This is it, the final chapter in our journey to mastering value-based bidding!
We have covered a lot of ground, from determining whether value-based bidding is a fit for your business, to understanding what data you’ll need, to assigning the right values, and choosing the right bid strategy.
After you have executed your value-based bidding strategy in your campaigns, it’s important to understand how and when to measure performance and how to optimize for your goals.
Check out the last two-minute video in our series on value-based bidding, and then we’ll go deeper into the details of optimizing value-based bidding.
When To Start Analyzing
To get a clear picture of how your campaigns are performing, you need enough data to work with.
Aim for at least 50 conversions or a full month of data, whichever comes first.
Remember to exclude the initial ramp-up period when your campaigns are still learning and gathering data. This ensures you’re analyzing stable and representative performance.
Evaluating Performance: Focus On The Value Metrics
In value-based bidding, we’re primarily concerned with two key metrics:
- Conversion Value: This represents the total value generated from conversions driven by your ads. It’s the monetary worth of the actions users take after clicking on your ad, whether it’s a purchase, a sign-up, or a subscription.
- Average Target Return On Ad Spend (ROAS): This is the traffic-weighted average ROAS that your bid strategy optimized for over a given time period. If you don’t see this metric in your performance table, be sure to add it from the column icon at the top of your Campaigns table. It’s available for both standard and portfolio bid strategies.
Optimization: Balancing Efficiency And Growth
If you think of your value-based bidding campaign as a car, your target ROAS and budget are your controls to adjust its speed and efficiency. To take this analogy further:
Target ROAS: This is like setting your cruise control. Adjusting your target ROAS influences how aggressively your bids compete in auctions.
- A higher target ROAS means your bids will be more conservative, and you’ll likely compete in fewer auctions. Set a higher target ROAS if you want to prioritize efficiency.
- Setting a lower target ROAS allows for more aggressive bidding. You’ll likely compete in more auctions and reach more customers. Set a lower target If you want to prioritize growth.
Budget: This is your gas tank. The amount of gas you put in depends in part on the bidding strategy you’ve chosen.
- If you’ve set a target ROAS, ensure your budget aligns with your target ROAS and allows the system enough room to optimize effectively. You want to always have plenty of gas in the tank.
- With a Maximize Conversion Value bidding strategy (without a target ROAS), the system aims to use all the gas you give it each day. It prioritizes driving the highest possible value within a specific allocated budget.
Understanding The Relationship Between Your Controls
Just like in a car, how you use the controls affects your overall performance.
Bid Limits – Don’t Limit Your Speed
You might be tempted to set limits on how much you pay per click (like setting a maximum speed limit) by setting bid limits. However, they can actually constrain the system and hinder performance.
It’s like trying to win a race while keeping your car below a certain speed. In value-based bidding, it’s best to let the system automatically adjust your bids based on the potential value of each click.
- You may opt to set bid limits when you’re getting started or are in a highly competitive sector, but keep these tradeoffs in mind as you evaluate performance.
- Note that bid limits are only used in Search Network auctions and only available for portfolio bid strategies.
Budget Constraints – Ensure Enough Fuel
If you’re using a target ROAS, make sure your budget isn’t constrained. Otherwise, it’s like trying to drive a long distance with very little gas. You won’t get very far.
- A restrictive budget can limit the system’s ability to participate in valuable auctions and achieve your desired return. The system needs a sufficient budget to effectively optimize for your target ROAS.
More Optimization Tools
Use these additional tools to help you optimize your value-based bidding campaigns:
Bid Simulators
These simulators allow you to experiment with different ROAS targets and see the estimated impact on key metrics like conversions and cost when adjusting your targets.
Bid Strategy Report
This report provides insights into your campaign performance over time. It helps you understand how your bids are performing, diagnose any unusual fluctuations, and identify areas for improvement.
- The conversion value delay shows how long it takes for customers to convert. This amount of time is the recent period to exclude when evaluating performance, as some conversions may still be reported later.
- This also is where you’ll find the “Actual ROAS” metric, which represents the actual ROAS that this strategy was able to achieve. Keep in mind that small fluctuations in performance are normal.
Performance Planner
Forecast target and budget scenarios across your campaigns.
- Performance Planner simulates relevant ad auctions over the last seven to 10 days, including variables like seasonality, competitor activity, and landing page.
- It also includes conversion delay estimates for Search and Performance Max impact estimates.
Portfolio Bidding & Shared Budgets
These features enable you to allocate spend across a group of campaigns. They can be especially useful when using a target ROAS since a shared budget will automatically reallocate any underused budget to budget-capped campaigns.
- Only apply shared budgets to campaigns that share the same goal (e.g., don’t have campaigns with different targets or bidding strategies sharing a budget).
- Also, note that shared budgets can’t be applied to campaigns that are part of an experiment.
Embracing The Journey
Optimization is an ongoing process.
As your business evolves and your understanding of your customers deepens, revisit your conversion values to ensure they still accurately reflect the worth of each lead.
Adding “value” to your advertising strategies will allow you to go beyond customer (or lead) acquisition costs, focusing on driving return in your campaigns.
You’re now equipped with the knowledge and tools to bid to value.
By focusing your budget on finding the leads that align with your goals, you can drive meaningful results for your business.
Watch The Other Videos In This Series:
More resources:
Featured Image: BestForBest/Shutterstock
