What is value-based bidding?

Value-based bidding is Smart Bidding that optimizes for the total value of conversions instead of their count. In Google Ads it means Maximize conversion value, with or without a target ROAS. Without a target, it tries to spend your whole daily budget to get the most value; Google warns this can significantly increase spend if you currently spend well under budget. With a target, it behaves like Target ROAS: it predicts the value of each auction and bids so the average return lands near your target.

As of June 2026, Google relabeled “Maximize conversion value with a Target ROAS” as “Target ROAS” (and the CPA equivalent as “Target CPA”). Google says the bidding behavior did not change.

The point is simple: if a $40 order and a $400 order both count as “1 conversion”, the bidder will chase whichever is cheaper. Values let it chase the one worth more.

Are you ready to switch?

You are ready when your values are real, varied and reasonably fast. Google’s value-based bidding page and best practices guide set these checks:

  • Two or more unique, non-zero values across your conversion goals. Google does not recommend zero-value conversions with value-based bidding.
  • At least 15 conversions in the last 30 days for Target ROAS on Search and Shopping, at the conversion tracking level.
  • Short conversion delay, ideally under seven days between click and conversion.
  • Values reported for three weeks or one to two conversion cycles, whichever is longer, before you switch. Do not backfill history.
  • Daily uploads if values come from offline sources.

If your conversion goal itself is changing (say, from form fills to qualified leads), Google’s advice is to optimize to the new goal first and add value bidding afterward. Changing both at once leaves you unable to tell which change moved results. Getting the underlying tracking right is covered in our conversion tracking guide.

What value should each conversion carry?

Each conversion should carry the value you actually want maximized: revenue, margin or a lead score. Google lists exactly these and accepts proxy values when exact figures are hard to get. What matters most is that the ratios between values are right. If a demo request is worth five times a newsletter signup to the business, the values should say so.

Business model Value to send Practical notes
Ecommerce Order value, or gross margin per order Margin stops the bidder favoring high-price, low-margin products
Lead generation Proxy value per stage (lead, qualified, closed) Send later stages back through enhanced conversions for leads
Subscription Expected value of a paid customer Avoid front-end values that ignore churn; see our subscription payback guide
Mixed online and phone Separate values per channel Google notes channels like calls and online conversions can differ in worth

For lead businesses, Google suggests choosing one funnel stage as the bid optimization goal, using lead form answers to estimate quality, and using enhanced conversions for leads to send offline outcomes back.

How do you set the first target ROAS?

Start at what you are already achieving, not at what you wish you achieved. The Target ROAS page gives the formula: conversion value divided by ad spend, times 100. A $5 return per $1 of spend is a 500 percent target. To find your current figure, add the Conv. value/cost column and multiply by 100, using a date range that leaves out the most recent conversion delay period (those days are still incomplete). Google also suggests using your historical 30-day ROAS as the benchmark.

Then follow these steps:

  1. Set the target at or near your recent actual ROAS.
  2. Keep the budget unconstrained if you use a target. Google’s best practices say a ROAS target works best without a budget cap, and recommend against extra limits such as maximum CPCs.
  3. Allow a ramp-up period of at least two weeks or three conversion cycles before judging results.
  4. Move the target in steps. A higher target favors efficiency and can limit traffic; a lower one (Google’s example is 300 to 200 percent) bids more aggressively and can raise total value if budget allows.
  5. Wait one to two conversion cycles after each change before comparing target to actual ROAS.

When should you use conversion value rules?

Use value rules when a segment’s conversions are worth more or less to the business, not when they merely convert at a different rate. Conversion value rules adjust recorded values by audience, geographic location or device (plus a “no condition” option for some goals). They apply to Search, Shopping, Display and Performance Max campaigns. Google notes Smart Bidding already uses geography, device and first-party audiences, so a rule that only reflects conversion rate double-counts what the bidder already knows.

How rules behave, per the Google Ads API documentation:

  • Actions: add a fixed amount, multiply (between 0.5 and 10), or set a value.
  • One rule per conversion: a campaign-level rule set is considered before the account-level one, and within a set the first matching rule wins.
  • Conditions: at most two condition types per rule.

Good uses: a customer list of past high spenders whose repeat orders are worth more, or a region where fulfillment costs cut margin. Some conditions are not available to advertisers in housing, employment or credit, under Google Ads policies.

How does the new customer acquisition goal fit in?

The customer acquisition goal is value-based bidding for new customers. It has three modes:

Mode Campaign types Bid strategies Purchase goal needed
New Customer Value Search, Performance Max, Shopping, Demand Gen Target ROAS, Maximize conversion value Yes
High Value New Customer Performance Max, Search Target ROAS, Maximize conversion value Yes
New Customer Only Search, Performance Max, Shopping, Demand Gen Value or CPA strategies Recommended

Google recommends New Customer Value for all advertisers with purchase goals. To tell new from existing customers, upload Customer Match lists (at least 100 active members, per the activation guide); if you already track Google Ads purchase conversions, Google’s autodetection also builds an audience list from up to the last 540 days. In Performance Max, this goal pairs with the brand controls in our Performance Max guardrails guide.

What are the common traps?

  • Zero or flat values. One value for every conversion is conversion bidding with extra steps.
  • Changing goal and strategy together. You lose the ability to tell which change moved results.
  • Tight budgets with a high target. The target and the budget pull against each other.
  • Front-end values for subscriptions. First-order revenue can reward customers who churn fast.
  • Ignoring outages. When tracking breaks, add a data exclusion so the bidder ignores the bad days.

How MSG approaches this

At MSG, conversion values have to reflect what a customer is actually worth before we ask Smart Bidding to chase them. We diagnose the current values, build the value and import setup in your own account, then switch bid strategies with a written hypothesis, a budget and a decision date. For partners paid on performance, we optimize on cohort revenue or predicted ROAS rather than front-end CPA. This sits in our Google Ads management and measurement services.

Sources

  1. Google Ads Help: About Smart Bidding using value-based bidding for Search and Shopping
  2. Google Ads Help: Value-based bidding best practices
  3. Google Ads Help: About Target ROAS bidding
  4. Google Ads Help: About Maximize conversion value bidding
  5. Google Ads Help: About conversion value rules
  6. Google Ads API: Conversion value rules
  7. Google Ads Help: About customer lifecycle goals
  8. Google Ads Help: Activate the new customer acquisition goal
  9. Google Ads Help: About enhanced conversions for leads
  10. Google Ads Help: Use data exclusions for conversion data outages

Platform features and policies change. This guide reflects the sources above as of October 7, 2026.