Google's Ads Liaison Gives Explainer On Value Based Bidding

Jun 27, 2023 - 7:51 am 1 by
Filed Under Google Ads

People Bidding In Auction

Ginny Marvin, Google's Ads Liaison, posted a Twitter thread with an explainer on Google Ads value-based bidding, VBB. Ginny wrote, "We’ve had lots of questions & heard some misconceptions about value-based bidding (VBB) recently. This week, I'll be sharing info & resources about VBB & answering any questions you've got at the end of the week."

So Ginny will be posting more, so I will just continue to update this thread with what she wrote, but here is part one:

(Q) What’s value-based bidding?

(A) VBB seeks to maximize conversion value within your budget & optional ROAS target. It optimizes for auctions predicted to deliver high conversion value. VBB is designed to return a higher total value of conversions but lower conversion volume vs. maximum conversion/tCPA bidding.

(Q) Who should use VBB?

(A) VBB works for lead generation, online sales & brick and mortar businesses of varied sizes and conversion cycles. The key to using VBB is setting values for the conversions you're tracking & feeding the right first-party data into Google Ads. You define the value you want to maximize, such as sales revenue, profit margins, lifetime value, etc. Here is more on using proxy values next, but here’s more on conversion values & how to set them.

(Q) What does setting a target ROAS do?

(A) If you set an optional Return on Ad Spend (ROAS) target, it will optimize towards getting as much conversion value as possible at that target. Target ROAS is available for single campaigns or a portfolio strategy across multiple campaigns.

(Q) Are there conversion minimums to use VBB?

(A) If you’re tracking conv values, you can use max conv value bidding. With tROAS, most campaign types need at least 15 conversions in the past 30 days. Check out the “Before you begin” section here.

(Q) What if I don’t have enough bottom-funnel conversions?

(A) Google recommends optimizing for your lowest-funnel conv action, but you can use a higher-funnel conv action if value measurement is an issue. Also, consider simplifying campaign structures, shared budgets & portfolio strategies.

There is more to come tomorrow, so I will keep adding more and more to this post as Ginny Marvin posted them on Twitter.

Day two starts here:

(Q) Can I use VBB if I don’t know the value of conv actions in my sales funnel?

(A) Some companies have LTV, profit margins, gross merchandise value, etc., data that’s ready to be imported into Google Ads, but many businesses aren’t there yet. VBB can still work by using proxy values. This calculator can help you gauge the average value of stages in your sales funnel based on the values you do know to get started. As you start experimenting, be patient. It can take time to establish the right proxy values that drive meaningful value to the business. If you’re not switching conversion actions, you can use campaign experiments.

(Q) Can VBB optimize for value & volume?

(A) If you have value goals, you should use VBB. ROAS targets are your lever to make your ads more or less likely to enter the auction. The higher your target, the fewer auctions your ads are likely to enter.

(Q) How do I minimize volume loss when switching to tROAS?

(A) You should expect lower volume when moving from conversion-based bidding. That’s because it’s optimizing for your most valuable customers instead of the most conversions within your targets. Be sure the bidding system has learned from your values & that your tROAS is in line with historical performance to help ensure conversion quality.

(Q) What if I want to optimize for new customers with VBB?

(A) If you have value goals, but also need to acquire a specific number of new customers, consider VBB+NCA (new customer acquisition) bidding. Here's more on using a NCA goal.

Now for day three:

(A) How long should I wait to measure tROAS performance?

(A) We typically suggest giving the bid strategy 2 weeks or 3 conversion cycles before evaluating to give the strategy enough time to learn and adapt. It may take longer to ensure you have enough conversion data to evaluate.

(Q) Doesn’t Google know the meaning behind the values I pass for bidding?

(A) No, Google only interprets your values as a scale to inform decisions to help hit your targets. That's why we continue to build ways to share data safely like Enhanced Conversions for Leads (more here).

(Q) Is my conversion value data used to help my competitors?

(A )Our bidding algorithm models train on highly aggregated advertiser data to continuously learn & improve predictions. We will never share your conversion values or volume with other advertisers.

Day 3:

(Q) What are best practices for using multiple conversion actions with different values?

(A) You can use multiple conversion actions with different values. Best practice is to upload true values of conversions that are aligned with your business goals. Any conversion actions included in the conversions column will be used to inform max conversion value/tROAS bidding.

(Q) Is 15 conversions the minimum per conversion action to use a target ROAS?

(A) We recommend primary conversions have at least 15 conversions within the last 30 days at the conversion tracking level.

(Q) For lead gen, what’s best practice for assigning values to offline conversions?

(A) If your goal is to differentiate conversions based on how valuable they are to your business, please value them against your business results if possible. The calculator can help you gauge the average value of stages in your sales funnel based on the values you do know.

(Q) Can I optimize for profit or another KPI using tROAS?

(A) Yes, that’s why we enable advertisers to use tracking values that are aligned with their business goals such as profit values. You can import LTV, profit margins, gross merchandise value, etc. data to Google Ads to optimize for the values that matter most to your business.

(Q) Why did my tROAS tests result in much lower traffic & conversions?

(A) Typically, we expect a VBB strategy to drive less volume than a conversion based one. It aims to maximize conv value within your budget & ROAS constraints and will bid away from conv that don’t fit those parameters. If you want to use tROAS and maintain a certain level of traffic, bid simulators can help you understand the tradeoff. Lowering your ROAS target will increase your reach, and vice versa. And when testing value based bidding, you should evaluate whether the experiment arm drove more value than the control arm.

(Q) Can you set negative conversion values for leads you don’t want to optimize for?

(A) That’s not currently feasible. If you are tracking conversions that aren’t aligning to your business goals, you can use conversion retractions. Additionally, this resource offers guidance for advertisers on addressing invalid traffic.

(Q) Are there different options in SA360 and Google Ads for VBB?

(A) Some VBB features unique to SA360 include:

- Bid to proxy or predictive values using unified management and bid strategy optimization across accounts & engines.

- GMP stack integration to combine data sets, attribute & model across media channels & devices.

- Budget bid strategies to automatically optimize spend toward your target during plan.

- SA360 Conversion value rules for Google Ads store sales/store visits, in addition to device, location, audience. Can be applied at the campaign and sub-manager level.

- Custom variable adjustments using Custom Floodlight Variables (CFV) to adjust conversion value for bidding using advertiser shared data .

Forum discussion at Twitter.

 

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