Lipophilic carbocyanine dyes are widely used as fluorescent cell membrane probes in studies ranging from biophysics to cell biology. While they are extremely useful for qualitative observation of lipid structures, a major problem impairing quantitative studies is that the chemical environment of the lipid bilayer affects both the dye's insertion efficiency and photophysical properties. We present a systematic investigation of the sulphonated carbocyanine dye 3,3'-dioctadecyl-5,5'-di(4-sulfophenyl) (SP-DiO) and demonstrate how its insertion efficiency into pre-formed lipid bilayers and its photophysical properties therein determine its apparent fluorescence intensity in different lipid environments. For this purpose, we use large unilamellar vesicles (LUVs) made of lipids with distinct chain unsaturation, acyl chain length, head group charge, and with variation in membrane cholesterol content as models. Using a combination of absorbance, fluorescence emission, and fluorescence lifetime measurements we reveal that SP-DiO incorporates more efficiently into liquid disordered phases compared to gel phases. Moreover, incorporation into the latter phase is most efficient when the mismatch between the length of the lipid and dye hydrocarbon chains is small. Furthermore, SP-DiO incorporation is less efficient in LUVs composed of negatively charged lipids. Lastly, when cholesterol was included in the LUV membranes, we observed significant spectral shifts, consistent with dye aggregation. Taken together, our study highlights the complex interplay between membrane composition and labeling efficiency with lipophilic dyes and advocates for careful assessment of fluorescence data when attempting a quantitative analysis of fluorescence data with such molecules.