Optimization

CLV is how much money a customer spends with your business for the duration of your relationship. It’s an important—yet overlooked—metric: rather than looking at a sale as simply a one-off exchange, CLV considers how valuable a customer is over time

Understanding this can help you spend your marketing budget more wisely and keep your customer acquisition costs low. After all, it costs more to attract a new customer than it does to close an existing prospect or keep an existing customer. 

Keeping your CLV high is vital to the long-term success of your business. 

What is CLV?

Customer Lifetime Value (CLV) refers to the profit you expect to make from a customer over time.



For some businesses, this may mean that your profitable customers make larger purchases or many repeat purchases, thereby increasing their value to your business over the lifetime of their relationship with you. 

However, for many industries with long sales cycles, that profit may come months or even years after you’ve established the awareness of your business with the customer at the top of the funnel (think: buying a car, applying to a university, procuring new software, or purchasing a home). These are big decisions and consumers need time to evaluate their purchases. 

5 Reasons to Measure CLV for Your Paid Search Advertising Campaigns 

Regardless of the nature of your customers’ CLV, optimizing your marketing campaigns to CLV is good for business. Here are five reasons CLV matters:  

  1. It helps you keep valuable customers

If you can identify and target high CLV customers, this should translate into higher ROI and could be a good way to improve your campaign performance. 

You may find that there are segments of the market who value your product but have a lower than average CLV/CAC ratio, meaning you're spending too much on acquiring individual customers. If so, it may be worth exploring ways in which you can acquire these new customers at a lower cost or perhaps look for marketing activities where you might get more exposure for the same budget (e.g., by increasing reach).

  1. It decreases CPA costs

Customer Cost-Per-Acquisition (CPA) is the amount of money a company spends on acquiring new customers divided by the number of new customers acquired during a given period. 


You'll notice that different customer types have different CLVs, which means they contribute more or less than others towards paying your CPA. You can use CLV to compare campaigns and determine which ones are performing better, resulting in improved return on investment (ROI).

It's important to monitor this metric over time, as you may find you can reduce CPA while maintaining or even improving your bottom line. This is because the lifetime value of certain customer segments will increase with time on your platform, resulting in an overall decrease in acquisition costs.

  1. It allows you to optimize your bids to different stages of the funnel

Full-funnel bidding allows advertisers to use top of the funnel conversion types for bidding while also factoring in final sales as a second bid factor. This bidding solution enables advertisers to grow efficiency and revenue from the sales funnel’s final stage while maintaining reactivity to recent market changes. Bids stay reactive to market changes, while efficiency targets are based on latent conversion metrics. 

  1. It helps you calculate campaign effectiveness

CLV will reveal which paid search campaigns are more successful, allowing you to optimize your total marketing spend. 

You can compare campaign effectiveness by sub-segmenting customers by their CLVs. For example, instead of just looking at conversion rates for all traffic sources as a whole, you could break down the conversion rates by each campaign. This will make it easier to understand which traffic sources are most effective at converting.

  1. It helps you grow in the long run

CLV isn’t something you need to track all the time, but ignoring it could spell trouble. Keeping an eye on CLV helps you spend your marketing budget more wisely, engage with your customers more effectively, and keep your CPA costs down through better loyalty—all of which helps your bottom line. 

How to Calculate CLV

The simplest formula is as follows: 

CLV = Customer Value (average order spend x number of orders in a year) x Average Customer Lifespan (in years) 

To calculate CLV, you need to track customer metrics over time and calculate your customer churn. This will allow you to determine CLV across any given timeframe.



You may want to deduct CAC (customer acquisition cost) from your total to give you a deeper understanding of the true value of a customer. 

Using a comprehensive reporting suite like MarinOne, you’ll be able to Identify which channels are driving revenue to your business. You’ll then need to track offline sales and interactions back to their source with a conversion tracking solution like Marin Tracker. Make sure to continue tracking touchpoints beyond the initial click-through, all the way through conversion. 

How to Improve CLV

Here are some tips on improving your CLV. 

