Understanding the Essence of Value-Based Bidding

In the realm of digital marketing, value-based bidding has emerged as a powerful strategy to drive sustainable business growth. Fundamentally, it involves manipulating conversion values using available business data, enabling you to bid more effectively and yield a higher return on ad spend (ROAS).

When you shift from a cost-per-action (CPA) bidding strategy to a target ROAS strategy, research has shown a significant increase in conversion value—around 14%—for a similar level of ad spend. But such a transition requires a strategic approach, careful monitoring, and ongoing adjustments.

Tailoring Value-Based Bidding to Your Business Goals

The Impact of Business Type and Goals

Every business has unique goals, and its value-based bidding strategy must reflect these. For instance, an online retail or lead generation business might focus on bidding higher for users who are likely to make more valuable purchases, moving away from a strategy solely based on driving volume. By doing so, these businesses can maximize the value they derive from online sales or leads within their budget or ROAS target.

Advanced businesses might take this one step further, bidding towards profit, margin, or consumer lifetime value.

Recognizing Device Specificities

Understanding how consumers behave on different devices also plays a crucial role in value-based bidding. For instance, if there’s a significant difference in lifetime value when consumers purchase on a computer vs a mobile device, reported values can be adjusted accordingly.

To achieve ROAS targets, a Smart Bidding strategy would bid differently on these devices, ideally within the same campaign.

Making the Most of Value-Based Bidding: Key Tools and Techniques

Optimizing Targets and Budgets

Once your campaigns are set up, the next step is to optimize targets and budgets. Here, tools like Performance Planner come into play, allowing you to forecast target and budget scenarios across campaigns up to 18 months ahead.

Consider using profitability as a guide to setting the right budgets and ROAS targets. However, remember that a higher target ROAS doesn’t necessarily lead to more profit.

Using Score Recommendations and Simulators

Leveraging optimization score recommendations can help identify growth opportunities swiftly. Similarly, simulators can forecast the impact of budget and target changes on key metrics.

Portfolio bidding and shared budgets are also worth considering. They allow for the allocation of bids and spending across a group of campaigns with similar performance goals.

Key Takeaways

• Value-based bidding is a versatile tool that can align your bidding strategy with your unique business goals.
• Recognizing device specificities and customer behaviours can result in more effective bidding.
• Tools like Performance Planner, optimization score recommendations, and simulators can help optimize your targets and budgets, leading to more successful campaigns.
• Advanced businesses might consider bidding towards profit, margin, or consumer lifetime value.

Mastering the art of value-based bidding can unlock new avenues of growth for businesses and provide students like you with a strategic edge in the dynamic world of digital marketing. Start experimenting with this approach today, and reap the benefits it can bring to your future career in the industry.