Generate Better Leads with Value-Based Bidding

What is Value-Based Bidding?

Value-based bidding is a powerful strategy where you assign specific values to your conversion actions. This helps guide your automated bidding strategy, ensuring you get the most out of your ad spend.

Ed Goss, Managing Director of Ten Thousand Foot View, joined us on the Hot Pursuit Podcast to explain how you can use this bid strategy to significantly improve the return on ad spend (ROAS) of your PPC campaigns.

Instead of treating every conversion the same, you’re telling Google which ones matter more to you. This way, Google bids more aggressively on high-value conversions and eases up on the lower-value ones. It’s like training for the big game. You focus on what’s gonna give you the best results.

As Ed Goss puts it, “The idea is to move away from just counting leads and treating all leads as if they have the same value and [instead,] informing Google by identifying the value for each lead that comes in”¹.

To get started, you need to set up conversion tracking in your Google Ads account. Then, assign values to your conversion actions. Ideally, you’ll want to use transaction-specific values for the most accurate data. If that’s not possible, average conversion values will still get you where you need to go².

Value-based bidding enables advertisers to optimize their pay-per-click campaigns by bidding based on the relative value of different conversion types. (If you’d like more specifics, check out How Value-Based Bidding Works.)

Rather than treating all conversions equally, value-based bidding allows you to communicate to Google which conversions drive the most sales. Then Google will learn to prioritize those conversion actions. 

Benefits of Value-Based Bidding

Alright, let’s get into the good stuff—the benefits of value-based bidding. Value-based bidding brings some serious advantages to the table, helping you get more bang for your buck.

Let’s break down exactly why you should be paying attention to this strategy.

Prioritizes High-Value Conversions

By assigning relative values to different conversion actions, you can optimize campaigns to prioritize the most valuable leads and customers. For example, you may value a demo request more than an email signup.

Improves Lead Quality

This strategy focuses on the value of each lead, not just the quantity. By assigning values to different types of conversions, you can prioritize those that matter most to your business. Google’s AI does the heavy lifting, using thousands of data points to fine-tune your bids for the best leads⁶.

Increase Your ROAS

Focusing spend on high-value conversions and audiences should increase return on ad spend compared to bidding strategies that treat all conversions equally.

Switching to value-based bidding can give you a better return on investment. By targeting the most valuable customers, you’re not just getting more conversions—you’re getting better ones. Ed Goss pointed out that lead generation businesses have seen an uptick in lead quality by implementing this strategy. “Instead of looking at things quantitatively, we’re looking at things qualitatively”¹.

It’s More Efficient

Value-based bidding automates the process of optimizing your bids, saving you time and effort. Once set up, Google Ads handles the rest.

You can also integrate this with your CRM systems to automatically feed back conversion data into Google Ads. Ed explains, “You can actually upload offline conversions for each deal that you close… Google will use that data to optimize your bidding automatically”¹.

Scalability

This approach works for businesses of all sizes, as long as you have enough conversion data. If you’re a small business, you might need to focus on micro conversions to provide enough data for Google to work with.

But once you’ve got that, value-based bidding can help scale your advertising efforts efficiently. As Ed says, “It works for any advertiser that’s getting kind of 25 plus conversions a month, but certainly more is better”¹.

Tips for Implementing Value-Based Bidding

Now that we’ve covered what value-based bidding is and why it’s beneficial, let’s dive into some practical tips for implementing it effectively.

1. Capture key data. Use hidden form fields and CRM integrations to pass important data like lead score, company size, or deal stage back to Google Ads. This powers better optimization.

1. Set Up Conversion Tracking Properly. Before you can start with value-based bidding, ensure that your conversion tracking is set up accurately. This means tracking all the actions that matter to your business, such as purchases, sign-ups, or any other key metrics.

2. Assign Meaningful Values to Conversions. Make sure you assign realistic and meaningful values to your conversions. This can be done using transaction-specific values or, if that’s not feasible, average conversion values. Remember, these values should reflect the actual worth of each conversion type to your business.

3. Use Transaction-Specific Values When Possible. Whenever possible, use transaction-specific values rather than average values. This provides more accurate data for Google Ads to optimize your bids. As Ed Goss mentions, “You can actually upload offline conversions for each deal that you close… Google will use that data to optimize your bidding automatically”¹.

4. Monitor and Adjust Regularly. Keep a close eye on your campaigns and be ready to make adjustments. This might mean tweaking your conversion values, adjusting your target ROAS (Return on Ad Spend), or refining your conversion tracking setup.

5. Integrate with CRM Systems. Use CRM systems to feed back offline conversion data into Google Ads. This ensures that your bidding strategy is based on the most comprehensive data possible, enhancing the accuracy of your bids. Use hidden form fields and CRM integrations to pass important data like lead score, company size, or deal stage back to Google Ads. This powers better optimization.

6. Start with a Realistic Target ROAS. When setting a target ROAS, use a realistic figure based on historical data. Setting it too high might restrict your reach, while setting it too low might not maximize your potential revenue.

7. Test and Iterate. Value-based bidding isn’t a set-it-and-forget-it strategy. You need to continuously test different values, monitor performance, and iterate on your approach. As Ed points out, “The truth is that, you know, you don’t know until you test this as with anything”¹.

Implementing these tips will help you make the most out of value-based bidding and ensure that your digital advertising campaigns are as effective as possible.

Wrapping It All Up

While value-based bidding requires additional conversion tracking setup, the performance gains are well worth the effort for many advertisers. By aligning bids with your true business goals, value-based strategies can help you get more from your PPC investment.

To learn more about value-based bidding best practices, check out Google’s official guide. And if you need help implementing value-based bidding for your campaigns, get a free consultation from Ten Thousand Foot View.

References

¹Goss, E. (2023). Interview on the Hot Pursuit Podcast. Retrieved from Ed Goss.txt.
²Google. (2021). Value-based Bidding Best Practices. Retrieved from https://services.google.com/fh/files/emails/value_based_bidding_best_practice_guide.pdf.
³Google. (2023). Google Ads AI Essentials: Value-based Bidding Best Practices. Retrieved from https://support.google.com/google-ads/answer/14792795?hl=en.
⁴Google. (2021). Value-based Bidding Best Practices. Retrieved from https://services.google.com/fh/files/emails/value_based_bidding_best_practice_guide.pdf.
⁵Google. (2023). Google Ads AI Essentials: Value-based Bidding Best Practices. Retrieved from https://support.google.com/google-ads/answer/14792795?hl=en.
⁶Goss, E. (2023). Interview on the Hot Pursuit Podcast. Retrieved from https://www.youtube.com/watch?v=yE_v-rUB-2U&t=1042s