Unlock Maximum ROI: Conversion Value Bidding Strategies for Ads

May 10, 2024 Kris Irizawa

Unlock Maximum ROI: Conversion Value Bidding Strategies for Ads

Bid strategy based on conversion value to maximize ad performance.

Do you wonder about the true impact of your digital advertising efforts?

Campaign managers like ourselves dedicate significant time to managing ads and driving conversions for various businesses.  But a crucial question often lingers: 

  • Are we achieving real sales growth, and is our approach cost-effective?  
  • Are we optimizing ad distribution based on actual sales data?

 

Fortunately, advertising platforms like Google and Meta offer a powerful solution: conversion value settings.  This article dives deep into conversion value settings and conversion value-based bidding strategies, empowering you to maximize the effectiveness of your ads and achieve optimal return on investment.

 

Why Conversion Value Matters: Optimizing Your Ads Beyond Just Conversions

Focusing solely on the number of conversions can lead to a misleading picture of your advertising success.  Imagine running ads that generate a high volume of conversions, but those conversions rarely translate into actual sales. This scenario highlights the importance of setting conversion values.

Visualizing the impact of conversions on sales is crucial for effective ad distribution.  Simply maximizing the number of conversions might lead to overspending on advertising per conversion, or missing out on valuable opportunities.

Let’s illustrate this with an example:

Consider a website that tracks “Request Information” and “Contact Us” as conversions. Analyze user behavior after each conversion, and suppose you discover that “Contact Us” leads to twice the sales compared to “Request Information.”

In this situation, treating both actions equally wouldn’t be ideal. Instead, setting the conversion value of “Contact Us” twice as high as “Request Information” would provide a more accurate representation of their relative value in driving sales.

Conversion value essentially assigns a weight to each type of conversion based on its contribution to sales.  By understanding and leveraging this concept, you can optimize your ad bidding strategies and ensure you’re investing in conversions that truly drive revenue.

 

The Power of Conversion Value: Optimizing Ad Distribution for Growth

Setting conversion values unlocks a powerful capability – visualizing the true contribution of each conversion to your sales. This allows you to distribute your advertising budget strategically, focusing on conversions with a higher sales impact. Ultimately, this approach leads to increased cost-effectiveness, driving business growth and promotion.

In fact, we have seen switching from a bidding strategy based solely on conversion numbers to one based on conversion value can yield significant improvements – up to a 14% increase in conversion value has been observed in some cases.

Here is how setting conversion values and implementing conversion value-based bidding strategies using Google’s Ads Manager interface works.

Setting Up Conversion Value in Google Ads

Let’s begin by exploring how to set your conversion values.  First, log in to your Google Ads account and navigate to the “Tools and Settings” section in the top right corner. From there, click on “Measurement” followed by “Conversions.”

Under the “Value” section, you’ll encounter two options:

  • Use the same value for each conversion: This option is ideal if all conversions contribute equally to sales. Simply enter the desired value you want to assign to each conversion.
  • Use different values for each conversion:  This approach is best suited for Ecommerce websites where different products have varying sales prices.  However, dynamically changing values based on individual products requires setting up a separate tag, which involves more technical expertise.  As such, we’ll focus on the simpler methods in this article.

By following these steps and understanding the power of conversion values, you can optimize your ad distribution and maximize your return on investment.

 

Leveraging Conversion Value Bidding Strategies for Optimal Results

Now that you’ve grasped the importance of conversion value, let’s explore how to implement a bidding strategy that utilizes this powerful concept.

Maximizing Conversion Value Bidding:

Once you’ve established your conversion values, it’s time to set up a bidding strategy that leverages this data. Here’s how to do it on Google Ads:

  1. Navigate to Your Campaign Settings: After selecting your desired campaign within Google Ads, navigate to “Settings” and then “Bidding.”
  2. Change Bidding Strategy: Click on “Change bidding strategy” and under “What do you want to focus on?”, choose “Conversion value.”

Target ROAS for Granular Control (Optional):

For even more precise control, you can incorporate a target return on ad spend (ROAS) by selecting “Set a target return on ad spend (optional)” and entering your desired ROAS percentage. This allows you to optimize bids based on the revenue you aim to generate from your ad spend.

Similar Functionality Across Platforms

It’s important to note that while this explanation focused on Google Ads, other advertising platforms often offer similar functionalities for setting bidding strategies based on conversion value.

The Power of Conversion Value Bidding

This article introduced the concept of conversion value bidding, a strategy designed to maximize the effectiveness of your advertising campaigns. By setting conversion values and employing a conversion value-based bidding strategy, you can:

  • Gain valuable insights into how each conversion type contributes to your sales.
  • Allocate your advertising budget strategically, focusing on high-value conversions.
  • Enhance the cost-effectiveness of your advertising efforts.
  • Drive business growth and promotion through targeted ad distribution.

If you’re currently tracking just the number of conversions for products with varying values, consider implementing conversion values and a corresponding bidding strategy.  This approach can significantly improve your return on investment and propel your campaign success.

If you need help setting up your conversion values, reach out to us for a proposal today.