Most marketers would agree that optimizing digital campaigns for the highest conversion value is crucial, yet often overlooked.
Well, implementing conversion value optimization provides the key to unlocking your most valuable customers and maximizing campaign profitability.
In this beginner's guide, you'll learn exactly what conversion value means, how to calculate your current conversion value, and actionable strategies to start optimizing for higher-value conversions right away.
Unlocking the Power of Conversion Value Optimization
Conversion value optimization is key for digital marketers looking to maximize return on investment. By focusing on generating high-value conversions rather than conversions alone, you can extract more value from your traffic.
What is Value-Based Bidding?
Value-based bidding is a Smart Bidding strategy that optimizes for conversion value instead of conversion rate. It works by evaluating conversions differently based on the value they provide to advertisers.
For example, a lead conversion may be worth $50 to a business whereas an ecommerce purchase conversion averages $100. Value-based bidding algorithms automatically adjust bids to help acquire more of the higher value conversions over time.
Some benefits of value-based bidding include:
- Maximizing return on ad spend
- Driving more revenue from the same amount of traffic
- Automatically valuing conversions by goal value
Overall, this bidding strategy simply helps you get more bang for your buck by optimizing for what matters most - value rather than standard conversion rate.
The Edge of Optimizing for Conversion Value
Focusing on conversion value can give your digital marketing efforts an important edge. Here are some of the key benefits:
- Increased profitability - With value-based optimization, you can maximize profitability rather than chasing vanity metrics like clicks or conversions. Each conversion has a clear value-add.
- Better allocation of resources - By understanding the true value of different conversions, you can better allocate budgets, creative assets, landing pages, and more to the highest value opportunities.
- Enhanced decision making - Conversion value data gives you a clearer picture for decision making. You can quickly see what's working and double down on the most valuable areas of your funnel.
- Higher lifetime value - In some cases, optimizing for conversion value allows you to focus more on repeat business and customer lifetime value rather than quick sales.
The key is to always think about the value exchange taking place during a conversion to best optimize your efforts. Value-based optimization gives you an opportunity to extract much more from your traffic across the board.
What is Optimize for conversions or conversion value?
Maximize conversions bidding and Maximize conversion value bidding are two Smart Bidding strategies in Google Ads that optimize campaigns differently:
Maximize conversions bidding attempts to get the highest number of conversions for your budget, regardless of the value per conversion. This works well if all conversions have roughly equal value to your business.
Maximize conversion value bidding optimizes for conversions with the highest total value to your business within your budget. This looks at conversion value data in your account to determine the bid strategy.
For example, if you sell products at different prices, Maximize conversion value can help get more sales of higher priced items by bidding higher on those. It balances volume of conversions with their monetary value.
Both strategies can improve performance, but Maximize conversion value takes conversion values into account for smarter optimization between conversion volume and value.
What does conversion value mean in Google Ads?
Conversion value refers to the revenue or business value associated with a conversion in your Google Ads campaigns. By assigning monetary values to different conversion actions, you can optimize your campaigns to maximize overall conversion value rather than just conversion volume.
Here are some key things to know about conversion values:
- They allow you to understand the real business impact of your ads, beyond the number of conversions. Tracking revenue per conversion shows you the true return from your ad spend.
- You can assign values to different types of conversions like leads, signups, purchases, etc. A purchase conversion would have a higher value than a lead conversion.
- Conversion values enable the use of automated bidding strategies like target ROAS and maximize conversion value. These strategies optimize bids to achieve your target returns.
- Tracking conversion value over time shows you how campaign performance trends in terms of revenue/profit generation rather than just conversions.
- Granular conversion value data allows you to identify your most valuable traffic sources, ad groups, keywords, etc. You can optimize investment towards the highest value areas.
In summary, setting up conversion values provides critical business context to campaign analytics. This drives more informed optimization decisions aimed at maximizing the revenue and profit impact of your Google Ads investment.
What should be the conversion value?
Conversion value refers to the monetary worth associated with a conversion event on your website or mobile app. When optimizing campaigns to maximize conversion value, the goal is to prioritize driving high-quality conversions that result in increased revenue, rather than purely chasing conversion volume regardless of value.
Some key things to consider when optimizing for conversion value include:
- Understanding your conversion funnel - Map out the typical customer journey and assign values to each conversion event (lead, signup, purchase etc) to understand where the highest-value conversions are happening. Focus optimization efforts on those high-value events.
- Evaluating conversion quality - Look beyond just conversion rate and consider the value being generated per conversion. If the value per conversion drops as you increase volume, it may not be a worthwhile tradeoff. Prioritize quality over quantity.
