Value-Based Bidding

Value-based bidding is a bid strategy in which an ad platform's algorithm doesn't try to buy as many conversions as possible, but as much conversion value as possible. Well-known variants are "maximize conversion value" and target ROAS in Google Ads, and value optimization on Meta.

How it works

With classic strategies, every conversion is worth the same. With value-based bidding, each conversion is sent along with a value. The algorithm learns which users, placements and ads bring in valuable conversions and bids more for those users.

Example

An insurance broker gets leads for liability insurance (average value $150) and disability insurance (average value $1,800). When optimizing for leads, the platform mostly buys the cheap liability leads. With value-based bidding and correct values, it shifts budget toward users who are more likely to ask about disability insurance – even if those leads cost more.

Target ROAS = conversion value ÷ ad spend

Value-based bidding in lead generation

In e-commerce, the value is known at checkout. With leads it isn't: real revenue only happens in sales. You have two options:

• Estimated lead value at form submission, e.g. based on product or stated budget. The lead value calculator helps you work it out.
• Actual value after the fact: deal value or payment from the CRM or payment provider, sent back to the platform.

LeadMetrics sends events like lead, purchase or deal won with value and currency through the Conversion API to Meta, Google Ads, TikTok and LinkedIn. The values come from sources such as HubSpot, Close, Stripe, CopeCart or Digistore24. That way the algorithm learns from real revenue instead of estimates.

Common mistakes

• Too little data: With very few conversions per week, the algorithm can hardly learn.
• Unrealistic values: Inflated flat lead values lead to inflated bids.
• Judging too early: After switching strategies, the algorithm needs a learning phase.