Value-based bidding has the important advantage of enabling you to rank conversions according to likelihood of increasing revenue or reaching particular company objectives, including sales, profit margins, or client lifetime value.
You may better control your bidding strategy and optimize for conversions that have the most impact by giving distinct values to different conversion activities.
Value-based bidding makes sure that your bids accurately represent the value of each conversion, whether it’s a sale, a lead, or a particular activity on your website, allowing you to optimize your return on investment (ROI).
Which Value-Based Bidding Approach Is Best for You?
Value-based bidding uses Smart Bidding to forecast the likely conversion value for each auction.
- The bid strategy will submit a larger bid if it finds that an impression has a high likelihood of resulting in a convert.
- This bid technique will make a lesser bid if it concludes that the impression isn’t likely to result in a high-value conversion.
Value-based bidding optimizes performance by using data from your campaigns, such as your reporting conversion numbers.
In addition, it makes advantage of real-time signals like device, browser, location, and time of day. It may also modify bids according on a user’s inclusion or exclusion from one of your remarketing lists.
Make sure you have the following before you begin bidding for value:
- Calculate a minimum of two distinct conversion rates that are tailored to your company.
- In the last 30 days, have at least 15 account-level conversions. (Note: Demand Gen should have at least 100 conversions in the last 35 days, or at least 10 in the last seven days, in order to qualify.)
To inform Google how you want to optimize for value, you have two options for your bidding strategy:
- Maximize conversion value.
- Set a target ROAS and maximize the conversion value.
Before we go any further, here’s a fast approach to consider each:
Maximize Conversion Value
Within a predetermined budget, this approach focuses on optimizing conversion value.
Advertisers who focus driving the maximum value within a certain budget should use it.
This is typically the first thing advertisers do before implementing a target ROAS plan.
Maximize Conversion Value At A Target ROAS
With this option, you may tell Google AdWords to adjust your bids in order to maximize conversion value while achieving a target return on ad spend (ROAS).
Objective ROAS: The Case for an Uncapped Budget
It is not advisable to cap or limit your campaign budget while bidding with a target ROAS.
That may sound scary at first, but let me reassure you that it doesn’t mean you don’t have control over your campaign spending!
The lever that controls your expenditure is your ROAS aim.
By setting a goal ROAS, you instruct Google to locate the most value at that particular target instead of maximizing value within a certain budget.
Therefore, it may be impossible for the algorithm to discover the next conversion at your objective if your budget is too tight.
Choosing Your ROAS Objectives
You have the option of setting your own goal or using a suggested ROAS.
Use the return on ad expenditure for the previous 30 days as a baseline for establishing ROAS KPIs.
Google uses your ROAS over the previous few weeks to determine its goal ROAS suggestions.
In order to accommodate for conversions that can take more than a day to complete after an ad click or engagement (such an engaged view), this advice does not include performance from the previous few days.
Get Started with An Experiment
Although value-based bidding may be implemented straight away, begin with a modest test through a marketing trial. This enables you to make data-driven judgments by evaluating value-based bidding’s success against your current bidding strategy.
To establish a campaign experiment, you have two options:
- One-Click Test from the Suggestions Section
- On your Recommendations page, you could get recommendations for using value-based bidding.
The recommendation to “Bid more efficiently with Maximize conversion value” will show if our simulations identify that your account measures two or more unique conversion values and will likely benefit from this strategy.
Using this suggestion, you can set up a one-click experiment to see how value-based bidding affects a particular campaign.
Custom Experiment
Another alternative is to design a more customized experiment to evaluate value-based bidding for your campaign.
Choose a campaign with sufficient traffic and conversions to generate statistically significant results.
Configure the experiment to use value-based bidding while the original campaign uses your existing bidding strategy.
How To Jumpstart Value-Based Bidding
You can employ strategies to jumpstart the system, such as initially setting a low ROAS target or starting with maximizing conversion value without an ROAS target.
If you start with maximizing conversion value without a target, ensure your budgets are aligned with your daily spending goals.
Allow A Ramp-Up Period Before You Optimize
Give the system a two-week or three-cycle ramp-up time after implementing value-based bidding. As a result, Google AdWords can effectively learn from and optimize your bids.
If you want precise performance measurement findings, take this first phase out of your study.