  • Optimize onboarding. As soon as possible, the user should be able to get value from your product or service (e.g., signups, downloads).
  • Don't focus on customer acquisition alone. It's important to make sure users are retained over time.
  • Optimize CLV by marketing based on customer behavior. If people aren't making repeat purchases or converting to long-term high-value purchases, consider investing in marketing efforts to increase retention.
  • Look for ways to improve value. If customers are joining, but not staying around or buying after a certain period of time, focus on improving user experience and product features.
  • Over-deliver. If your product and service are great, people will come back.
  • Boost user experience. If you can provide an improved user experience, make sure to communicate this benefit in all your marketing efforts. Consider advertising on social media platforms that offer the opportunity for strong engagement.
  • Increase average value order. If customers are buying, but not purchasing many items per order, then there is room to boost sales.
  • Gather market research. If you can gather unbiased opinions about your product or service from potential customers, use this data to create marketing campaigns that will appeal directly to your target audience.
  • Uncover business drivers. You may need to modify your business plan based on what customers are saying.
  • Improve customer service. If you’re not delivering great customer service, customers will avoid dealing with you in the future. Not only that, but they’ll likely share their experiences on social media—which could turn away potential new customers.

Conclusion

Measuring CLV plays an important role in determining ROI, optimizing your advertising spend, and keeping your CPA low—all of which means less budget spent on search campaigns. Optimizing your CLV can provide valuable insights regarding whether or not there is excessive spending on your search campaigns. CLV allows you to evaluate the financial impact in order to re-strategize regarding how various programs are measured and attributed.

How MarinOne Can Help

MarinOne’s powerful self-serve platform connects your offline conversion data to the ad clicks that ultimately drive the sale, making it easy to see which customers are the most valuable and which campaigns have been effective in closing customers. From analysis and reporting to advanced bidding algorithms—analyze the most valuable shoppers, optimize your bids to revenue, and focus your efforts on your best customers. This leads to extending your marketing spend while attracting high-value customers to your brand.

Learn more about the benefits of MarinOne’s full-funnel optimization.  

Ensure that the 2021 holiday season will be even more successful with these last minute tips!

Managing Bidding during a Sales Event

Before the sale:

  • Find out Revenue-Per-Click or Conversion-Rate uplift from historic sales as a percentage.

On the day of the sale:

  • Apply your historical percentage uplift calculated as a boost on day of sale.  
  • Remove all bid change limits. Preserving bid change limits only allows your bids to change up to the limited amount, possibly restricting a number of keywords.
  • Ensure campaign budgets are set appropriately and will not be overly restrictive.
  • Once the sale has begun, check hourly spend rates in the publisher accounts. Compare your spend trend in the current sale with previous sales to confirm bidding configuration is not over or under-spending.
  • Assess the number of terms hitting bid caps

After the sale:

  • Add previous and latest sales periods to Excluded Dates.
  • Set bid change limits to pre-sale setting.
  • Revert Boost to historic level.

Effective Tips and Tools

Ad Scheduling/Flighting

Flighting is a technique where you schedule your ads to run for a period of time (called a flight) followed by a period where you pause all ads for the advertised product or service. A smart way to leverage flighting for Black Friday and Cyber Monday is by offering progressive promotions. This means, you can start your campaign offering a promotion with low percentages off, and as the days/weeks go by, increase the percentage off.

Power Words

To increase relevance, CTR and Conversion Rate, consider including in your ad creatives words such as: Discount, Deals, Promotions, Savings, Offers, Free, Black Friday, Cyber Monday.

Sitelinks / Promotion Extensions

Include these special sales and offers with your ads to make your promotion stand out so potential customers can spot great deals and generate new sales for your business.

Countdowns Timers

Let potential customers know about sales or special events by adding a countdown timer to your ad text to create a sense of urgency.

Increase Budget Caps

To cover the increase in traffic, you must consider increasing the budget of your campaigns to capitalise on the increase of impressions and clicks.

Good luck! Marin Software has got you covered. We’ve put everything in place to provide above-and-beyond customer service, particularly during the critical Black Friday and Cyber Monday events, for our retail customers in the midst of their busiest time of the year. Don’t hesitate to reach out to your account manager or our sales team today.

