Google Ads AI Essentials: Value-based Bidding Best Practices

About value-based bidding

Value-based bidding enables you to maximize the total value of conversions generated by your campaigns. Google AI optimizes bids in real time to reach people who are likely to bring more value to your business. Just specify the value you want to maximize, like sales revenue, profit margins, or lead scores, when setting up conversion tracking for your account.

Follow these best practices below to refine your bidding strategy.

Evaluate value-based bidding suitability

Assess if value-based bidding fits your business goals and data capabilities to maximize advertising results. Consider:

• Specific value goals: Do you have specific value goals beyond just conversion volume? Determine if prioritizing conversion value, such as revenue, profit, or customer lifetime value, is essential to achieving your business objectives. Learn more here.
• Meaningful value assignments: Can you assign accurate values to your conversions, such as revenue, profit, lead scores, or predicted lifetime value?
• Measurement capabilities: Does your current data infrastructure allow you to measure and connect value data to your Google Ads campaigns?

Harness data to fuel your value-based bidding success

Build a solid foundation for building and measuring data effectively. This will help you tap into the full potential of your first-party (1P) data by aligning with your business objectives. Here’s how:

• Check your tagging setup to ensure your Google tag or Google Tag Manager setup is capturing conversion actions such as online purchases or lead form submissions accurately across your website. This ensures that the 1P data used by Google's AI-powered solutions is comprehensive and reliable.
• Connect additional 1P data sources with Google Ads Data Manager to access your data wherever it lives. This includes a range of technologies to both store and manage customer information, such as cloud data storage, CRMs, customer data platforms, or marketing technologies.
• Use enhanced conversions for durable, accurate measurement.
  • Enable enhanced conversions for web to supplement your existing conversion tags.
  • Make use of enhanced conversions for leads to share offline conversion data.
• Utilize data-driven attribution models for a more accurate distribution of value across your customers' journey. This helps in understanding the true impact of each touchpoint on conversions.
• Select a single stage of your lead-to-sale funnel as your bid optimization goal; choose a goal with a relatively short conversion delay and at least 15 monthly conversions.
• Track and upload conversions frequently, ideally on a daily basis, to ensure up-to-date data for optimization.

Define value for optimal results

Ensure your measurement setup accurately defines and measures the right values to maximize the effectiveness of your value-based bidding strategy. Take these actionable steps:

• Start by considering the worth of each conversion to your business. If exact values are challenging to determine, utilize proxy values that align with your business priorities.
• Tailor values based on how different actions are worth different amounts to your business. For example:
  • Different products or shopping carts may have different values.
  • Particular answers on lead forms may indicate higher quality leads.
  • Channels like online versus phone calls may be worth something different.
• Consistently feed these values back to Google, aiming for daily uploads to ensure accuracy and relevance.

Aligning Value-Based Bidding with Your KPIs

Set up your budgets and targets for success. Here are a few considerations:

• Set optimal return on ad spend (“ROAS”) targets: When starting out, ensure your campaigns meet your performance objectives by setting clear and achievable ROAS targets based on historical data.
• Adjust budgets: If using a ROAS target, ensure the budget is unconstrained, allowing the system to optimize bidding strategies without limitations.
• Customize ROAS for your goals: Once your campaigns have been running for some time, tailor your ROAS targets to match your campaign objectives, whether it's maximizing efficiency with higher targets or prioritizing growth with lower targets.
• Avoid additional constraints: Optimize bidding performance by refraining from imposing additional constraints like CPC limits, which can hinder the system's ability to achieve your desired outcomes.

Tips for testing and optimizing your strategy

Launch and refine your value-based bidding strategy through practical experimentation. Here's what you can do:

• Launch value-based bidding immediately or conduct a small-scale test using a campaign experiment. Create experiments within your account's Recommendations page or follow the best practices outlined in the Help Center article for customized experiments.
• Ensure a successful transition by reviewing budget recommendations. Adjust allocations as needed to allow for a ramp-up period of at least 2 weeks or 3 conversion cycles before evaluating performance.
• Follow a checklist for a seamless transition:
  • Establish a robust measurement system to consistently track 2 or more unique, non-zero values.
  • Before transitioning, consistently upload data for at least 4 weeks or 3 conversion cycles.
  • Aim for a minimum of 15 conversions per month at the account level.
  • Adjust budgets to align with daily spend goals or ROAS targets, depending on your strategy.

Customer success story