bidding up to lifetime customer value
For each ad group I track conv value/cost over the preceding 6 months. My profit margin for the average sale is 20% of the reported conv value, so I want conv value/cost to be at least 5 to break even on the first sale. I've been letting it go up to 10 before I start raising my bid, so my target range is 5 to 10, but I feel lost in picking a target.
I've read that I should be bidding right up to match my cost to my lifetime customer value. Why would I want to just break even with Adwords? Shouldn't I be aiming for a cost significantly less than lifetime customer value?
Re: bidding up to lifetime customer value
A great explanation for conversion value was presented a few years ago by Hal Varian - Google's Chief economist. Though a few years old, the principle still valid and well explained;
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