Have you noticed a change to your Google search results on your phone or tablet? Google has just finished rolling out continuous scrolling for mobile devices for English users in the U.S. This means instead of having to tap the “See more” button at the bottom of the page, Google automatically loads another page of results. Pages continue loading for four pages, as Google says most people typically browse up to four pages of results.

It sounds like a subtle change, but you’ll notice it is a huge difference in user experience on your mobile device. This update makes it easier for people to access more search results which could mean finding what they’re looking for faster. And depending on the nature of the search query, users who enter limited keywords or broad phrases may be looking for a wide range of results (think: chicken recipes). So continuous scrolling eliminates a lot of friction in the user’s search for content.

What continuous scrolling means for advertisers


But what does this mean for advertisers?

First off, this change does not affect how the ad auction works or the way Ad Rank is calculated. Your Ad Rank (where ads are shown on a page relative to other ads) will still be calculated using:

  • your bid amount
  • your auction-time ad quality (including expected clickthrough rate
  • ad relevance
  • landing page experience
  • the competitiveness of an auction
  • the context of the person’s search (location, device, time of search, the nature of the search terms)
  • the expected impact of extensions and other ad formats


Ad Rank will also continue to be eligible to show on multiple pages since Google calculates Ad Rank for each page.

With that said, there are some other considerations to be aware of with continuous scrolling.

Google will now be redistributing the number of text ads that can show between the top and bottom of pages. So, text ads can show at the top of the second page and beyond, while fewer text ads will show at the bottom.

And some users who previously used to go back to the top of the search results in page one may continue to scroll down to page two. So some campaigns may see more impressions from top ads and fewer impressions from bottom ads. Google does expect clicks, conversions, average CPC, average CPA to remain relatively stable.

How MarinOne can help manage this change


The Search experts at Marin recommend monitoring your prominence metrics which will give you more information on where your ads are appearing on the page.

  • Search top impression rate “Impr. (Top) %” is the percentage of your ad impressions that are shown anywhere above the organic search results.
  • Search absolute top impression rate “Impr. (Abs.Top) %” is the percentage of your ad impressions that are shown as the very first ad above the organic search results.
  • Search absolute top impression share “Search abs. top IS” is the impressions you’ve received in the absolute top location (the very first ad above the organic search results) divided by the estimated number of impressions you were eligible to receive in the top location.
  • Search top impression share “Search top IS” is the impressions you’ve received in the top location (anywhere above the organic search results) compared to the estimated number of impressions you were eligible to receive in the top location.


In addition to monitoring performance, consider using an automated bid strategy to dynamically adjust keywords bids based on prominence metrics. For Example, Smart Bidding for Impression Share, set at the Campaign Level or Marin Awareness Targeting, set at the group or campaign level, and capable of targeting an Impression Share range or Impression Rate (intraday).

The marketing experts at Marin are always here to help you navigate the quickly evolving digital landscape. Click here for more on how MarinOne can optimize your Google campaigns.

Marketers know the importance of an optimized conversion funnel and its impact on a business's profit. However, complex conversion funnels with long sales cycles are typical in many industries.
Buying a car, finding the right university or procuring a new piece of software can often take months (and sometimes years) from initial research to completion.

When it comes to paid media optimization for a business with these complex and often lengthy conversion funnels, marketers often face a crucial question: Which stage of the funnel should I use for my bid optimization?
Well, what if you didn't have to pick and you could factor in multiple stages of a conversion funnel into one bid calculation? This concept is known as full funnel bidding.
This blog will explore full funnel bidding and why it is so important.

Let's start with the basics: good bid optimization requires useful data, so tracking each stage of the conversion fully is key for funnel optimization.
Sometimes an ad doesn't lead directly to a sale but instead starts a customer down a path that leads to purchase later on. The aim here is to measure each action (stage of the funnel) a user took in both an online and offline world and then tie it back to advertising spend. Although it can be a challenge, fortunately, there are numerous methods of connecting data from the offline world back to online activity. Connecting CRM actions through a unique identifier, matching order ID data or leveraging dynamic phone numbers are a few methods for measuring offline conversions and/or lifetime value.
This data will help advertisers better understand their conversion funnel to target and optimize their marketing campaigns for increased profit.


Why Not Just Optimize to the Final Sale?


