Value-based bidding: How to use Target ROAS for lead generation in Google Ads

By: Jyll Saskin Gales, Google Ads Coach

Can you use the Target ROAS bid strategy for lead generation campaigns? Absolutely! Google Ads offers a powerful feature called value-based bidding (VBB) that allows you to optimize your lead campaigns based on the value of each lead, not just the number of conversions.

This is important because not all leads are created equal. Some leads might be more likely to convert into paying customers than others. By assigning values to your leads and using value-based bidding, you can guide your campaigns to prioritize those high-value leads and maximize your overall return on investment.

In this post, we'll cover:

• How value-based bidding works
• Two approaches to assigning values to your leads
• Setting up offline conversion tracking to connect your CRM
• Google's recommendations and practical considerations for value-based bidding

Understanding Value-Based Bidding in Google Ads

Value-based bidding goes beyond simply counting conversions. It allows you to assign different values to your leads based on their potential to generate revenue. This helps your campaigns prioritize leads that are more likely to become paying customers, when you leverage Target ROAS.

Assigning Values to Your Leads

There are two primary ways to assign values to your leads:

1. Scoring System: Create a scoring system based on lead quality. For example, a basic lead might have a value of 10, a qualified lead a value of 50, and a converted customer a value of 500. You can adjust these values based on your specific business and sales process.

2. Revenue-Based Approach: Use your actual revenue numbers and conversion rates to determine lead values. For instance, if your average revenue per order is $1,000 and 10% of your leads become customers, you can assign a value of $100 to each lead. When a lead converts into a customer, you can add the remaining $900 to reflect the full order value.

Connecting Your CRM with Offline Conversion Tracking

To implement value-based bidding effectively, you need to connect your CRM (Customer Relationship Management) system to Google Ads. This allows you to track the value of each lead throughout the sales funnel and feed that data back into your campaigns. This process is known as offline conversion tracking.

Google's Recommendations and Practical Considerations

Google suggests having at least 15 conversions in 30 days to use value-based bidding. However, in practice, you'll likely need more data for optimal performance. Aim for at least 30 conversions in 30 days, and ideally, 90 or more for the best results.

Remember, Target ROAS and value-based bidding relies on processing more than just basic conversion data. It analyzes the value associated with each lead, requiring more information for the system to learn and optimize effectively.

Ready to Implement Value-Based Bidding?

If you're looking to take your lead generation campaigns to the next level, value-based bidding is a powerful tool to explore. By assigning values to your leads and optimizing for conversion value or ROAS, you can guide your campaigns to prioritize the most valuable leads and maximize your return on investment.