How to Prioritize PPC Ad Spend with Lifetime Value

Say you sell blue widget subscriptions. Wouldn’t it be great to know that customers who convert for “best blue widgets” generally keep their subscriptions for 8 months ($200), whereas customers who convert under “fast blue widgets” don’t make it through the free trial ($0)? You can do this with Lifetime Value (LTV), and you can do it at the campaign, ad group or even keyword level.

WHAT YOU NEED

  • Pay-Per Click Campaigns (Google Adwords, Bing)

  • Billing Data

  • Lifetime Value by Customer (Manually or via a Customer Data Platform)

  • Mechanism for associating PPC data with billing data (Manually or via a Customer Data Platform) 

HOW YOU DO IT

First, you need to add parameters to your destination URLs that pass the campaign, adgroup or keyword information. 

Next, get with your developer and have them store the information in the URL parameters to a cookie, and then pass those values along to the customer’s billing record if they convert. You must store the values or they will be lost once the user visits a second page of your site. If you have a Customer Data Platform, such as Umbel, your work is done. Simply allow your CDP to capture the information, automatically associate the data with the customer, calculate their lifetime value and aggregate those insights.

Now your marketing team can log in to your CDP each day, segment by channel, campaign, ad group, or keyword and sort by lifetime value. You will have a beautiful breakdown of which ad groups generate the most value over time. With this information, you can go back to your “best blue widgets” ad group, knowing these customers stay for 8 months and increase your CPA targets and bids. Likewise, you should stop bidding the same amount for “fast blue widgets” because clearly those customers almost always cancel during their free trial. 

By segmenting your PPC campaigns by lifetime value you can bid more than you thought on critical keywords and stop wasting budget on keywords that bring in low value customers. You shouldn’t be bidding the same amount on two keywords just because they have the same conversion rate. Lifetime value lets you tailor your bids just right.

If you don’t have a Customer Data Platform, you need one. But to do it manually, you will need to pass the parameters to your billing system. Then sync that data to a separate reporting tool and have your team manually export and analyze the data. We’ve done that before and it works, but a CDP pays for itself in no time by automating the process and reducing human error. 

Want more tips? Download our White Paper 10 Ways to Use Data to Increase Conversions

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