Bidding to Value in Google Ads

On Tuesday, Google premiered their latest video on ‘Search Excellence’. A seminar on the latest best practices for search campaigns.

I poured a coffee, and braced for 20 minutes of the Dalek…

‘Automate!…Automate!…Automate!’

(and the first two words, on the first slide, were – literally – ‘smart bidding’…)

… But I was determined to keep an open mind

(not least thanks to an excellent audiobook on unbiased thinking, that I’ve just finished and highly recommend: The Scout Mindset by Julia Galef).

The overall theme of the seminar was Value Based Bidding.

That is, the idea of progressing from a focus on the click, up the gears through conversions, gross value, net value, towards true lifetime values.

And it is true lifetime value – or as close as we can get to it – that should be the guiding light of our analysis and optimisation… and the raw material that we feed into the Smart Bidding algorithms.

This is a useful principle (One I was discussing a couple of weeks ago in the live Q&A in the membership) but leads to an important question, and an important caveat.

1. How to actually do it?

Yes, we want the algorithm pointing towards genuine value – not just raw, gross revenue or an unqualified enquiry… but how to feed this into your account, and into the algorithm?

The seminar touched on two options:

a) Manipulating conversion value

When we’re looking at e-commerce, there are good reasons why conversion value = revenue. 

Everyone understands it, it makes sense of common-currency equations like ROAS and ROI, and it’s the default outcome of using GA transactions as your Google Ads goal.

Do we really want to be messing with what conversion value means in our accounts?

If we’re talking lead gen, it’s easy enough to assign different values to different methods of enquiry (e.g. form submit vs click to email). At a push, we may be able to differentiate form enquiries based on some pre-qualifying questions, and assign different values based on the answers.

But when it comes to the rest of that lead’s journey to paying customer (and potentially, repeat customer) we’ve got a serious bridge to cross… which takes us to

b) Uploading offline conversions

This allows more information about how valuable that conversion has become, to be ascribed to the activity that led to it.

The trouble is, offline conversion importing is still a niche sport. It’s not easy, or common, and it’s not sufficiently viable in most cases for Google to be recommending it as the way forward.

We can create custom columns for net profit or estimated LTV easily enough… but we can’t turn custom columns into goals, nor can we use calculations when setting the value of a goal in the interface…

So for the time being this is not a broadly realistic method of climbing the final rungs of the value-based-bidding ladder.

Make it easier, and we’ll do it.

2. Value-based bidding can still be manual bidding

As Google continues to push automation – and wins more of us over with genuine improvements to its algorithms’ performance (and by slowly decreasing our control over the manual levers) – we should not forget that we are a long way from ‘smart bidding is clearly/always the best option’ territory.

Reminders of the algorithms’ limitations are all around us. e.g.

  • your badly wrong interest categories (check out what Google thinks of you at https://adssettings.google.com/)
  • The low quality ideas in the Recommendations tab in the Google Ads interface (shortcut ‘G’ then ‘Y’).
  • Most importantly, underperforming smart bidding campaigns, with wild bids or unnecessarily throttled spend.

The benefits of a clear view to actual profit are just as powerful when it’s you in the driving seat.

Smart bidding is good; it’s often the best choice, but we’re not quite all the way there yet.

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