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Smart Bidding – Max Conversions vs. Max Conversion Value

When it comes to Google Ads smart bidding strategies, we understand that it can be overwhelming picking the right bidding strategy for each campaign you have running in your Google Ads account. It gets even more confusing if your goal is to generate conversions because there are multiple “conversion” related Google Ads bidding strategies. In this post, we will give an overview of what you need to do to start leveraging a conversion-based bidding strategy. We will then give an overview of each conversion related bidding strategy and their intended purpose. To top it off, we will then compare campaign experiments we have run between max conversions vs. max conversion value to see if they did accomplish their intended purpose.

Step 1 – Setting Up Conversion Tracking

It’s important to note that to properly leverage a conversion-based bidding strategy, your Google Ads account must have conversion tracking set up. There are multiple ways to accomplish this, and if you need help setting up conversion tracking we would love to help you. Our preferred way to set up conversion tracking in a Google Ads account is to set up all tagging in Google Tag Manager to feed the data to Google Analytics 4. Once it’s populating in Google Analytics 4, we flag those events as “conversions”, which then allows us to pull those actions into the Google Ads account from Google Analytics 4.

Why do we prefer this route? Setting up all conversion tracking in Google Analytics 4 allows you to see conversion level information for every channel, not just Google Ads paid search. This is important to measure the activity across all marketing activity. In addition, Google Analytics 4 is the next generation of Google Analytics, so it’s the platform you want to be on, especially since there are big changes happening in the privacy realm and to the way people are tracked online.

Conversion Tracking Scenarios:

  • Lead Based – Lead based conversion tracking is in reference to tracking important actions on your website that result in a lead, or an action that is important to your business. In most cases when we set up lead-based conversion tracking for a client, we are tagging and tracking a contact us form, request an estimate or proposal, phone number clicks (or even manual dials), email address clicks, and call extension engagement.All businesses are unique though, and we have a ton of other examples of actions we have tagged for clients. Examples include webinar signups, tradeshow signups, whitepaper downloads, design guide downloads, info pack downloads, event signups, email list signups, job applications, donate, etc.
  • Sale Based – Sales based conversion tracking is in reference to tracking orders that are placed on your site. By properly setting this up, you will be able to track valuable information like how many orders are placed, how much revenue was generated, and return on ad spend.

Step 2 – Generate Conversion Activity

To properly leverage a conversion-based bidding strategy, you should first have some account activity and ideally conversion activity taking place. Google works by understanding all factors that correlate to a person who is likely to convert, so the more conversion history you have, the smarter the system will be. If you activate a conversion-based bidding strategy in a new account, or an account that is not generating conversions, it might not work as well as it could.

Generally, with any new account or an account that had newly implemented conversion tracking, we will start with a bidding strategy meant to generate activity. For example, we typically start with a “max click” bidding strategy, but there are other options as well. We like max click because it generates volume. Once the account has time to start generating conversion activity, we will then run a campaign experiment to potentially step into a conversion-based bidding strategy. Our process typically looks something like this:

  • Start with max click, run a campaign experiment with max click vs. max conversion. If max conversions win, implement it.
  • Run a campaign experiment of max conversion vs. max conversion value. Implement the winner.
  • Run an experiment of the last winner, so let’s say “max conversion value” vs. max conversion value target CPA. Implement the winner.

Overview of Google Ads Smart Bidding Conversion-Based Bidding Strategies

  • Max Conversion – This bidding strategy is straight forward. Google will do their best to drive as many conversions as possible within the budget you provide. Here’s the catch. If you are tracking multiple conversion actions in the account and they are not of equal value to your business, it doesn’t matter in Google’s eyes. They will just try to drive as many conversions as possible across the entire population of conversion actions.
  • Max Conversion Value – This bidding strategy is intended to take max conversion to another level by telling Google to focus on driving not only the most conversions, but the most conversions at the highest value.In an eCommerce environment, this is straight forward if conversion tracking is set up properly. Your Google Ad account will report out conversions and the value, or revenue, of all conversions. With this strategy, in theory, Google will focus on driving higher dollar sales instead of just any sale.

