Value-based optimization (VBO) with real-time LTV: CAC by 25% with Curology

Ocurate’s value-based optimization (VBO) solution leverages Machine Learning for customer value and integrations into advertising platforms to increase the Return on ad spend (ROAS) by 15%+.

Over the last years, Google, Facebook, and TikTok have built out capabilities to push data back into the ads APIs.

VBO leverages that technology by infusing the APIs with predictions of future per-customer revenues. Predictions are made immediately upon sign-up and exceed 90%+ accuracy.

The platforms can now allocate bids for ad impressions based on customer value as opposed to first purchase. The result: increasing ROAS without increases to the existing ad budget.

Below, we describe the VBO process with Google non-branded search for one of our customers, Curology ($200M+ revenue D2C skincare brand) , where our ROI is even higher (25%+):

VBB powered by real-time LTV on Google NB Search

Goal: Allow Google Ads to optimize bidding toward acquiring customers with higher LTV.

Test methodology: Matched Market Test

  • Push real-time LTV back to Google for all conversions identified via OcuboostTM
  • Identify 2 regions in an existing campaign with similar demographics, spend and performance.
  • Exclude the two designated regions from the current campaign and adjust the budget accordingly.
  • Create 2 new campaigns mimicking the strategy of the current campaign: same ad copy and keywords
  • VBB Control - targeting Region #1
  • VBB Treatment - targeting Region #2
  • Run both the Treatment & Control campaigns mimicking the original strategy, allowing both campaigns to learn until behavior normalizes.
  • Once behavior normalizes - within the VBB Treatment campaign, switch the campaign Goal to the new Lifetime Value conversion action, and set the bidding strategy to tROAS, with a 75% ROAS target.

Observed lift: 25% in LTV:CAC

Observed lift: 25% increase in LTV:CAC

Significance: Increase first-year gross profit from acquisition media spend by 25%

Impact: for every $10M ad spend: Increase annual returns by $1.43M, from $5.72M to $7.15M – a 25% incremental increase in 12 months gross profit

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