Ready to supercharge your lead generation efforts? Discover how value-based bidding can attract not just more leads, but the right leads that convert into valuable customers.
The Power of Quality Leads
Not all leads are created equal. For lead gen marketers, it’s not just about generating a high volume of leads; it’s about attracting those that are most likely to convert into valuable customers.
Value-based bidding is your strategic ally. This approach allows businesses to focus on optimizing campaigns for conversions that truly matter.
We’ve seen value-based bidding work wonders for online sales and brick-and-mortar businesses alike. In this series, we’ll focus on using it to drive higher quality leads.
This is the first of five articles that delve deeper into our new video series on value-based bidding for lead generation. Each article builds on the previous one, and as you’ll see in this first video below, each is short enough to take in over a quick coffee break.
We’ll start from the beginning and cover what value-based bidding is and whether it could be the right strategy to elevate your lead generation efforts in Google Ads.
Bidding to Value
Quality over quantity is the new mantra. Value-based bidding allows you to prioritize specific value goals that align with your business objectives.
These goals could encompass sales, revenue, profit margins, or even the lifetime value of a customer. With this strategy, Google’s AI uses billions of signal combinations along with your first-party data to identify conversions that are most likely to deliver on your defined value objectives.
It then optimizes bids to focus your ad spend on reaching those higher-value customers.
The Basic Mechanics of Value-Based Bidding
Understanding the gears behind the machine empowers you. Value-based bidding offers two primary pathways to optimize your campaigns by bringing values into Smart Bidding:
- Maximize conversion value with a target ROAS: Drive as much conversion value at a particular ROI.
- Maximize conversion value (no ROAS target specified): Get as much value within a set budget.
Maximize conversion value: If you’re working with a fixed budget, this option focuses on extracting the maximum lead conversion value from your campaign within the constraints of your budget.
Set a ROAS (Return on Ad Spend) target: This option enables you to optimize for conversion value at a specific target ROAS to help ensure your ad spend generates a desired level of return. When you set a ROAS target, the system will optimize to find as much value as possible on average at your target. There are data thresholds to using target ROAS which we will cover later in this series, but this is the preferred strategy when you want to achieve specific ROAS goals and respond dynamically to shifts in demand.
Value-based bidding will maximize the conversion value based on budget constraints and ROAS targets where applicable, so higher-value customers will be prioritized over volume alone.
Keep this in mind when comparing target CPA performance, which optimizes for conversion volume irrespective of value. While the emphasis will be on attracting high-value customers, it’s important to note that you might still see some medium to low-value customers depending on the dynamics of the ad auction.
When using ROAS targets, the higher your target, the fewer auctions your ads are likely to enter. In other words, ROAS targets are your lever to make your ads more or less likely to enter the auction.
Is Value-Based Bidding the Right Fit for Your Business?
Not every strategy fits every business—but this one might fit yours. Value-based bidding has seen success across a spectrum of industries, but whether it’s the right fit for you depends on your specific business needs and capabilities.
Before embracing this strategy, you’ll need to address these key questions:
Can You Assign Meaningful Values to Your Conversion Actions?
Your customers’ value isn’t uniform, and neither should be your bidding. You are likely already differentiating your customers’ value in some facet, formally or informally.
You’ll need to set a concrete value to each conversion, whether through static proxy values like lead scores or dynamic economic values such as total profit. We’ll cover proxy values more in the third article in this series.
Do You Need to Strike a Balance Between Volume and Value Goals?
Finding the sweet spot between quantity and quality is crucial. Bidding to value means your campaigns likely will not generate the same volume of conversions as they would using Maximize Conversions with an optional target CPA bid strategy. This strategy is designed to return a higher total value of conversions. Bid simulators can help you understand this tradeoff.
If you want to maintain a certain level of traffic, use the Smart Bidding bid simulator to help you gauge the optimal ROAS target that will yield your desired volume of leads while maintaining a focus on quality.
Lowering your target ROAS will increase your reach, and raising your target ROAS will decrease reach while seeking out higher-value conversions.
Are You Able to Measure and Connect Your Value Data to Google Ads?
Data is the lifeblood of value-based bidding. Access to accurate and comprehensive value data is a must for implementing value-based bidding effectively. To start, this means having proper site tagging to track conversions.
Feeding the right first-party data values into Google Ads is key to training the system to identify and differentiate predicted customer value for each auction.
If your value objective is sales value, for example, you’ll need to be able to measure and connect that data back to your Google Ads account. We’ll cover how to do that later in this series.
Reaping the Rewards of Value-Based Bidding
The initial effort pays off in the long run. The setup of value-based bidding typically requires some effort up front, but don’t let that intimidate you.
You can start with a more basic setup and adopt more sophisticated approaches that have more technical requirements, such as optimizing for margin or lifetime values, later if you wish.
Value-based Smart Bidding gives the system the flexibility to set each bid based on the predicted value of the conversion and target higher-value conversions. Over time, it learns which users are more likely to be higher value and more profitable, then bids accordingly.
Bidding to find the most valuable customers can deliver incremental revenue uplift and profitability. Businesses that have found success with this strategy report a marked improvement in lead quality.
On average, advertisers that switch their bid strategy from a target CPA to target ROAS can see 14% more conversion value at a similar return on ad spend.
Beyond the Basics
We’re just scratching the surface. While we’ve covered the foundational aspects of value-based bidding, we’re just getting started.
In the upcoming articles in this series, we’ll dive deeper into this strategy, including how to identify and leverage the right data and values for your business, and how to share your value information with Google Ads.
