Value-Based Bidding for Google Ads: What it is & How it Works

Aaron Peterson

Value-Based Bidding for Google Ads: What it is & How it Works

One of the most prevalent issues that comes along with pay-per-click advertising is avoiding all of the spam leads that come from serving paid ads. Though there are measures experienced digital marketers can take to filter these out, up until recently there was no efficient or truly effective way to stop serving ads to unwanted spam leads.

That is, until this year when Google rolled out its Value-Based Bidding strategy. This technology allows marketers to integrate the Google Ads platform with their CRM and subsequently train the Google Ads algorithm to bid toward leads deemed desirable by the CRM. When set up and used properly, Value-Based Bidding will be a game-changer for businesses of all types. 

The Technology Behind Value-Based Bidding

Historically, Google’s bidding algorithms and strategies have been centered around the concept of maximizing the frequency of a desired action at the lowest cost possible. This approach is still very relevant and more applicable than value-based bidding in some cases, but viewing all leads as equal does not paint the full picture of marketing success, specifically when a company has a robust sales database.

To address this gap, Google Labs began working on a way for Google Ads to recognize and pursue higher-quality leads backed by data directly from businesses. Using a combination of artificial intelligence, API integrations, CRM data, and existing Google Ads software, Value-Based Bidding came to be.

Value-Based Bidding works by providing Google’s software with a specific ‘Value’ to bid towards. The term ‘Value’ can mean several things depending on your business goals, including but not limited to lead qualification, lead score, and lead value. 

Once a value is determined, Google then uses built-in API integrations with customer relationship management software such as SalesForce and HubSpot to share data between the two platforms. 

Using the corresponding Value and data in your CRM, Google Ads’ proprietary AI software then trains itself on data from your CRM. This works by sending data back and forth using an API integration and data is analyzed using a combination of Google’s artificial intelligence models to identify patterns and trends in leads to bid toward ‘desirable’ leads. 

These data points that Google’s machine learning is analyzing are known as ‘Signals’, and though the tech giant isn’t fully transparent as to what these entail, it is logical to assume that these are based on a very wide range of factors, including but not limited to…

  • User Demographics
  • Behavioral Data
  • Interaction Data
  • Transaction Data
  • Engagement with Emails
  • App Engagement
  • Search Behavior
  • Referral Sources

What Types of Businesses Should Be Using Value-Based Bidding? 

The simple answer to this question is that all businesses can use Google’s Value-Based Bidding strategies to enhance their pay-per-click advertising efforts. The differentiating factor here isn’t based on industry, company size, revenue, or any of these. 

Rather, the determining factor as to whether or not this strategy is implementable is found in your overall sales process. First and foremost, the ability to qualify and/or ‘rate’ leads accurately and consistently is key to this bidding strategy. There is a good bit of subjectiveness when it comes to lead quality, but ensuring that you have a clear and uniform method for inbound lead qualification is key.

Secondly, from a technical standpoint, your CRM should be well-equipped and already possess a good bit of data. Though the latter is not necessarily a must, it is without a doubt beneficial to have lead data in your CRM. Ensuring you have the proper fields mapped in the backend of the customer relationship management software is vital to this process.

How to Set Up a Value-Based Bidding Strategy

Step I: Define a Goal

Determine the main goal of enabling value-based bidding. Whether you want more leads of a specific variety or are looking to avoid spam/bad leads, decide among your business leadership, sales, and marketing teams what the objective is.

Step II: Create Fields in Your CRM

From here, you’ll need to create fields in your CRM. Whether you’re using SalesForce, HubSpot, or something else, ensure that your fields are intentional and mapped correctly to ensure a smooth flow of data.

Step III: Set Up Your Google Ads Campaign

Next, if you haven’t already, go ahead and create a Google Ads campaign. Ensure your campaigns are oriented to appeal to the user persona and target market you selected in step one. Be sure that you have Enhanced Conversions turned on as well.

Step IV: Integrate Your CRM with Google Ads

For step four, we’ll set up an API integration between your Ads account and CRM of Choice. Ensure that your CRM is compatible with Value-Based Bidding and Google Ads as a whole.

Step V: Allow Conversion Data to Populate

Here, we will allow Google Ads to provide conversion data to the CRM and for the CRM to provide feedback on those conversions back to Google. Ensure you’re allowing at least one month for Google’s machine learning to train on the data.

Step VI: Change Your Bid Strategy to Value-Based Bidding

In step six, your Google Ads admin will need to change your bid strategy from whatever your current goal is to a Value-Based strategy.

Step VII: Monitor, Optimize, & Report on Campaigns

Lastly, ensure that you’re keeping a close eye on your Google Ads account. Continue to optimize your campaigns based on performance and document ebbs and flows accordingly.

How to Maximize Value-Based Bidding in Google Ads

So now that your Value-Based campaign is set up, how can businesses ensure they get a maximum return on their ad spend? The typical optimization best practices of Google Ads remain in play for Value-Based campaign strategies, however, keeping in mind the end goal of this campaign is crucial to a successful campaign.

Let’s say your goal is to target high-ticket leads for your business. Just as your bidding strategy and CRM are configured to go after these larger fish, your ads should be oriented similarly. Ensure your keywords, targeting, ads, and overall campaign setup are oriented to attract your target market. One way of doing this might be targeting companies of a specific size as opposed to including smaller corporations with less budget.

Regardless of what the final objective of your campaign is, keeping your ads and sales process in line with this is critical. Another aspect of implementing this strategy is ensuring that your business and marketing objectives are working cohesively.

Work With a Digital Marketing Agency to Implement Value-Based Bidding

Though Value-Based Bidding is no doubt going to be at the forefront of pay-per-click advertising over the next few years and beyond, implementing this bid strategy is far from a simple setup. To remedy this, it is highly recommended to work with a digital marketing and PPC agency.

By working with a professional SEM agency, you’ll not only enjoy a smooth setup process but also reap the benefits of a well-planned, well-executed, and well-optimized campaign. A digital marketing expert will be able to provide the best possible return on ad spend and mitigate the risk that comes along with errors in your IT systems.

Here at Simple SEO Group, we’ve already helped multiple businesses improve their return on ad spend using Google Ads’ Value-Based Bidding technology. To do the same for your organization, visit us online or give us a call to schedule a free consultation with our Google Ads experts.