If you’ve been running PPC campaigns for your business, there is one thing you know for sure: not all leads are created equal. Because many businesses are willing to pay a higher cost-per-lead for higher quality leads, Google is at it again with bidding improvements designed to structure campaign results around your true customer values.
With the cost of advertising on Google, Facebook, and other digital platforms on the rise year-over-year, the onus on campaign optimization to increase your marketing returns is more apparent than ever. By implementing value based conversion bidding, Google estimates an overall increase of 15%-35% in conversion value for your campaigns.
So, how to use value based bidding to optimize your campaigns toward the most qualified leads for your business? Read on!
What is Value-Based Bidding?
First, let’s clarify what Value Based Bidding actually is. Essentially, it’s a modification to your existing conversions which assigns them a weight based on their true value. This can pair with offline customer data imports to train machine learning to “ identify and differentiate predicted customer value for each individual auction.” This adjustment allows your campaign to prioritize bids toward conversions with the highest customer value rather than optimizing toward any and all conversions.
For the multi-family apartment industry where website leads go through an entire vetting, touring, and sales process before converting into a lease, this bidding strategy paired with offline conversion data from your CRM can provide the customer value data that Google can use to optimize your campaigns to the types of leads that are actually converting into tours, and further those who convert to finalizing a lease.
In the example below, we are clearly structuring the actions that a potential customer may take upon viewing your ad. By segmenting these actions by their specific value and labeling them in your CRM, Google can use this information to assign specific value to each type of website action or conversion to ensure your budget is being optimized towards those leads that are most likely to convert into your highest value customer. Even if you don’t have an exact value you can assign to each conversion, you can at least assign a relative value. For instance, if you know that “Contact Us” forms are less valuable than calls which are themselves less valuable than “Schedule a Tour” forms then we can assign a relative weight of 5, 7, and 10 to these conversions respectively.
Obviously, in order to enable Google to do its job, it’s important to ensure that your leads are clearly weighted and labeled so that machine learning is able to digest the data and respond accordingly.
How to implement Value-Based Bidding in your campaigns:
The first step is assigning a potential value to each lead in Google Ads so that you can give Google’s algorithm a chance to begin to register and identify the optimal behavior.
Once you have the value-assigned conversions labeled and tracked in your campaigns for a month or so, Google should have some data upon which you can begin to implement your preferential bid strategy. You can set up an experiment to test this conversion value bid type and determine your new cost-per-acquisition or cost-per-lead based on the conversion type. The new bid strategies whose performance you will unlock are tROAS (Target Return on Ad Spend) and Maximize Conversion Value. Having your new weights assigned is crucial since both of these automated strategies take your new conversion values as inputs. After the first month or so of running an experiment, you will want to cross-check the conversion types with your CRM to confirm their real-life value and quality.
At POM, we strongly believe in testing and experimenting with any new Google betas or strategies before implementing them across your campaigns. Don’t fall for general estimates or Google recommendations until you are sure that they are working well for your business and are bringing in the desired results.
If you’re looking for help to improve your campaign performance and implement these new strategies to your marketing campaigns, reach out to us today and we’d be happy to schedule a demo for your business!