella name, ad revenue (via Google, YouTube, Google Maps, Google Ads, etc.) still drives 85% of revenue for the company
  • Other Google products and services, like Google Play or the Google Pixel phone, help to generate 14.5% of total revenue
  • Other Bets count to 0.4% of revenue – these are Alphabet’s moonshot attempts to find the “next Google” for its shareholders

Facebook (Revenue in 2018: $55.8 billion)

  • Facebook generates almost all revenue (98.5%) from ads
  • Meanwhile, 1.5% comes from payments and other fees
  • Despite Facebook being a free service for users, the company generated more revenue per user than Netflix, which charges for its service
  • In 2018 Q4, for example, Facebook made $35 per user. Netflix made $30.

So while the tech giants may have many similarities, how they generate their billions can vary considerably.

Some are marketing products to you, while others are marketing you as the product.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Standard Lithium Company Spotlight

Subscribe

Join the 100,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular