Google Ads AI Essentials: Value-based Bidding Best Practices

About value-based bidding

Value-based bidding enables you to maximise the total value of conversions generated by your campaigns. Google AI optimises bids in real time to reach people who are likely to bring more value to your business. Just specify the value that you want to maximise, 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 maximise advertising results. Consider:

• Specific value goals: Do you have specific value goals beyond just conversion volume? Determine if prioritising 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 that 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.
• Utilise data-driven attribution models for a more accurate distribution of value across your customers' journey. This helps in understanding the true impact of each touch point on conversions.
• Select a single stage of your lead-to-sale funnel as your bid optimisation 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 optimisation.

Define value for optimal results

Ensure that your measurement setup accurately defines and measures the right values to maximise 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, utilise 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 baskets 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 that 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 that the budget is unconstrained, allowing the system to optimise bidding strategies without limitations.
• Customise 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 maximising efficiency with higher targets or prioritising growth with lower targets.
• Avoid additional constraints: Optimise 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 optimising 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 Centre article for customised experiments.
• Ensure a successful transition by reviewing budget recommendations. Adjust allocations as needed to allow for a ramp-up period of at least two weeks or three conversion cycles before evaluating performance.
• Follow a checklist for a seamless transition:
  • Establish a robust measurement system to consistently track two or more unique, non-zero values.
  • Before transitioning, consistently upload data for at least four weeks or three 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.

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