By aligning your campaigns with the conversions that truly matter most to your business objectives, you can optimize your ad spend, maximize your return on investment, and achieve sustainable business growth.
Up next week, we’ll talk about figuring out the right data and values.
How to Set a Winning Data Strategy for Value-Based Bidding
Ready to skyrocket your campaign performance? Discover the key steps to establish a solid data foundation for effective value-based bidding in our second video of the series.
Why the Right Data Matters More Than Ever
Your bidding success hinges on quality data. Value-based bidding is only as powerful as the data you feed it. It’s not just about having data—it’s about having the right data.
In last week’s article of this value-based bidding series, we explored how to determine if this strategy aligns with your business goals. Now, we’re diving into the essential steps to ensure your data foundation is primed for success in this second video of our series.
Set Clear Goals for Google’s AI
Without clear goals, even the smartest AI can’t hit the target. Once your data foundation is established, it’s crucial to tell Google exactly what your objectives are.
It might seem daunting at first, but with a few strategic steps, you can make your value-based bidding campaigns operate at peak efficiency.
Step 1: Tighten Up Your Tracking
Precision tracking is the heartbeat of your data strategy. Ensure your Google Tag or Google Tag Manager is properly installed and configured across your website.
This snippet of code measures crucial user interactions, particularly those vital lead form submissions that will serve as your initial conversion actions.
Don’t let offline interactions slip through the cracks. Not all valuable customer interactions happen online.
Phone calls and other offline conversion events are often just as significant in your lead generation efforts. Each stage of the offline sales cycle—lead, marketing qualified lead, sales qualified lead, closed deal, etc.—holds specific value for your business.
Sharing this offline conversion event data back into your campaigns enhances your value-based bidding strategy to find more of the conversions you value most.
Enhanced Conversions for Leads
Take your offline data to the next level. The most durable method for sharing offline sales conversion data is enhanced conversions for leads.
This allows you to attribute offline conversions back to your Google Ads campaigns. When a user submits a form on your site, it sends back hashed lead information you specify, such as an email address.
You then store that lead in your CRM or database, and when that lead converts or completes a further action, you upload that hashed lead information for Google to match it back to the ad that drove the lead (auto-tagging is required).
If you’re currently using offline conversion import (OCI) to bring in your offline data, we recommend transitioning to enhanced conversions for leads for several reasons: it’s privacy-safe, provides more accurate measurement, supports cross-device and engaged-view conversions, and is easier to implement since you don’t need to modify your lead forms or CRM systems to receive a GCLID.
You can implement enhanced conversions for leads using the Google tag or with Google Tag Manager—more on making this switch here.
Google Ads Data Manager
Centralize your data like a pro. Google Ads Data Manager is designed to simplify importing and activating your offline conversion and first-party data in one central location.
You’ll find “Data manager” under the Tools icon in your Google Ads account. This is where you can connect your first-party data sources, such as BigQuery, Google Cloud, HTTPS, HubSpot, Snowflake, Google Sheets, and more via a direct partner connection or Zapier.
Note, if you don’t see your preferred data source listed among the featured products, be sure to click “Search all” to find more options.
Configure your data sources to ensure that all your conversion data, regardless of origin, is feeding into Google’s AI. You can also access and configure your Google tag from Data Manager.
Step 3: Use Data-Driven Attribution
See the full picture of your customer journey. As you know, the customer journey is rarely linear.
People might visit your website multiple times from various sources and interact with your brand on multiple channels before finally converting.
A data-driven attribution model takes all these touchpoints into account, assigning credit to each interaction based on its actual contribution to the conversion.
It looks at conversions from your website and Google Analytics from Search, Shopping, YouTube, Display, and Demand Gen ads, determining which keywords, ads, and campaigns have the most impact on your goals.
The benefit of this approach, especially when using value-based bidding strategies, is that it gives Google’s AI a more nuanced understanding of what’s driving results than a last-click or other static attribution model.
This means the system can make better-informed decisions about where and how to allocate your ad spend to find more conversion value based on your goals.
Setting the Right Goals
Aim small, miss small—set precise goals for maximum impact. Now that you’ve got the right data flowing in, it’s time to tell Google’s AI what to focus on.
While you can—and should—track a variety of actions within Google Ads, when it comes to bid optimization, it’s important to choose a single, primary goal and focus on one specific stage of the customer journey.
Ideally, your primary goal should be the action closest to the end of the customer journey where you have sufficient conversion volume.
Ensure this action occurs at least 15 times per month at the account level so that Google’s AI has enough data to work with. Additionally, the shorter the conversion delay (the time between an ad click and the conversion), the better.
That doesn’t mean that if you have a long sales cycle and relatively low closed-deal conversion volume you can’t use value-based bidding. You’ll just need to look at other actions your potential customers take that have more volume and a shorter conversion delay. This could be a lead form submission, a product demo request, a free trial sign-up, etc.
Keep the Data Fresh
Fresh data fuels smarter decisions. Lastly, make sure to upload your conversion data to Google Ads frequently, preferably on a daily basis.
This ensures that Google AI always has the most up-to-date information, allowing it to make the most accurate predictions and optimizations.
Again, you can upload this data by connecting your sources in Data Manager or the Google Ads API.
Conclusion
You’re now equipped to elevate your lead generation strategy. By leveraging value-based bidding, you focus not just on generating leads, but on attracting high-quality leads that bring significant value to your business. From understanding the importance of quality leads to setting up a solid data foundation and defining clear goals for Google’s AI, you’re on the path to maximizing your return on ad spend and achieving sustainable growth.
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