Everything you need to know about selecting either maximize conversion value or maximize conversion value with a target ROAS. Welcome back to our series on value-based bidding for lead generation marketers! So far, we’ve explored how to determine if this approach suits your business, develop an effective data strategy, and assign appropriate values to your conversions.
Now, we’ll focus on the crucial final step before implementing your value-based bidding strategy: selecting the optimal bid strategy for your lead generation campaigns. The primary advantage of value-based bidding is its ability to prioritize conversions that are most likely to generate higher revenue or help achieve specific business objectives, such as increasing sales, profit margins, or customer lifetime value.
By allocating different values to various conversion actions, you enhance your control over the bidding process and can optimize for conversions that have the greatest impact. Whether it’s a purchase, a lead, or a particular action on your site, value-based bidding ensures that your bids accurately reflect the true value of each conversion, allowing you to maximize your return on investment (ROI).
Which Value-Based Bidding Strategy Should You Choose?
With value-based bidding, Smart Bidding evaluates the potential value of a conversion for each auction.
If the bidding strategy identifies an impression likely to yield a high-value conversion, it will place a higher bid. Conversely, if it deems the impression unlikely to result in a valuable conversion, it will submit a lower bid.
This approach leverages data from all your campaigns, including the conversion values you report, to enhance performance. It also incorporates real-time signals such as device type, browser, location, and time of day, adapting bids according to whether users are on your remarketing lists.
To begin implementing value-based bidding, you should:
Measure at least two distinct conversion values that align with your business objectives.
Ensure your account has recorded at least 15 conversions in the past 30 days. (For Demand Generation, the requirement is a minimum of 50 conversions in the last 35 days, with at least 10 in the last seven days, or 100 conversions within the same timeframe.)
You can choose between two bidding strategies to instruct Google on how to optimize for value:
- Maximize conversion value.
- Maximize conversion value with a target Return on Ad Spend (ROAS).
Optimize for Maximum Conversion Value:
This strategy aims to maximize conversion value while staying within a specified budget. It’s ideal for advertisers who seek to achieve the highest possible returns from their assigned budget. Many advertisers begin with this approach before transitioning to a target return on ad spend (ROAS) strategy.
Maximize Conversion Value with a Target ROAS:
This approach allows you to set a specific ROAS target, guiding Google Ads to optimize your bids to hit that target while also maximizing conversion value.
Target ROAS: The Importance of an Uncapped Budget:
When employing a target ROAS bidding strategy, it’s essential that your campaign budget remains uncapped. This may seem daunting at first, but rest assured, you still maintain control over your spending! Your defined ROAS target serves as the mechanism to regulate your expenditures.
By using a target ROAS, you’re instructing Google to prioritize maximizing value based on your specific target rather than merely seeking to optimize within a restricted budget. Limiting your budget may hinder the system’s ability to find additional conversions at your desired target, reducing its effectiveness.
Establishing Your ROAS Targets:
You have the option to either utilize a suggested target ROAS or create your own. When determining your ROAS targets, refer to the return on ad spend from the past 30 days as a guideline.
Google’s recommended target ROAS is based on your actual ROAS from recent weeks. Notably, this recommendation omits data from the last few days to accommodate conversions that may extend beyond a single day following an ad click or interaction (like an engaged view). For further information about target ROAS, click here.
Initiating an Experiment:
Although you can implement value-based bidding right away, it might be beneficial to first conduct a small test using a campaign experiment. This approach enables you to evaluate how value-based bidding performs compared to your current bidding strategy, helping you make informed decisions based on data.
On your Recommendations page, you may find suggestions for adopting value-based bidding. For instance, if your account is tracking two or more distinct conversion values, you might see a recommendation to “Bid more efficiently with Maximize conversion value,” indicating that this strategy could be advantageous for you.
Custom Experiment:
You have the opportunity to design a personalized experiment to evaluate value-based bidding in your campaign. Make sure to select a campaign that generates enough traffic and conversions to achieve statistically significant outcomes.
Set up the experiment to utilize value-based bidding, while allowing the original campaign to maintain its current bidding strategy. For guidance on how to establish a custom experiment, refer to the instructions provided here.
How to Kickstart Value-Based Bidding:
To effectively initiate a value-based bidding strategy, consider starting with a low ROAS target or utilizing the Maximize Conversion Value option without a specific ROAS goal. If you choose the latter, ensure that your budgets align with your daily spending objectives.
Allow for a Ramp-Up Phase Before Optimization:
After implementing value-based bidding, provide a ramp-up period of two weeks or three conversion cycles. This timeframe allows Google Ads to gather data and adjust your bids efficiently.
When evaluating performance, remember to exclude this initial phase from your analysis to ensure you have accurate insights. We have now covered the fundamentals of getting started with value-based bidding. In our final segment, we will explore how to monitor and optimize your performance to enhance your business’s value.