High LTV vs High AOV

🚀 Choose the perfect Ad and business model and win the game like a pro

In partnership with

Howdy Readers 🥰 

In this newsletter, you’ll find:

🚀 2024’s Winning Models: High LTV vs. High AOV

🌟 Cutting-Edge Ad Solutions Debut at Cannes Lions: Amazon and Yahoo Innovate

💸 Tackling Ad Budget Waste: The Hidden Cost of Close Variants

If you’re new to ScaleUP then a hearty welcome to you, you’ve reached the right place along with 50k+ CEOs, CMOS, and marketers.😉 Let’s get into it, shall we? Oh! Before you forget, if someone forwarded this newsletter to you, don't forget to subscribe to our newsletter so you never miss out!


Use the beehiiv Ad Network to advertise across hundreds of newsletters.

Wondering how you can sponsor hundreds of newsletters at once, without spending hours managing campaigns? 

The beehiiv Ad Network delivers 800 million impressions a month across hundreds of the world's top newsletters, paid on performance. 

Our managed service enables you to unlock newsletters as a growth channel without the added time. 


🚀 2024’s Winning Models: High LTV vs. High AOV 
Insights from Nativ Yanko

As ad costs rise, only two business models are proving sustainable. Here are two brands that exemplify these models:

☕ Spacegoods Mushroom Coffee - Low AOV, High LTV

  • Affordable Entry Point: Priced at £39 with high margins.

  • Subscription-Based: Each pack offers 30 servings, encouraging repeat purchases.

  • Incentives: Uses low-cost “free gifts” to drive subscriptions.

  • Simplicity: One SKU accounts for 95% of revenue, reducing complexity.

  • Investment-Backed: With external funding, they can sustain high ad spend.

  • Quick ROI: Customer acquisition cost (CAC) doesn’t need to be extremely low as they recoup spending within a few months.

❄️ Lumi Ice Baths - High AOV and First-Order Profitability

  • Range of Offers: Products priced from £115 to £995.

  • Payment Flexibility: Uses Klarna to make high-ticket items more accessible.

  • Trendy Niche: Capitalizes on the growing trend for wellness and cold therapy.

  • High Break-Even CAC: Can afford higher CAC while remaining profitable on the first order.

  • Incentives: Offers low-cost “free gifts” to enhance value.

  • Upselling: Uses accessory upsells to increase average order value (AOV).

📈 Key Takeaways

  • Spacegoods: Leverages a subscription model to maximize lifetime value (LTV) despite a lower AOV. Simplicity and external investment fuel their growth.

  • Lumi: Achieves first-order profitability with high AOV products. Flexible payment options and upsells boost overall revenue.

🌟 The Ideal Business Model

The ultimate strategy is to have both high AOV and high LTV. Brands with mid-AOV and low LTV are struggling as rising CPMs limit their scalability.

Ad costs will continue to climb, making it crucial for brands to optimize their business models to survive and thrive.


🌟 Cutting-Edge Ad Solutions Debut at Cannes Lions: Amazon and Yahoo Innovate

What’s Up? At Cannes Lions 2024, Amazon and Yahoo have introduced innovative ad technologies aimed at enhancing targeting precision and creative execution, boosting business outcomes and audience engagement.

The Breakdown:

Amazon’s AI-Powered Ad Targeting:

Amazon unveiled Ad Relevance, an advanced AI tool that eliminates the need for cookies. By leveraging first-party data from user activities like browsing, purchasing, and streaming, Ad Relevance offers improved addressability and reduces CPMs by up to 34%. 

This tool, tested on Amazon’s Audiences and Performance+ products, has successfully increased addressability for 65% of previously anonymous impressions and reduced costs-per-click by 8.8%.

Yahoo’s New Creative Platform:

Yahoo introduced Yahoo Creative, a dynamic, data-driven platform developed with Innervate. Compatible with Yahoo DSP and other platforms, it generates multiple ad versions dynamically to enhance campaign performance. Early user Princess Cruises noted significant gains in performance and brand visibility. 

The platform uses AI to streamline the creative process, enabling efficient adaptation and expansion of ad visuals, though human input remains essential for complex imagery.

These new ad technologies, mark a significant advancement in digital advertising, offering sophisticated targeting and creative tools to elevate engagement and effectiveness.


💸 Tackling Ad Budget Waste: The Hidden Cost of Close Variants

What’s Up? An extensive study on millions of clicks uncovered the hidden costs of unmanaged close variants. Here’s the impact and how to handle them efficiently.

The Breakdown:

True Match vs. Close Variants Explained:

True Match: Keywords that precisely match user searches, including exact, phrase, and broad match types.

Close Variant (CV): Loosely matched terms that can be relevant but often lead to higher expenses and lower conversion rates.

Performance Insights:

Both Google and Microsoft Ads show that CVs perform worse than true matches. Google Ads had nearly double the CPA for CVs, while Microsoft Ads managed lower CPCs but still saw reduced conversion rates for CVs. Both platforms showed about half the ROAS for CVs compared to true matches.

Strategies to Manage CVs:

  • Identify the Problem: Use analytical tools or spreadsheets to assess CV performance.

  • Streamline Campaigns: Organize ad groups by match types for better control.

  • Ongoing Optimization: Regularly add effective CVs as keywords and mark poor CVs as negatives.

Close variants consume a significant portion of ad budgets but perform poorly compared to true matches. Effective management of CVs is essential for maximizing ROI and enhancing ad performance.


👬🏻 How do Industry experts find influencers to partner with? How do they write outreach emails? How do they manage their long-term partnerships? Subscribe to Return on Influence a free newsletter by Eleni Zoe from team Modash and discover what influencer marketers do behind the scenes to run profitable campaigns. Subscribe now with one click!

🕸️ How you can capture the email addresses of up to 40% of anonymous website Traffic and grow your Email list 10x faster? With 'Machine Fingerprinting' technology, Smart Recognition matches your unknown website traffic with associated email addresses from a 220+ million online shopper database. Try Smart Recognition for free today!

ℹ️ Gen Z is shifting from traditional search engines to social media for product research. They find search engines unreliable, with 61% citing issues with information accuracy, 44% struggling to find relevant results, and 41% needing to consult multiple sources. 

📷 Snap introduces generative AI elements in Lens Studio 5.0, enabling real-time AR creation with simplified prompts. Users can now create interactive AR experiences by describing scenes.


Wanna put out your message in front of over 50,000 best marketers and decision makers?

We are concerned about everything DTC and its winning strategies. If you liked what you read, why not join the 50k+ marketers from 13k+ DTC brands who have already subscribed? Just follow this.

At ScaleUP, we care about our readers and want to provide the best possible experience. That's why we always look for ways to improve our content and connect with our audience. If you'd like to stay in touch, be sure to follow us EVERYWHERE🥰

Thanks for your support :) We'll be back again tomorrow with more such content 🥳