Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite benign, is typically used to compare the costs of acquiring a customer (often referred to as SAC, which stands for Subscriber Acquisition Costs) with the discounted positive cash flows that will come from that customer over time. As long as the sum of the discounted future cash flows are significantly higher than the SAC, then […]
Above the Crowd
By Bill Gurley
Posts Tagged ‘LTV’
Google’s Acquires ITA: Will Deeper Vertical Integration Lead to Higher Revenues?
“It’s funny how fallin feels like flyin, for a little while…” – Jeff Bridges, Crazy Heart Soundtrack On July 1st, Google announced its intention to acquire ITA Software . ITA owns a primarily B2B airfare search and pricing system called QPX. Several of the leading online travel sites, like Orbitz, Kayak, and Bing Travel, use information from QPX to power their airfare search. Many in the industry view this move as a seminal event in Google’s history, as the company makes a decisive step from being a general search engine, into more structured vertical search. Certainly, Google already offers vertical search in Images, Videos, Maps, News, and several other categories. Despite […]
You must be logged in to post a comment.