Measuring the Lifetime Value of Customers Acquired from Google Search Advertising

For your marketing

Possible founder application

Track customer lifetime across channels when estimating paid-search value. Include repeat purchases and offline or sales-assisted spillovers instead of stopping at a platform-attributed conversion.

Reported result

What the study found

Customers acquired through Google search advertising had higher transaction rates than customers from other channels in this dataset. Including future purchases and offline spillovers produced substantially higher customer values than the conventional method used for comparison.

Research question

What the authors investigated

How should firms estimate the long-term value of customers acquired through paid search, including purchases that occur offline?

Design

The authors merge web-traffic and sales data from a small U.S. firm into a customer-level panel tracking repeated online and offline purchases and Google-search referrals. They jointly model customer lifetime, transaction rate and gross margin.

Sample and setting

Customers of one small U.S. firm with multichannel purchases; the abstract does not report customer count.

Scope and transfer

Limitations to keep in view

A single small firm and its channel mix; results do not establish that paid search always acquires higher-value customers. The study's period and search-ad environment differ from today's platforms.

Research sources

INFORMS publisher record and first-author-hosted abstract; data source, model and findings are described on the article page.

Additional research source ↗