- Setting appropriate targets - Rather than targeting maximum conversions, shift to value-based targets around revenue, profitability, LTV or other monetary objectives. This will automatically optimize campaigns around driving higher-value outcomes.
- Leveraging bidding strategies - Smart bidding algorithms like Target ROAS in Google Ads can help automatically bid to hit specified conversion value targets rather than conversion volume goals.
In summary, optimizing for conversion value involves a shift in mindset from chasing every last conversion to focusing efforts on the conversions that contribute the most monetary value to your business. This requires tracking conversion values and setting up campaigns to hit value-based targets.
How do I maximize conversion value on Facebook ads?
To maximize the value of conversions from your Facebook ads, you first need to make sure your conversion tracking is properly set up. Here are the key requirements:
Have an active integration like Conversions API, Meta Pixel, or Facebook SDK
This integration enables Facebook to receive data about your conversions. It must:
- Send Purchase events to Facebook
- Include monetary values for each purchase
- Have at least 2 distinct values reported in the last 7 days
This allows Facebook's algorithm to optimize towards higher value conversions.
Enable Value-Based Bidding
Within your ad set or campaign budget optimization settings, turn on "Value-based bidding."
This shifts the optimization strategy from chasing low-value conversions to prioritizing conversions with higher monetary value.
Analyze Performance Over Time
Check back on the performance regularly to see if the average order value (AOV) increases.
Compare AOV during regular bidding vs value-based bidding periods to quantify the business impact.
By focusing spending on conversions likely to drive more revenue, value-based bidding can lift AOV and return on ad spend. Monitor over time and tweak bids if needed.
Assessing and Amplifying Your Current Conversion Value
Strategies for auditing your current conversion value to pinpoint areas for enhancement and growth.
Calculating Your Average Conversion Value
To begin optimizing for conversion value, you first need to calculate your current baseline. Here are the key steps:
- Determine your conversion goals - what counts as a conversion on your site or campaign? Common options are lead form submissions, ecommerce purchases, content downloads, signups, etc.
- Track the number of conversions and aggregate revenue or value generated from those conversions over a set period. For example, you had 300 conversions last month that generated €5000 total revenue.
- Divide total conversion value by number of conversions to get your average conversion value (ACV). In our example, ACV is €5000/300 = €16.67.
Benchmarking against historical performance, you can set goals to increase ACV by a certain percentage over time through optimization.
Dissecting Conversion Data Across Marketing Channels
With your ACV baseline established, break down conversions by channel to find high-opportunity areas to focus optimization efforts:
- Calculate ACV for each traffic source - organic search, paid search, social media, email, etc. The channel with the lowest ACV has the most room for improvement.
- Analyze keyword or campaign performance - lower ACV terms likely need enhanced landing pages, better targeted products/services, higher intent visitors.
- For paid channels, adjust bids to direct spend toward high converting keywords or placements. Value-based bidding strategies help maximize conversion value.
- Try a/b testing channel-specific landing pages and calls-to-action to lift ACV.
Doubling down on the best performing channels and improving the worst ones compounds gains.
Spotting the Value Leaks in Your User Journey
Analyze your user journey funnel from initial visit to conversion to find where value gets lost:
- Identify pages with high exit rates pre-conversion - enhance content quality, relevance on these pages.
- Look for gaps between visitors and conversions by key pages - lower rates present optimization opportunities.
- Determine if upsells/cross-sells are converting once users have purchased - additional offer conversion lifts ACV.
Plugging value leaks comes down to understanding points of friction and delivering better, more seamless user experiences. Testing proposed fixes is key before rolling out site-wide.
In summary, assessing where you currently stand in terms of conversion value derived from your digital presence informs an effective optimization strategy and sets the direction for continuous improvement through ongoing analysis.
Crafting a Strategy to Maximize Conversion Value
Optimizing for conversion value allows you to maximize the revenue from your campaigns by bidding based on what each conversion is worth to your business. This strategy shifts focus away from volume of conversions and towards the quality and value derived from each conversion.
To implement this effectively, you need to:
Implementing Maximize Conversions Bidding Strategy
The maximize conversions bidding strategy in Google Ads automatically sets bids to get as many conversions as possible while trying to maximize conversion value.
To set this up:
- Determine a target conversion value that reflects the revenue you typically generate per conversion. As a starting point, take the total revenue from conversions last month and divide it by the number of conversions.
- Navigate to the "Bidding strategies" section under "Campaigns" in your Google Ads account.
