High-CLV Lookalike Audiences

Target new, similar customers via Google and Facebook using predictive customer lifetime value metrics. Optimize in real time and ditch ROAS.

ROAS vs. CLV

Return on ad spend, or ROAS, is a popular metric marketers use to gauge the success of their campaigns. At Retina, we’ve noticed that many companies have very low ROAS—usually around 1 or even less than 1. This often happens when a company’s ad spend isn’t proportional to their prospects’ or existing customers’ lifetime value.

One way to dramatically increase ROAS is to create value-based lookalike audiences and set corresponding bid caps. In this way, businesses can optimize ad spend based on the value their customers will bring them in the long run.

Case Study

  • Problem: The client had poor ROAS on their Google search and display ad acquisition campaigns.
  • Retina solution: Retina calculated the lifetime value for half of the company’s customers and helped them set up value-based lookalike audiences.
  • Baseline experiment design: The client built lookalike audiences of the customers in the top 20% of LTV and ran acquisition campaigns on Google for 30 days.
  • Results: 8.1x ROAS

ROI Tracking

Cost Savings

Save $0 if ROAS is 1. Waste up to thousands of dollars a day if ROAS is < 1 (for GoDaddy it was $2000/day per Google ad campaign)

Increased Revenue

Achieve higher ROAS and 14.2x ROI. $2,000 daily ad spend budget resulted in $14,200 daily / $426,000 monthly return.

Opportunity Cost

Continue wasting money on 1 or < 1 ROAS campaigns, and wasting your marketing team’s time.

How to Implement

  1. Score all customers using eCLV
  2. Set up value-based bidding in Google or Facebook
  3. Pick a campaign to test
  4. Run campaign in Facebook or Google
  5. Measure ROAS
  6. If ROAS is higher than usual, run and use high LTV lookalikes for all campaigns

If you’re like most companies, your ROAS is less than 1. This means you are actively hemorrhaging money, which can add up if you’re spending thousands of dollars a day per campaign. Even if your ROAS is equal to 1, you’re barely breaking even. Of course, this hurts your marketing budget, but it also detracts from your team’s productivity. Your marketing teams are wasting time setting up campaigns that produce little to no return.

By allocating ad spend toward prospects that resemble your high LTV customers, you increase the chances of conversion. You already know what ads converting customers respond to, so why not target similar people? In a $30,000 pilot, one of Retina’s customers did just that. By creating lookalikes of the top 20% of customers by LTV, the client ran a Google acquisition campaign that achieved an 8.1x ROAS in 30 days. The customer was spending $2,000 per day, equating to a $426,000 monthly ROAS. When compared to the pilot cost, this yielded the customer a 14.2X return on investment.