    This bidding strategy is not just intended for eCommerce websites. We use this all the time for lead-based clients. To do so, you must make sure you assign a value to each conversion action you are tracking, which can be done in one of two ways. If you are importing conversion actions from Google Analytics 4, you need to assign a value to those conversion actions in Google Analytics 4 and it will cascade up to Google Ads. If you implemented conversion tracking directly to Google Ads, you can navigate to the “conversion” window in Google Ads, click on each conversion action, click on “value”, and enter the value of a conversion.

    What if you don’t know the true value of a lead, or of each conversion action? No problem! We set this up all the time even if we don’t know. You just need to rank the conversion actions in order of value to your business, then assign an arbitrary value to each one. For example, say you are tracking 6 conversion actions; request a proposal, social media link clicks, email signups, phone call clicks, email link clicks, and whitepaper downloads. We might rank them in the below order, and assign a value system like this:

    • #1 – Request a Proposal: $1,000
    • #2 – Phone Call Clicks: $1,000
    • #3 – Email Link Clicks: $600
    • #4 – Whitepaper Download: $200
    • #5 – Email Signup: $200
    • #6 – Social Media Link Clicks: $25

In this scenario, Google will try to generate more of the conversions that are the top of the list to generate the most value as possible, instead of just the most conversions possible.

  • Max Conversion Target CPA – This works in the same way max conversion works, but you provide a target CPA to let Google know how much you are willing to pay for every conversion. For example, you can say “generate the most conversion as possible and do it by spending on average of $20/ conversion”. You must define that target CPA, and it can’t just be a made-up number. If you go way to low, you probably won’t pick up any activity. When we use it, we look at the data to understand what the historical CPA is, and then base it on that, or make minor tweaks to it one way or another.
  • Max Conversion Value Target CPA – This joins the max conversion value bidding strategy we discussed above with the element of target CPA. Target CPA works the same in both instanced of max conversion and max conversion value. It’s the extra layer of information Google can leverage to help you achieve your goals.

Smart Bidding – Max Conversions vs. Max Conversion Value Results

Now for the fun! Below we compare max conversion vs. max conversion value experiments we have run to see if they did achieve the intended results. These were run as campaign experiments, so they were set up to 50/50 split tested the traffic in real time so we could compare which strategy drove the best results. It’s also important to note, we let each once run for enough time to give us a relevant sample size of data.

Smart Bidding Google Ads

Experiments Notes

  • The Goal – Before looking at anything else, let’s look at how the conversion value metric was affected, since that is the goal of this bidding strategy. In two of the experiments the conversion value did increase. In the first experiment it generated a 24.1% higher conversion value. In the second experiment it generated an 8.4% lift to conversion value. In experiment 3 and 4 it produces a slight decrease in conversion value.
  • The Negative – In all four experiments shown, average cost per click (Avg. CPC) increased, total conversion dropped, and conversion rates dropped. All are negative consequences unless conversion value increased, which is only true for half of the experiments.
  • The Positive – In two of the four experiments, click through rate (CTR) improved and conversion value improved.

Our Takeaway on Max Conversions vs. Max Conversion Value

In 50% of these experiments, we would say it was a positive outcome because conversion value was stronger. That said, by picking a max conversion value vs. a max conversion bidding strategy, it seems like you can expect a potential increase in cost per click, decrease in total conversions, decrease in conversion rate, and sometimes get that boost to conversion value.

In two of these cases, we went with the max conversion value bidding strategy, and the other two we went with the max conversions.

We would highly recommend you run your own experiments to learn which bidding strategy is best. As we learned you can’t just expect the desired results based on the bidding strategy. Test, learn, and move forward with the strategy that fits your goals, for every campaign. Blindly changing bidding strategy is not a good idea, as shown by some of the unintended results in our experiments.

Happy testing!

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