Guide: Value Based Bidding

What are the Benefits of Value-Based Bidding in PPC?

Overview

Value-Based Bidding (VBB) is an advanced strategy designed to optimize your campaigns based on conversion value rather than just conversions. The two primary VBB strategies available are:

• Target ROAS (Return on Ad Spend)
• Maximize Conversion Value

There are many benefits of VBB for a variety of account types…

1. Optimizes for Revenue, Not Just Conversions

• Traditional bidding strategies focus on getting more conversions, but not all conversions have the same value.
• VBB prioritizes high-value conversions, ensuring your ad spend generates the highest possible revenue.

2. Improves Return on Ad Spend (ROAS)

• By bidding based on conversion value rather than volume, VBB helps maximize ROAS by allocating budget toward users who are likely to generate higher revenue.

3. Adjusts Bidding Dynamically

• Google’s algorithm automatically adjusts bids in real-time based on signals like device, time of day, and audience behavior.
• Ensures that higher-value users get priority, leading to more efficient ad spending.

4. Accounts for Seasonality and Market Trends

• Unlike static bidding strategies, VBB adapts to market trends and seasonality, optimizing spend during peak periods and adjusting bids when demand fluctuates.

5. Reduces Manual Optimization Effort

• Automates the bidding process, allowing marketers to focus on strategy rather than constantly adjusting bids.

6. Enhances Performance in Competitive Markets

• By focusing on conversion value, VBB ensures that you’re bidding competitively where it matters most, improving the effectiveness of your PPC campaigns.

7. Works Well for E-commerce & Lead Gen Businesses

• E-commerce: Helps drive high-value purchases by targeting users likely to spend more.
• Lead Generation: Prioritizes leads that are more likely to convert into high-paying customers.

8. Maximizes Budget Efficiency

• Rather than spending budget evenly across all conversions, VBB directs funds to higher-value opportunities, ensuring better cost-efficiency.

How do you set up Value-Based Bidding?

Key Reminders Before Implementing VBB

1. Ensure Sufficient Data: Your account should have at least 15 conversions with revenue value in the last 30 days to provide the system with enough data for optimization.
2. Prefer Maximize Conversion Value Over Target ROAS:
   • Due to seasonality fluctuations, Target ROAS can sometimes struggle to keep up, potentially disrupting the bidding system.
   • Maximize Conversion Value is generally recommended for better adaptability.

Steps to Implement Value-Based Bidding

Step 1: Confirm Your Campaign is Tracking Floodlight Conversions

• If using Google Analytics 360, ensure that your campaign is set to track Floodlight conversions.
• This ensures that your system is receiving the necessary signals to optimize effectively.

Step 2: Ensure Four or More Weeks of Data Collection

• Your campaigns should have been running for at least four weeks with another bid strategy before transitioning to VBB.
• If your campaign is using Max Clicks or another bid strategy, switch to Max Conversions first and allow the system to gather data for four weeks before proceeding.

Step 3: Apply Value-Based Bidding to the Campaign

• Navigate to your campaign settings.
• Select the campaign(s) you want to apply VBB to by checking the box next to the campaign name.

Step 4: Choose the Right Bidding Strategy

• Choose either:
  • Maximize Conversion Value (Recommended)
  • Target ROAS (if you have stable seasonal trends)
• Select Use Standard Strategy
• Click Apply to finalize the bidding strategy.