So once tracking is in place for each stage of our conversion funnel, shouldn’t we optimize our marketing campaigns to our final sale or LTV?
Well, there are several reasons why this might not be the best solution:

Data sparsity – Due to the nature of conversion funnels, downstream conversion events will have fewer data points than upper funnel conversion events. Data sparsity can make it more challenging to optimize your bids.

Data accuracy - For many sales cycles, there are weeks, months or even years between a click on an ad and the final conversion. Latency can lead to situations where you have advertising cost, but you won't know if it will lead to a conversion.

Reactivity – Advertisers want their bids to stay reactive to market changes. Due to latency, this is not always possible if you are optimizing for your final sale.

So how do we solve these issues? That’s where full funnel bidding comes in.

Full Funnel Optimization – Getting the Best of Both Worlds


Full funnel bidding allows advertisers to use a top-of-the-funnel conversion type for bidding while also factoring in final sales values as a second bid factor. This approach enables advertisers to grow efficiency and revenue from the sales funnel's final stage while maintaining reactivity to the recent market changes in upper funnel conversion points. Bids stay reactive to market changes, while efficiency targets are based on latent conversion metrics, giving the ability to optimize simultaneously to upper funnel leads and to lower funnel value defined as revenue or customer lifetime value.

Take the below example:



We're looking at two high-volume keywords with the same number of clicks.

You can see that keyword one drives a lot more leads than keyword two. Given it has a higher conversion rate, it makes sense to reward the first keyword with a higher bid.

However, as we moved down the conversion funnel, keyword two, with fewer leads, drove significantly more revenue than keyword one. Keyword two, with better lead quality than keyword one, is boosted with a 2x bid adjustment, while keyword one, the driver of a large number of leads but with low quality, is adjusted downward. This adjustment results in very different bids than were previously calculated, focusing strictly on leads.

Marin Software provides an automated full funnel bidding solution - called Marin Full-Funnel Bidding - as part of our new industry-leading bidding algorithm, and which also works with the publishers’ own bidding solutions. If you would like to find out how this could work for your business, get in contact and one of our account team members will be in touch shortly.

The search for better performance never stops. To help our customers get the most out their digital marketing dollar we have upgraded our optimization tools. MarinOne Bidding is our newest bidding solution that delivers peak performance, improved accuracy, faster bid calculations and increased scale.

Customers upgrading to MarinOne bidding from the previous version saw a 10-20% performance improvement and bidding times reduced by up to 95%.

MarinOne bidding automatically incorporates over 75+ signals for incredible responsiveness and accuracy across audiences, devices, geos and more. MarinOne Bidding is simple to set up but flexible enough to meet the needs of your business. It is especially well suited for advertisers with third-party revenue tracking and longer sales cycles.


Accuracy, Speed and Scale


No need to choose, with MarinOne bidding you get all three:

  • Faster Run Times: The bid calculation job for large clients can be up to 90% faster than Marin search.
  • Increased Scale: MarinOne bidding can effortlessly handle accounts with 10M keywords.
  • Improved Accuracy: Dynamic Clustering algorithms improves predictions on lower-volume terms by strategically sharing across similar keywords via a decision tree clustering technique. The result: an average 28% lift in performance vs. Marin Search.
  • More Reactive: Flexible lookback periods efficiently use the right amount of historical data to improve reactions to changing market conditions.
  • Powerful Forecasts: In MarinOne’s Optimization page, users can forecast time into the future and explore trade-offs between volume and efficiency for each bid strategy.
  • Better Control: Advertisers can specify separate targets by device and MarinOne bidding will optimize based on device-specific performance.
  • Better Guardrails: In addition to max Users can set either a Top, Absolute Top, or Search Impression Share Cap.
  • Automation of Bidding Target Changes: Scheduled boosts simplify management of changes in bidding targets and can be set globally or segmented by device and publisher, MarinOne bidding can automatically exclude data from data from boosted sale periods. bidding.


Getting Started


Our existing customers using bidding are being upgraded to MarinOne bidding. If you are a Marin Customer looking to get started with bidding, please connect with your account manager.

If you are interested in learning more about MarinOne bidding getting started with Marin, click here to schedule a conversation.

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