Industry Research Report

2025 Value-Based Bidding Benchmark Report

How Predictive AI Redefined ROAS Across 150 E-commerce Brands

Published: June 2, 2025
•
AdZeta Research
•
20 Pages
Dr. Alex Thompson
Dr. Alex Thompson

Chief Data Scientist at AdZeta

Executive Summary

TThe 2025 Value-Based Bidding Benchmark Report represents the most comprehensive analysis to date of how predictive AI and value-based bidding strategies are transforming e-commerce advertising performance. Based on anonymized data from 150 e-commerce brands across multiple verticals, this report reveals the significant performance gap between traditional CPA-focused advertising and advanced value-based approaches.

1

Predictive value-based bidding delivers 2.7X higher ROAS compared to traditional CPA-optimized campaigns across all verticals studied.

2

Customer acquisition costs decreased by an average of 32% when implementing AI-driven value-based bidding strategies while maintaining or increasing customer quality.

3

Payback windows shortened by 41% on average, with subscription businesses seeing the most dramatic improvements (58% faster payback).

Introduction: The Value-Based Bidding Revolution

The e-commerce advertising landscape has undergone a fundamental transformation. For years, marketers optimized campaigns around cost per acquisition (CPA), treating all customers as equally valuable. This approach, while straightforward, ignored a crucial reality: not all customers deliver equal lifetime value.

Value-based bidding (VBB) represents a paradigm shift in digital advertising strategy. Rather than optimizing solely for conversion volume or cost, VBB focuses on the predicted value each potential customer will generate throughout their relationship with a brand. This approach aligns marketing spend with actual business outcomes—revenue, profit, and sustainable growth.

The integration of predictive AI has supercharged this approach. While early value-based bidding relied on historical customer data, today's advanced systems can predict potential customer value from the first interaction, enabling truly proactive optimization.

Key Terminology

  • Value-Based Bidding (VBB): Optimizing bids based on predicted customer value, not just acquisition cost
  • Predictive LTV: Forecasted lifetime value based on early behavioral signals
  • ROAS: Revenue generated for every dollar spent on advertising
  • Value Gap: Difference between current and potential performance with optimal VBB

Research Methodology

This report analyzes data from 150 e-commerce brands across 12 verticals, representing $312M in advertising spend and 4.8M conversions.

Study Overview

  • 150 brands across Fashion, Beauty, Subscription, Home Goods, Electronics
  • 12 months of performance data (June 2024 - May 2025)
  • 4 maturity levels: Traditional CPA → Basic VBB → Intermediate → Advanced Predictive

Key Findings

Our analysis revealed transformative insights about value-based bidding's impact on e-commerce advertising performance in 2025.

1. The Value-Based Performance Advantage

Brands implementing predictive value-based bidding (Level 3 maturity) achieved:

2.7X Higher ROAS Compared to traditional CPA campaigns
32% Lower CAC Customer acquisition cost reduction
41% Faster Payback Shortened payback windows

2. Platform Performance Variations

Value-based bidding effectiveness varies significantly across advertising platforms:

Platform Traditional ROAS VBB Level 3 ROAS Improvement
Google Ads 2.8X 7.2X +157%
Meta (Facebook/Instagram) 2.1X 4.9X +133%
TikTok Ads 1.6X 4.2X +163%
← Scroll to see more →

3. First-Party Data Impact

Brands using first-party data in their value-based bidding strategy significantly outperformed platform-only implementations:

47%

Higher 90-day ROAS

23%

Higher Customer LTV

31%

Better Prediction Accuracy

Industry Benchmarks

Performance benchmarks across e-commerce verticals and value-based bidding maturity levels:

ROAS by Vertical & Maturity Level

Vertical Level 0 (Traditional) Level 1 (Basic VBB) Level 2 (Intermediate) Level 3 (Advanced)
Fashion & Apparel 2.1X 3.2X 4.8X 5.9X
Beauty & Cosmetics 2.3X 3.6X 5.1X 6.2X
Subscription Services 1.8X 2.9X 4.2X 5.4X
Home Goods 1.9X 2.7X 3.8X 4.6X
Electronics 2.0X 3.1X 4.3X 5.2X
ROAS figures represent median performance across brands in each category
← Scroll to see more →

Key Insight

Advanced implementations focus on the top 30% value customers, yielding 40-60% ROAS improvements through smart budget reallocation.

Implementation Strategies

A proven 4-phase roadmap for implementing value-based bidding:

Phase 1

Foundation Building

Establish data infrastructure and measurement frameworks. Timeline: 2-4 months.

  • Implement comprehensive conversion tracking
  • Establish customer value measurement
  • Integrate first-party data systems
  • Set up attribution modeling
Phase 2

Basic Value Optimization

Implement platform-native value optimization. Timeline: 1-2 months.

  • Enable value-based bidding on primary platforms
  • Implement basic customer segmentation
  • Set up value-based conversion tracking
  • Begin A/B testing value strategies
Phase 3

Advanced Value Modeling

Develop predictive value models. Timeline: 3-6 months.

  • Build predictive LTV models
  • Implement real-time value scoring
  • Develop custom audience strategies
  • Optimize cross-platform attribution
Phase 4

Continuous Optimization

Establish ongoing refinement processes. Ongoing.

  • Automated model retraining
  • Advanced creative optimization
  • Cross-channel value orchestration
  • Emerging technology integration

Conclusion & Recommendations

Value-based bidding delivers 2.7X higher ROAS, 32% lower acquisition costs, and 41% faster payback. The performance gap continues to widen—creating opportunities for early adopters.

Next Steps by Maturity Level

Level 0-1: Getting Started

Start with platform-native value optimization, implement conversion value tracking, and build first-party data collection.

Level 2-3: Advanced Implementation

Develop predictive LTV models, implement real-time value scoring, and optimize cross-platform attribution.

Discover Your Value Gap

Most e-commerce brands have a significant "Value Gap"—the difference between their current performance and what's possible with advanced value-based bidding implementation. Our ValueGap Audit reveals this untapped potential and provides a roadmap for capturing it.

Book Your Free ValueGap Audit Download Full Report
Scroll