Value based bidding tells Google Ads which conversions are actually worth more, so the algorithm chases revenue instead of volume. Here is how to set conversion values, pick between Target ROAS and Maximize Conversion Value, and avoid the setup mistakes that make it backfire.
Most Google Ads accounts optimise for conversion count. Every form fill, call and purchase counts as one conversion, so the system works to produce as many of them as it can inside your budget. That is perfectly sensible when every conversion is worth roughly the same. It stops being sensible the moment one lead is worth ten times another.
Value based bidding replaces the count with a number. You tell Google what each conversion was worth, and the bidding system starts optimising for total value rather than total volume. The practical effect is that Google will pay more for the click that tends to produce a four thousand dollar job and less for the one that produces a hundred and twenty dollar job, because it is now being scored on money rather than tally marks.
This is the step most accounts skip, and it is the reason value based bidding gets a bad reputation. If you switch to a value based strategy while every conversion still reports the same default value, nothing improves. Google is still counting. You have just made the reporting more confusing.
Before changing anything in the bidding settings, decide what a conversion is worth and make that number reach Google Ads.
These numbers do not need to be perfect. They need to be directionally right and consistently applied. A rough value that correctly says one lead type is worth five times another will outperform a precise value you only apply to half your conversions.
Both are value based strategies. They differ in what you are asking for.
Maximize Conversion Value asks Google to get the most total value it can out of the budget. It does not promise efficiency, it promises to spend the budget in the direction of value. This is usually where to start, because it does not require you to already know what a realistic return looks like.
Target ROAS asks Google to hit a specific return on ad spend. That only works once the account has enough value data for the system to predict outcomes, and once you know a target that is actually achievable. Setting a target far above what the account has ever produced is the fastest way to throttle delivery to nothing.
The usual sequence is Maximize Conversion Value first, read the ROAS the campaign naturally settles at, then set a Target ROAS slightly tighter than that and move it in increments.
Value based bidding is only as good as the conversion data arriving in Google Ads. Browser restrictions and cookie loss mean a meaningful share of conversions never get matched back to the click that caused them. Enhanced conversions send hashed first party data such as an email address alongside the conversion so Google can match more of them.
Fewer matched conversions means fewer value signals, which means worse bidding decisions. If you are going to run a value based strategy, set up enhanced conversions first and confirm they are actually recording.
Changing bid strategy resets how the system is learning. Expect roughly two to three weeks of unstable performance while it recalibrates, and expect some of those days to look worse than before you changed anything.
The mistake here is intervening. Changing budgets, targets or conversion settings during the learning period restarts it. Set the strategy, leave it alone, and judge it on the period after it stabilises rather than during.
Done in that order, value based bidding stops being a setting and starts being a way of telling Google which customers you actually want.
Before using value-based bidding, you must properly track conversions.
Inside Google Ads:
This allows Google to measure actions like:
Without conversion tracking, bidding strategies cannot optimize effectively.
Google Ads allows several conversion sources:
For most businesses:
Choosing the correct source ensures accurate optimization.
Each conversion should have a clear naming structure.
Examples:
Proper naming improves reporting clarity and optimization management.
Google Ads needs value data to optimize toward profitability.
You can use:
Dynamic conversion values are especially powerful for e-commerce and advanced lead generation systems.
Enhanced conversions improve tracking accuracy using first-party data.
This may include:
Benefits include:
In 2025, enhanced conversions are considered essential for high-performing Google Ads accounts.
You also need to define:
Common attribution models include:
The correct setup depends on your sales cycle and customer journey.
Google Ads offers two major value-based bidding approaches:
This strategy focuses on profitability.
Google optimizes bids to hit a target return on ad spend (ROAS).
Best for:
Once campaigns launch:
Optimization improves over time as Google gathers more conversion data.
Value based bidding is a group of Google Ads strategies that optimise toward the total value of conversions rather than the number of conversions. You assign a monetary value to each conversion and the bidding system works to maximise that value, so it will bid more aggressively for the clicks that tend to produce higher value outcomes.
They describe the same mechanism with a different input. Value based bidding usually means passing revenue as the conversion value. Profit based bidding means passing margin instead, so the system optimises toward what you actually keep rather than what you invoice. Profit based values are harder to calculate but produce better decisions when margins differ a lot between products or services.
Yes, and it is often where the biggest gains are. Lead generation accounts rarely have revenue in the browser, so you estimate a value for each lead type by taking the average closed deal value and multiplying it by the rate at which that lead type closes. Different forms and different service pages should carry different values.
Target ROAS asks Google to generate conversion value at a specific return on ad spend. If you set a 400 percent target, you are asking for four dollars of conversion value per dollar spent. It only works once the account has enough conversion value data for the system to predict outcomes, and once the target reflects what the account can realistically produce.
Start with Maximize Conversion Value. It does not require you to know a realistic return in advance and it gathers the value data the system needs. Once the campaign has stabilised, read the return it naturally settles at and move to Target ROAS set slightly tighter than that figure, adjusting in small increments rather than large jumps.
There is no single threshold, but campaigns producing only a handful of conversions a month will not give the system enough to model value reliably. If volume is thin, consolidate campaigns and ad groups so the data pools, and stay on Maximize Conversion Value rather than reaching for Target ROAS.
Enhanced conversions send hashed first party data such as an email address along with the conversion, which lets Google match conversions it would otherwise lose to browser and cookie restrictions. More matched conversions means more value signals, and value based bidding is only as good as the data reaching it.
Expect roughly two to three weeks of unstable performance after switching, while the system recalibrates. Some days during that window will look worse than before the change. Changing budgets, targets or conversion settings during the period restarts the learning, so the most useful thing you can do is leave it alone and judge results after it settles.
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