Value-Based Optimization: Using Real-Time Data to Find More Profitable Customers
Have you noticed there seems to be a lot of data flying around nowadays? It seems like we’re drowning in data. The challenge, of course, is being able to make sense of the gigabytes we gather, to transform it into something valuable, over just raw, unending numbers.
In our experience, the most important thing is not the data, but rather the questions we ask that provide the lens and focus we need to create hypotheses. Only then do we delve into the data to find answers.
A few months ago we asked a question about the relative value of online sales. We had an issue. We were optimizing campaigns to drive sales, but were working under the flawed assumption that all sales were made equal. Many of our clients sell different types of products, from individual low price items to higher priced bundles of multiple products. So we wondered if by optimizing campaigns to drive as many sales as possible, we were actually leaving $ on the table.
Our real-time optimization methods at that time relied on a pixel firing when a user made a purchase. But arduous, manual calculations were needed to take sales revenue and ROI into account. By the time those insights could be shared with our partners, they would have already optimized the campaign to drive a higher volume of sales instead of the goal – drive a high volume of more profitable sales. We needed a partner to help us figure out if it was possible to automate and optimize our media to create increased value, versus a simple conversion, in real time.
So what did we do? We dropped the V-bom!
V-bom was the internal nickname, (blame us, not DataXu) we gave to Value-Based Optimization. How did it work? Simply put, online shopping cart value is shared via real-time pixels. By passing actual online order values through to the DataXu platform, we successfully optimized our campaign to drive a high volume of more profitable sales, for a much improved ROI.
Through co-collaboration, DataXu developed this innovative approach that resulted in CPAs that were 64% more efficient than optimizing on traditional conversions, 60% more actions overall, and ROI that was 4x more than the control group which was optimizing on a simple conversion pixel fire. In other words, just optimizing to sales volume did in fact leave $ on the table. By using this new value-based approach, we were able to ensure we were driving the highest return with our media dollars.
Joshua Spanier, Director of Communications Strategy