- Click the plus (+) icon to add a new strategy. Select "Maximize conversions" from the menu.
- Enter your target conversion value previously calculated.
- Modify the bid strategy to apply it campaign-wide or to individual ad groups.
Once enabled, Google Ads will automatically adjust bids to maximize conversion value based on your targets.
Customizing Your Conversion Value
Since not all conversions have equal worth, you can further customize the conversion value to align better with profitability. Here are some tips:
- Assign conversion values by conversion type if they vary significantly. For example, set different values for purchases vs sign-ups.
- Factor in acquisition costs and lifetime value to accurately value a conversion. Acquiring a loyal customer may be worth 5x more than a one-time sale.
- Regularly update the conversion value. As your profit margins or acquisition costs change, the values should be adjusted accordingly.
Fine-tuning your conversion values takes some trial and error but allows you to optimize bids around conversions that generate the most long-term value.
Bidding for Long-Term Value Optimization
Maximizing immediate conversion value is a good start, but optimizing for the long run is ideal. Some strategies that help with this:
- Use target ROAS bidding to maximize return on ad spend based on profit margins. This balances spend with revenue to enable scaling.
- Set a target CPA bid strategy to acquire customers below your upper limit acquisition cost. This efficiently scales spend without exceeding ROI thresholds.
- Factor in customer lifetime value (LTV) when setting bidding strategy targets to secure conversions most likely to drive repeat business.
Bidding with the big picture in mind enables sustainable growth built on value-driven conversions. Monitoring analytics and being agile to optimize based on performance is key to success.
Leveraging Value-Based Smart Bidding Strategies
Delve into advanced tactics with value-based Smart Bidding strategies for Google Ads and beyond.
Smart Bidding Strategy for Optimizing Value
Google Ads offers various Smart Bidding strategies to help advertisers automatically set bids to meet specific campaign goals. Value-based bidding focuses on maximizing conversion value rather than conversion volume or clicks.
This tactic helps ensure you acquire the highest value customers that align with your profitability targets. It works by considering the value of a conversion based on your conversion tracking setup. For example, if you track conversion value at the transaction level or use custom conversion values, Smart Bidding utilizes that data to optimize bids.
Here are some key pointers when implementing value-based Smart Bidding:
- Properly set up conversion tracking at the transaction level or leverage custom conversion values to provide Google Ads accurate value data to work with. Without this, the algorithm cannot factor value into bid optimization.
- Choose the appropriate Smart Bidding strategy suited for value optimization - Maximize Conversion Value or Target ROAS. Maximize Conversion Value focuses solely on driving conversion value, while Target ROAS balances it with return on ad spend (ROAS) targets.
- Set reasonable targets, especially initial Target ROAS targets. Overly aggressive targets hamper performance. Start broad, then tighten targets once the algorithm has sufficient conversion data.
- Closely monitor performance metrics like conversion value, ROAS, impression share, top of page rate, etc. Adjust targets accordingly if needed.
Executed well, value-based Smart Bidding provides phenomenal ability to automatically optimize bids while maximizing conversion value and profitability simultaneously.
Value-Based Bidding with SA360
Beyond Google Ads, Search Ads 360 (SA360) opens up additional opportunities to implement value-based bidding across search channels.
For example, leveraging its Cross-Channel Bid Strategies feature allows you to set an automated, value-focused bidding strategy across Google, Bing, Amazon, Verizon Media, and more. This means the platform handles bid optimization across channels, aiming to drive the highest conversion value based on your targets and conversion data.
Some tips when utilizing value-based bidding with SA360:
- Take advantage of SA360's integrated insights across search channels to better understand performance, identify trends, and enhance decision making.
- Unify conversion tracking using SA360's conversion tracker. This provides the bidding algorithm robust conversion data across channels to optimize towards.
- Define channel priorities if pursuing cross-channel value-based bidding. For instance, you can choose to prioritize Google over Bing if desired conversion volume differs significantly.
With its centralization and cross-channel capabilities, SA360 makes executing advanced value-focused Smart Bidding straightforward and impactful.
Balancing Maximize Conversion Value vs Target ROAS
When leveraging value-based Smart Bidding, advertisers face the decision between two key strategies - Maximize Conversion Value and Target ROAS. Both aim to drive conversion value but have nuances worth considering.
Maximize Conversion Value
As the name suggests, this strategy purely seeks to gain conversions with the highest value. It disregards return on ad spend (ROAS).
Pros:
- Simple goal of purely maximizing conversion value.
- Can help unlock additional value if historical ROAS targets were too restrictive.
Cons:
- Risk of poor ROI if strategy overspends to chase high-value conversions.
- Lower priority on conversion volume compared to ROAS-based targets.
Target ROAS
As a value-based strategy, Target ROAS balances gaining high-value conversions with a specific ROAS target in mind.
Pros:
- Directly optimizes for return on investment via ROAS benchmark.
- ROAS target helps control spend & risk.
Cons:
- Conversion volume may be lower than Maximize Conversion Value.
- Requires more historical data and testing to find optimal ROAS target.
In summary, consider your risk tolerance, conversion volume needs, and historical ROAS. Maximize Conversion Value gives you higher flexibility to gain high-value conversions, while Target ROAS offers more spend control to balance it against ROAS. Test both to determine the best approach.
Testing and Iterating to Uplift Conversion Value
Approaches to A/B testing and iterative refinement to continually enhance and elevate conversion value over time.
Experimenting with Creative Messaging
A/B testing creative elements like headlines and descriptions can be an effective way to optimize conversion value. Here are some tips:
- Test different emotive appeals in copy to identify what resonates most with your audience. For example, test a rational, informative headline against one focused on aspirational or social benefits.
- Try rewriting copy to speak directly to the user's needs and frame the offering as a solution. This helps convey relevance and value upfront.
- Test simplifying messaging to focus on the one or two strongest selling points or benefits. Removing extra claims or details that dilute the core value proposition can boost conversions.
- Pay attention to copy length - longer, more detailed descriptions tend to convert better for complex or expensive products and services, while concise copy often works best for simple or impulse purchases. Test what performs best with your offer.
- Use A/B testing platforms to rapidly iterate on creative elements while preserving statistical validity and segmenting data. This enables efficient experimentation at scale to lift conversion value.
Optimizing Audience Targeting to Find High-Value Segments
Strategically testing and segmenting your audience is key for concentrating marketing spend on high conversion value users. Consider these approaches:
- Build distinct audience segments based on behavioral and contextual data, then create tailored messaging for each one. Test which segments yield the highest conversion rates or purchase value.
- Try narrowing your targeting criteria to hone in on previous high-value converts and similar users. This focuses spend on proven customers.
- Experiment with expanding into potential lookalike audiences that match the characteristics of existing top converters. Monitor whether they convert at comparable values.
- Test demographic factors like age, income level, geography to uncover unexpected pockets of high-value converts. However, avoid assumptions - the data often surprises.
- Frequently re-evaluate performance by segment, doubling down on what works while pruning ineffective targets. Align messaging, offers and creative with each validated high-value group for optimization.
Applying Insights to Scale Successful Variations
Properly analyzing A/B testing data, then scaling up the most effective variation is crucial for maximizing gains in conversion value long-term. Here is a framework:
- When a variation in copy, visuals, targeting or other elements shows improved conversion rate and/or order value, verify it meets statistical significance first before declaring a winner.
- Check the uplift holds true across relevant customer segments before scaling up the change. Ensure it did not disproportionately skew performance in one subgroup only.
- Monitor the new variation closely over an additional 1-2 week period after ramping it up to 100%. Confirm the lift sustains at scale before shifting focus to new optimization efforts.
- Resist making further changes to the page/funnel that is uplifting conversion value until it shows signs of plateauing. Focus experimentation efforts on other areas instead to build on momentum.
- Continue iterating - no page or campaign ever stays fully "optimized". Applying what is learned from past tests informs new hypotheses that can further elevate conversion value.
Conclusion - Mastering Conversion Value Optimization
Optimizing for conversion value allows you to maximize the revenue from your marketing campaigns and website traffic. By implementing some of the key strategies we covered, you can set yourself on the path to conversion value mastery:
Adopt Value-Based Bidding
Leverage value-based bidding in your ads. This shifts focus solely from conversions to the value each conversion brings. Fine-tune your bids to target higher-value users.
Analyze Your Conversion Path
Understand the journey users take to convert on your site. Identify friction points causing drop-offs. Rectify issues to smooth the path and increase conversion rates.
Prioritize High-Value Conversions
Not all conversions are equal. Maximize conversion value by highlighting product offerings, promotions etc. likely to drive higher-revenue conversions.
Continually Test and Optimize
Run regular split tests on your site to validate improvements. Experiment with versioned landing pages, calls-to-action, offers etc. Use the learnings to refine your strategy.
Following these best practices paves the way for exceptional conversion value optimization. Focus both on driving more revenue per conversion and reducing friction in the user journey. With a data-backed approach of constant testing and iteration, you will unlock better results.