Value-Based Bidding

Of course you want to acquire the highest value customers, but what about the medium or low value customers? Are they still valuable?

A new way to bid

Value-based bidding is predicated on the idea that even lower-value customers are worth acquiring一as long as you don’t spend too much acquiring them. With that assumption, Retina helps customers implement value-based bidding (VBB) in their Google and Facebook campaigns. Setting bid caps can help ensure high LTV:CAC ratios and gives clients more flexibility to modify campaign parameters to fit business goals.

With dynamic bid caps from Retina, clients significantly improved their LTV:CAC ratios by keeping acquisition costs below 60% of their bid caps.

Case Study

  • Problem: The client needed to acquire higher value customers and lower their customer acquisition costs.
  • Retina solution: After proving the success of an earlier A/B test based on LTV, Retina partnered with the Client to implement a value-based bidding strategy
  • Baseline experiment design: Implement VBB for Facebook campaign.
  • Results: After applying VBB strategies, the client reduced CAC by 30% and increased LTV:CAC by 1.37X.

ROI Tracking

Cost Savings

Reduce customer acquisition costs by 30% or more with value-based bidding.

Increased Revenue

Achieve 1.4 times higher LTV to CAC ratios. High-value customers will spend more over the course of their lifetimes.

Opportunity Cost

Continue wasting money spending the same amount acquiring every customer—regardless of the value they bring to your business.

How to Implement

  1. Score all customers using eCLV
  2. Pick a campaign to test
  3. Set up value-based bidding lookalikes in Google or Facebook (should be roughly 5 groups based on CLV)
  4. Assign a bid cap to each group (high CLV customers are worth more)
  5. Run campaign in Facebook or Google
  6. Measure LTV:CAC
  7. If LTV:CAC is better than usual, apply VBB strategy to all campaigns