Table of Contents
What is Value-Based Bidding?
Google Ads is one of the most trusted and reliable fields of paid advertising and there are diverse bidding strategies that help advertisers to optimize their campaigns. The value-based bidding (VBB) is one of the most powerful and advanced strategies. That help businesses focus on maximizing conversions that hold value and potential rather than just raising the number of conversion attempts.
In this blog, the reader will learn all about value-based bidding. How it works, how it requires setting up to deliver the campaign’s effectiveness. How it elevates the Google campaigns. Until now, the advertisers were relying on traditional bidding strategies, but now with the right time that shift has come to bid for the value to increase the conversion value and the profit margins.
The value-based bidding, and performance Max campaigns are all the result of ad automation powered with Artificial Intelligence and Machine learning. This is the ideal approach to adopt strategies to grow the businesses, especially over Performance max campaigns in Google Ads.
Value-based Bidding is a secured bidding strategy that focuses on valuable conversion rather than just increasing the counts of leads. That means the user’s ad campaigns focus on quality rather than quantity. The value-based bidding strategy considers the stage-specific conversion considering the value simplifying the whole final conversion stage.
The value-based bidding strategy optimizes the ad campaigns towards maximizing the conversion cost.
For example, the products A, B, C, D, and E can bring the value of $5, $10, $17, $18, & $23 for business respectively. Now let’s suppose the bidding of $10 for products a and b doesn’t make sense and it is not going profitable, Whereas the bid of $10 with product E is driving the 2x ROAS.
What has Changed with Value-Based Bidding?
Value-based bidding (VBB) employs Artificial Intelligence and machine learning, venturing the ad automation and energizing the whole bidding game. Understand that here you can seamlessly assign values across different stages to drive conversions. It can differentiate the most value conversions from the least conversion values. The advertisers can assign a higher conversion value to all stages to drive the final conversion which is more prominent compared to the first stage of the customer journey.
When the advertiser feeds this conversion value data to Google Ads it bids the high-value conversion behind Google recommendations keeping the budgeting high for the value bidding strategies. The user can leverage the value-based bidding by sharing the right data with Google.

Types of Value-Based Bidding Strategies
1. Target ROAS (Return on Ad Spend)
Target ROAS is the most commonly used bidding strategy. It enables users to set a target ROAS on ad spend, achieving for the campaign and the Google Ads for automatically adjusting the bids to reach the business goal.
How it works: You need to set a target ROAS. By using Google machine learning it enables the adjustment of bids in real time for higher bidding for conversions that are most likely to convert into higher return and to lower for less valuable conversions.
When to use: This strategy of value-based bidding works perfectly for eCommerce businesses, allowing them to focus on the value of their sales. If the advertiser is looking to drive revenue and is not concerned with the number of conversions, then the target ROAS is an ideal fit.
2. Maximize Conversion Value
The maximize conversion strategy allows people to get as seamless conversion value as possible, regardless of the target ROAS. It enables the focus on generating the maximum possible revenue without the need for a specific target.
How it works: Google Ads automatically bids to maximize the total value of conversions, during campaigns. However, don’t specify a target ROAS. The Google system adjusts the bids dynamically based on different factors such as the likelihood of conversion and the expected value.
When to use: This conversion strategy is useful to focus on maximizing the overall revenue without fixing the ROI. It works well for businesses with a broader goal of increasing revenue.
3. Target CPA (Cost Per Acquisition)
Although Target CPA is not strictly value based on its traditional sense. It aligns the value by focusing on the regulatory cost of conversion. If you are looking to set a target cost per acquisition and Google Ads, the user needs to adjust the bids helping the user to get the highest conversions at the targeted CPA.
How it works: You set a target CPA, and Google uses machine learning to find the conversions at the lowest pricing. While it is not directly related to the value of elevating the conversion. It needs to be valuable for businesses to maintain control over how much they can be willing to pay for conversions.
When to use: Use the target CPA, it enables consistent value per conversion which is more concerned with acquiring conversion at a certain cost rather than maximizing the revenue.
4-Point Framework for Value-Based Bidding
1. Disseminate the Better Data
Online conversions
The Global site and the Google Tag manager help the user pass back the online data points using additional tag parameters at the time of conversion helping the user to understand the whole conversion value.
The conversion data help the ppc marketing to either make or break the success using value-based bidding. The user gets more accurate conversions that match the whole business goals.
Offline conversions
The offline conversion enables the user to import the conversions enabling the placement of offline which eases the user to pass back to Google via tools like Zapier, directing the CRM integration with Salesforce and Hubspot. Anyone who wants to click the ad gets assigned a Google click ID. Using such an anonymous identifier allows the user to report back their conversion path while keeping the customer’s data secure.
2. Assign Clear Conversion Values
Estimated Value: This is an impressive guess that allows users to understand how much money a conversion has or needs to generate. Depending on the needs, the user needs to consider the immediate top line (Revenue), bottom line (Profit & Margin), forecast profit, or a customer’s lifetime value.
Implementation: With this conversion tracking, the user enables different conversions and has different values. The user needs to choose the assigned value if the business model demands it. There are three different ways to assign the values.

