For many businesses, the primary objectives include growing revenue and purchase volume, generating leads, or driving more foot traffic into stores. However, to truly maximize profits, optimizing towards value is essential. This approach ensures that your marketing efforts consistently drive the highest possible return on ad spend (ROAS).
Defining a Consumer’s Value
Value-based bidding helps prioritize the most critical auctions and generate maximum conversion value for your business. The value represents the monetary or business value a customer brings, measured by metrics such as cart size, average order value, lead value, and lifetime value.
Adding value to your advertising strategy lets you focus on growing monetary returns rather than just customer acquisition costs. Value-based bidding captures the most valuable consumers, driving the highest monetary value for your business.
Google Ads solutions allow businesses to import first-party data indicating each conversion’s value. This data enables value-based bidding to identify and bid on auctions likely to generate the most business value. Through measurement and AI, this approach drives traffic to your most profitable categories and channels.
Value-Based Bidding Strategies
Value-based bidding strategies like Target ROAS and Maximize conversion value help you report on and optimize for crucial business objectives, such as revenue, profit, or lifetime value. Since not all conversions and consumers are equally valuable, your marketing strategy should reflect this reality.
Examples in Action:
- Online Retail or Lead Generation Business: Use value-based bidding to focus on high-value conversions.
- Highly Seasonal Businesses: Adjust bidding strategies according to seasonal demands.
- Subscription-Based Businesses: Optimize for long-term subscriber value.
Starting with a Strong Measurement Strategy
The first step in creating a value-based strategy is establishing robust online conversion measurement. Accurate measurement allows you to track conversion actions and set up attribution and optimization with Smart Bidding. Implement the global site tag and Enhanced Conversions to minimize data gaps when cookies aren’t available.
For Google Ads conversions, consider implementing options based on your business objectives, such as:
- Online sales
- Lead generation
- Offline sales
- Other offline conversions
Privacy-Centric Measurement: If you use a third-party platform for conversion tracking, ensure alignment with Google Ads data for optimization. Building a solid, privacy-centric measurement foundation is crucial for maintaining privacy-safe and durable optimization strategies.
Building on the Right Attribution Model
Attribution helps understand the value of each touchpoint along a consumer’s path, allowing you to identify the most influential interactions. For value-based bidding, use a non-last-click attribution model to ensure accurate conversion attribution.
Data-Driven Attribution (DDA): Whenever possible, choose DDA. It identifies the most impactful touchpoints and assigns fractional credit to each keyword in the purchase path. If DDA isn’t available, consider non-last-click models like time decay, linear, or position-based attribution.
Key Takeaways
Focusing your strategy on growing value allows you to go beyond acquiring consumers to capturing the most valuable sales. Correctly measuring conversions and assigning value to sales are foundational steps in creating an effective value-based bidding strategy.
