Value-based lookalike audiences have long been a go-to strategy for advertisers, and for good reason. By uploading a list of your highest-value customers—whether defined by large purchases, lifetime value (CLV), or subscription status—you can let Meta’s algorithm work its magic to find more potential customers just like them. Additionally, creating “negative value” audiences can help you refine your targeting by excluding less desirable segments.

The Challenge with Traditional Value-Based Targeting

However, exclusively targeting high-CLV customers limits your growth potential, especially without proper controls in place. If you let Meta target a broader audience without refining your criteria, you risk attracting users who may seem like high CLV prospects but are unlikely to purchase, or worse, never become high CLV customers. Without additional controls, Meta’s algorithm lacks the data needed to effectively exclude low-value prospects.

The Solution: Segmenting Your Audience for Better Control

To address this, consider further segmenting your customers into high and low CLV groups. Instead of uploading a single high-CLV customer list, create two separate lists: one for high CLV and another for low CLV. When setting up your campaign, exclude the low CLV group and their lookalike audiences. This allows you to focus on the most profitable customers while avoiding unnecessary spending on less valuable segments.

Don’t Overlook Low CLV Customers

Even though low CLV customers may not be as lucrative, they’re still worth targeting—just at a lower cost. This approach lets you appeal to a broader audience while keeping acquisition costs in check, a crucial step in scaling your brand to household name status. You can change the tone of your ad, test different offers, promote a lower-ticket hero product, and more to figure out how to unlock this audience as you would with high CLV audience targeting.

Understanding Value-Based Bidding (VBB)

Value-Based Bidding (VBB) is a strategy that leverages your customer segmentation to maximize ad spend efficiency. Rather than treating all potential customers the same, VBB allows you to set different bid caps for different audience segments based on their expected CLV. This way, you can afford to spend more on high-value customers while keeping costs lower for less valuable prospects. VBB is particularly useful in competitive markets where you need to maintain a balance between acquiring high-CLV customers and preserving profitability.

Implementing Value-Based Bidding

Here’s how to put VBB into practice:

1. Segment Your Customers: Divide your customer base into five value-based groups, each representing 20% of your customers. Label these groups A to E.
2. Upload and Create Lookalikes: Upload these segments as custom audiences (not value-based) and create lookalike audiences for each group.
3. Set Target CAC: For each segment, establish a target Cost-Per-Acquisition (CPA) based on their expected CLV. For example:
   • Audience A: $200+ CLV, CAC $100 (2:1). This segment is worth taking a first-order loss for potential high future value.
   • Audience B: $100+ CLV, CAC $33 (3:1). Maintain profitability by setting a lower CAC for this segment.

The goal is to align your spending with your business objectives—whether that’s aggressive growth, balanced scaling, or maximizing profitability.

Meta’s New Update: Automating the Process

Meta has introduced a new feature that automates some aspects of this strategy. While promising, it’s advisable to continue using manual controls as Meta’s updates can sometimes be unreliable. Testing this new feature alongside your manual methods can help you determine if it provides similar or better results.

Who ELSE Should You Exclude from Your Campaigns?

When refining your audience, consider excluding the following segments:

• Existing customers (last 90 days): Adjust this based on your average time between orders and customer lapse period.
• “One-and-done” customers: Those who ordered once but not in the last 120 days—indicating they weren’t satisfied or the product didn’t fit their lifestyle. This is similar to your low-CLV customer segment but provides a more granular approach. Use either, or both!
• Negative reviewers: Even if they have a high CLV or AOV, they’re unlikely to return.
• Frequent returners/refunders: High return rates often signal dissatisfaction, making them poor targets for future campaigns.

Conclusion: A Balanced Approach to Scaling

By leveraging these strategies—segmented targeting, Value-Based Bidding, and careful audience exclusions—you can optimize your ad spend, target the right customers, and drive more growth and profitability for your brand. Whether you’re aiming for rapid growth or sustainable profitability, these methods provide a roadmap for effectively scaling your business in a competitive market.