How Does Value-Based Bidding Work in Google Ads?

What Is Value-Based Bidding and Why Should You Care?

How Does the Algorithm Decide What to Bid?

When Should You Switch to Value-Based Bidding?

There are two main approaches to assigning conversion values in Google Ads, and the right choice depends on your business model and technical capabilities.

Static values. You assign a fixed value to each conversion action. For example, a phone call enquiry might be worth $200, a form submission worth $100, and a live chat interaction worth $50. This is simpler to set up and works well as a starting point. Derive these values from your historical data: what percentage of each lead type closes, and what is the average deal value when they do?

Dynamic values. You pass the actual transaction value back to Google at the point of conversion. E-commerce businesses do this naturally because every order has a different total. Service businesses can achieve this by integrating their CRM with Google Ads and passing back actual deal values when leads close. This creates a feedback loop where Google learns from your real revenue data.

Dynamic values deliver better results because the algorithm learns from real revenue data rather than estimates. However, static values are a perfectly good starting point if you do not have the infrastructure for dynamic tracking yet. Many of our Singapore SME clients start with static values and graduate to dynamic values within three to six months as their systems mature.

The critical thing is accuracy. If your values do not reflect reality, the algorithm will optimise for the wrong outcomes. We have seen businesses accidentally set incorrect conversion values and watch their campaigns chase low-quality leads for weeks before spotting the problem. Audit your values quarterly against actual revenue data to keep them calibrated.

How to Set Up Value-Based Bidding Step by Step

Frequently Asked Questions

How much conversion data do I need for value-based bidding?

Google recommends at least 15 conversions over the past 30 days for the algorithm to learn effectively. More data produces better results. If your campaign has fewer conversions, consider using portfolio bidding to pool data across multiple campaigns, or consolidate smaller campaigns into fewer, larger ones.

Can I use value-based bidding for lead generation?

Yes. Assign values to different lead types based on their likelihood to close and average deal size. For example, a phone call enquiry might be worth $300 while a newsletter signup might be worth $10. This tells Google to prioritise high-intent leads that are more likely to generate revenue.

What is the difference between Maximise Conversion Value and Target ROAS?

Maximise Conversion Value spends your full budget to generate the highest total revenue. Target ROAS aims to hit a specific return ratio, which may mean spending less than your full budget if the target cannot be met. Use Maximise Conversion Value for growth and Target ROAS for efficiency. Many businesses start with Maximise Conversion Value and graduate to Target ROAS once they have enough data.

How long does the learning period take?

The learning period typically lasts two to four weeks. During this time, avoid making significant changes to bids, budgets, or targeting, as each change resets the learning process. Performance may fluctuate during this period, which is normal. Judge results after the full learning period, not during it.

Will value-based bidding work for small budgets?

It can, but results depend on conversion volume rather than budget size. A small budget that generates 20 or more conversions per month can work well with value-based bidding. A larger budget with very few conversions will struggle regardless of spend. Focus on building conversion volume first, then switch to value-based bidding.