3. Build Rules for Conversion Values
The conversion value rules enable the Google Ads feature that enables the user to tell their system more about how they value traffic based on three different conditions.
- Location
- Audience
- Device
The value rules are applied to the account or a cross-account level of the base conversion value. It enables working with clients and the other team to help users understand the hierarchy of audience, locations, and devices for the business.
4. Pick the Right Bid Strategy
Maximize the overall conversion value (with or without a target ROAS) enabling the definitive smart bidding strategy for the businesses that vary for the different products or customers with different values.
Improving the conversions is not recommended unless the user not only sells a single product variety or has no information to differentiate over the value of one type of lead v/s. Another.
Setting Up Value-Based Bidding
Step 1: Ensure that you have the right data
- Take full advantage of value-based bidding, to track and record the value of conversions in Google Ads.
- For eCommerce, the user needs to set up the conversions to track the website’s conversion and to record the purchase value and other relevant data.
- If you use Google Analytics, the user can import the overall conversion value into Google ads proving you have the integrated platforms.
Step 2: Choose the right value-based bidding strategy
- Decide on the bidding strategy that best aligns with the campaign’s proficiency.
- Set a specific return on the ad spend.
- Let Google optimize the bids for the highest value without any specific ROAS.
- Choose a target cost per acquisition.
Step 3: Set up the effective conversion tracking
- For value-based bidding, the user needs to track the conversion and their associated values accurately.
- You need to first set up the conversion tracking in Google Ads through Google Tag Manager.
- For eCommerce sites, the user needs to ensure that the value the product needs for being purchased is dynamically passed through each conversion.
Step 4: Develop Campaigns that apply the Bidding Strategies
- Once the conversion tracking is in place, and you have chosen the bidding strategy then, Go to the Google Ads account.
- Navigate the Campaign’s tab and create a new campaign to select an existing one.
- In the campaign settings, select your preferred bidding strategy and set your target metrics based on strategy implications.
- Launch the campaign and let Google’s machine learning optimize the bids.
Step 5: Monitor & Optimize Performance
- The regular check on the conversion value, ROAS, or the other key performance indicators to ensure the strategy for working as expected.
- Adjust the target if needed. Tweak on ROAS, or CPA to target to reflect on changed business goals or the market conditions.
- Review the auction insights to witness how the competitor’s bidding is performing and how to identify the areas for improvement.
Best Practices for Value-Based Bidding

Set Realistic Targets
The value-based bidding strategy enables a powerful and robust set of realistic targets. Let’s take an example, set an aggressive ROAS to target the limit that volume of traffic you receive.
Use High-Quality Conversion Data
The effectiveness of these-based bidding is closely associated with the quality of conversion data to ensure tracking is set up properly capturing the accurate conversion values.
Segment Campaigns Based on Value
Not all the products or services have the same value. The segment of campaigns enables the reflection on differences for better bidding optimization.
Allow Time for Machine Learning
Google Ads require enough time to learn and optimize the ads. Generally, the business takes about 7-14 days for the system to gather enough data to make optimal bidding decisions.
Consider Seasonality & Trends
To make adjustments need a targeting and strategy based on seasonality or the promotional period as a conversion value that can fluctuate depending on external factors.
Conclusion
The value-based bidding enables an advanced bidding strategy that significantly boosts the efficiency of Google Ads. The optimization for the revenue or the valuable outcomes of conversions leverages Google’s machine learning that focuses on increasing the value of conversion rather than just the volume. The usage of a value-based mechanism improves the quality of conversions and multiples the return on Ad spend driving more profitable outcomes for the business.
By carefully setting up the business, data tracking, and ongoing optimization, promotes value-based bidding that can help to achieve more sophisticated and profitable ad strategies. It ensures the ads that drive long-term profitable benefits to business.