For lead gen marketers, we know it’s not just about generating leads; it’s about attracting the right leads – those that are most likely to convert into valuable customers.
Value-based bidding is a strategic approach that allows businesses to focus on optimizing campaigns for conversions that truly matter.
We’ve seen value-based bidding work for online sales and brick-and-mortar businesses as well, but here we’re going to focus on using it for driving higher quality leads.
This is the first of five articles I’ll be sharing weekly to delve in deeper and build on each episode of our new video series on value-based bidding for lead generation.
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 it is and whether value-based bidding could be the right strategy to elevate your lead generation efforts in Google Ads.
The Power Of Quality Leads
Not every customer brings the same value to your business. High-quality leads are more likely to engage with your brand, convert into paying customers, and contribute to long-term business growth.
Value-based bidding is particularly beneficial for businesses that typically need to nurture relationships with customers between an initial online conversion and a final sale.
By focusing on quality leads, you can streamline your sales funnel, improve conversion rates, and ultimately boost your bottom line.
So how can you do that with value-based bidding?
Bidding To Value
Value-based bidding allows you to prioritize specific value goals that align with your business goals.
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 combinations of signals 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
Value-based bidding offers two primary pathways to optimize your campaigns by bringing values into Smart Bidding:
VALUE-BASED 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 be able to respond dynamically to shifts in demand. Target ROAS is available for single campaigns or a portfolio strategy applied to multiple campaigns.
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?
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: