PPC Industry & Insights

Value-Based Bidding: What Is It? And Why You Need To Be Using It ASAP!

Value-Based Bidding: What Is It? And Why You Need To Be Using It ASAP!

Hannah Pate Hannah Pate
5 minute read

Humour me for a moment and imagine that you run a fruit stall at the local farmer’s market. On a busy Saturday morning you get lots of different customers, who are all interested in different fruits, and have different amounts of money that they’re willing to spend. Of your plethora of delicious fruit, the infamous “Tangy Red Apple” is by far the most valuable to you; it doesn’t cost you much to grow and it sells for a competitive price. Other products, such as the “Juicy Watermelon”, though may cost more than the “Tangy Red Apple”, are far more expensive to produce so you won’t make as much profit per sale.

Value-Based Bidding is like showing the “Tangy Red Apple” first to customers who you know are looking for apples and are willing to spend more on top quality produce. You know from previous Saturday morning markets that these particular customers are more likely to buy the “Tangy Red Apples” and may even be tempted to buy more fruit, providing you with even more value. Therefore, you prioritise these customers over those who are just looking for a cheap snack, or are more interested in lower value products, such as the “Juicy Watermelon”, or simply just don’t like apples!

Thanks for sticking with me. Anyone else really craving a red apple now…or is that just me?!

At Clean Digital, we truly believe that Value-Based Bidding is the most important paid media implementation in 2023. Having a robust VBB strategy in place is vital to the success of your PPC campaigns – it’s sink or swim. Google, Meta and other PPC channels are now adopting this approach, allowing advertisers to optimise towards business value and gain a competitive edge in the auctions. In simple terms, instead of just paying for clicks (CPC), or impressions (CPM), you base bids on the potential value a user might bring.

Whether you are an eCommerce or a lead gen business, VBB now plays a crucial role in maximising your return on investment. Looking specifically at Google Ads for this example, if you are an eCommerce business without a VBB strategy in place, Google will only take 2 factors into consideration, Product Revenue & Past Sales Performance, which, as we know from our fruit seller analogy, isn’t the best approach. Value-Based Bidding, on the other hand, will also factor in Profit Margin, Expected Future Performance, Stock Levels, Lifetime Value (LTV), and Other Business-Critical Information. Similarly, if you are a lead gen business, Google will treat all leads exactly the same regardless of who they are, whereas VBB optimises to Lead Quality & Final Sale Characteristics.

But, how does it work?

Value-Based Bidding, first and foremost, requires a deep understanding of your customers in order for it to be as effective as possible. Therefore, analysing your data correctly is imperative. Firstly, you need to assign a value to your customers based on factors like their past purchase history, lifetime value, or their likelihood to make a purchase, and then use these values to adjust your bids. For example, if you determine that one user is twice as valuable as another, you might bid twice as much to have your ad shown to them.

Ok…this sounds tricky, is there a product that can do this for me?!

Enter…SignalPulse.

SignalPulse is our Value-Based Bidding solution, developed by our genius Data & Analytics here at Clean Digital. This groundbreaking tool allows you to dynamically insert any user input or item identifier into a conversion value. This value can then be utilised in platform bidding, optimising your advertising strategy by focusing on profit and long-term value bidding as opposed to just revenue. Designed to work seamlessly with Google Ads, Microsoft Ads, and Meta Ads, SignalPulse an powerful tool for both eCommerce and lead generation advertising campaigns.

SignalPulse is not just another advertising tool. Its unique features offer numerous benefits:

1. Easy setup: Say goodbye to complex setups with third-party platforms. SignalPulse provides a hassle-free integration, making it a breeze to get started.

2. Customisable signal scoring value: Tailor your scoring value according to your business priorities. SignalPulse allows you to optimise this score over time, ensuring your advertising strategy stays aligned with your evolving business needs.

3. Real-time data feedback: With SignalPulse, you receive immediate feedback on your advertising campaigns. This enables you to make timely adjustments and maximise the effectiveness of your strategy.

To Sum Up…

There is no denying that Value-Based Bidding is the future of PPC advertising. With the significant improvements in smart bidding over the past few years, it's essential to give Google and other platforms more precise, business-critical information to optimise differently than it does for the larger market. To ensure you don’t fall behind in the auctions, get a robust VBB strategy, like SignalPulse, in place ASAP.

At Clean Digital, we could talk about SignalPulse and VBB until the cows come home, so please don’t hesitate to get in touch and arrange a chat with one of our experts.

Why wait? Start saving money on your PPC now!

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