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How to Structure Your Paid Ad Campaigns and Accounts to Maximize Customer Lifetime Value

By Kevin Simonson, CEO/Co-Founder, Metric Digital

We recently had the privilege of hosting a webinar with our partners at ShipBob.

(If you missed the Digital Shopper Experience Summit, you can still watch all of the great sessions from a variety of presenters, including Metric Digital, here!)

Our session focused on structuring paid ad campaigns and accounts to maximize customer lifetime value.

Here was our thesis:

Brands that build a loyal following do so by executing paid advertising in a way that communicates with prospects and customers differently based on where they are in the purchase funnel.

Now, before we jump into our strategies, one quick note on our assumptions.

Our digital marketing expertise comes from brands we’ve launched from scratch and grown to hundreds of millions in valuation and over a billion dollars in sales. And so, these ideas are specific to ecommerce executives who are broadly familiar with digital marketing channels of Facebook and Google. Meaning, earning $5-$100m in annual revenue, spending at least 15K/month on digital advertising, and holding very performance focused goals, i.e., sales, customer acquisition costs.

With that in mind, here are several key takeaways from our presentation, including a few ads to help you visualize.

First, how to think about customer lifetime value

Of all the marketing I've ever done, attribution has come up 100% of the time. And there's never a perfect answer. Overall, though, the goal should be to increase the lifetime value of a customer.

Paid marketing is only one part of that. Everything from seo to email to paid marketing to influencers, anything and everything contributes to what your company should be going after, which are its highest lifetime value customers. We keep this in mind for every single brand we work with, and we structure and utilize strategies accordingly.

For example, would you pay $50 to acquire a customer, or would you rather pay $100?

Some may say they’d rather pay $50. But if you pay to acquire a customer for $100 and that customer throughout their life ends up repeat purchasing and spending $1,000 on your brand, versus the cost per acquisition, it's much more valuable to acquire that customer for $100. It’s counterintuitive if you're only looking at a low cost per acquisition. You have to keep that in mind in terms of building and executing all of these strategies across all channels.

Next, how to think about ad accounts

If you want to strip everything to its most simple, these are the three pillars of an account that you scale on.

  1. Structure: Campaign, Ad Sets, Ads/Campaign, Ad Groups, Keywords + Bid Strategies
  2. Targeting: Audiences (Lookalikes, behavior, etc.), Interests
  3. Creative: Imagery and Ad Copy => What you’re communicating

Please note, the approach to structure, targeting, and creative changes over time with respect to spend levels and the goals of the business and depending on where you are in your company’s life cycle.

(We’ve been blogging a lot about performance creative lately, if you want to go deeper on this topic!)

Most importantly, how to think about customers

Within the frame of customer lifetime value, there are three potential classifications to discuss.

  1. Prospecting: Users who have never been to your site or engaged with your content
  2. Remarketing: Users who have been to your site and/or engaged in your content
  3. Retention: Users who have purchased a product before and are ideal for focus on increasing lifetime value through repeat purchases

Let’s break down each one. First, prospecting.

We’ll use a Facebook ad from Mizzen+Main as an example:

Here are several possible themes and types of creative to consider:

Next, we’ll break down remarketing.

Let’s use a Facebook ad from Vuori as an example:

Here are several possible themes and types of creative to consider:

Finally, here’s how to think about remarketing creative.

Let’s use another Facebook ad from Vuori as an example:

Here are several possible themes and types of creative to consider:

# # #

Remember, the most successful companies in ecommerce understand their customer lifetime value. Make sure you’re being thoughtful about your structure and targeting when it comes to prospecting, remarketing and retention.

And if you want to dive deeper, check out all the great webinars from the ShipBob Digital Shopper Experience Summit!

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Thanks!

Kevin Simonson CEO & Co-Founder, Metric Digital The Metric Digital Blog A Blog on All Things Digital Marketing