In today’s data-driven digital landscape, advertisers are increasingly challenged to not only drive conversions but also ensure that every dollar spent generates the highest possible value. Enter value-based bidding (VBB), a strategy that shifts the focus from conversion volume to optimizing for the true worth of each conversion. However, VBB only performs as well as the data feeding it. By unifying, enriching, and streaming data in real time, Tealium ensures VBB models can maximize every ad dollar.
In this guide, we’ll explore:
- What value-based bidding is
- How to implement it effectively
- Where things can go wrong
- How Tealium can bring added value
Why Advertisers Need Value-Based Bidding Now
Traditional bidding strategies optimize for more conversions, not better ones. They assume that every lead, purchase, signup is equally valuable. When ad platforms can’t see which actions generate higher revenue or long-term costumer value, they optimize toward instead of profit, wasting spend on low-value clicks. Value-based bidding solves this by using machine-learning algorithms that analyze real-time signals—such as user behavior, device type, location, time of day, and historical data—to dynamically adjust your bids.
Advertisers assign a value to each conversion event. This is often a monetary value like the actual purchase amount, an estimated profit margin, or even a calculated customer lifetime value (CLV). The platforms use these values to automatically adjust bids in real-time. The system increases bids for users with a high predicted conversion value and lowers bids for lower-value prospects, thereby optimizing the overall return on ad spend (ROAS).
Tealium provides the foundation that makes VBB work as intended. By standardizing and streaming data across every channel, it ensures that the data feeding VBB is complete, consistent, and timely.
How to Implement Value-Based Bidding in 5 Steps
There will be variations for different platforms, but the core process stays the same. This five step process ensures your campaigns have the clean data they need for VBB to work as intended.
1. Identify Key Conversions
Determine which actions (e.g., purchases, sign-ups, app installs) are most critical to your business goals. Start simple with something obvious, like purchases that have an easy to understand value to them. As you do that have an eye on other conversions that are important to your business that you will expand to later on, for example upper funnel conversions.
2. Check Conversions Are Correctly Tracked
Ensure that all conversion data flows into your advertising platform accurately. Value-based bidding relies on complete conversion tracking to function properly, and without it, you’ll lack a reliable baseline to measure the strategy’s performance improvements.
A robust data layer and collection framework form the foundation of effective conversion tracking. This infrastructure is critical whether you’re using value-based bidding or not. Tealium’s Event Data Framework, which includes iQ Tag Management and EventStream, provides the tools needed to build this strong data foundation.
3. Enhance Your Conversion Data
Once you’re tracking conversions correctly, then you can leverage your internal data sources and third-party integrations to ensure every conversion is tracked with its corresponding value. This is where many organisations struggle.
You may have individual transaction values that you can pass through in order for Value-based bidding to work, but what if your conversion isn’t a transaction, like a newsletter sign-up? What if you have more granular margin data stored or calculated in back-office systems? You need to find a way to get this value data and update the conversion, or send it as an offline conversion.
Tealium EventStream can help with offline data enrichment for real-time conversion processing. Lookup the additional conversion data in real-time and enrich the original conversion event as it is tracked.
Getting access to model data may be time-consuming within your organisation, or add a significant delay before your data team can handle your request. If you don’t have these additional models available, then look to your customer data tools to help. Tealium AudienceStream can calculate various models and make the model data available to each conversion. Your team can both implement Value-based bidding and define their value models themselves. That time to market is important for implementing a new strategy.
4. Choose the Right Bidding Strategy
You can choose different strategies for value-based bidding depending on what your objectives are. Let’s look specifically at Google Ads. There are two strategies to choose from:
- Maximize Conversion Value: This strategy focuses on obtaining the highest total conversion value within your budget.
- Target ROAS: If you have a specific return target, set a desired ROAS percentage to guide the bid adjustments.
5. Continuously Monitor and Optimize
You can “set and forget” value-based bidding, but it really benefits from close monitoring, especially when you’re starting out. First, you want to check you are getting the benefits in your existing campaigns, and second, you’ll be looking to expand usage and learn from your experience.
- Review Campaign Performance: Regularly analyse performance data to understand which segments are generating high value.
- Refine Targets and Models: Adjust your bidding targets and refine your conversion value models based on historical performance and evolving market conditions
Summary
Value-based bidding represents a significant evolution in digital advertising strategy—shifting the focus from quantity to quality by prioritising high-value conversions. By integrating advanced tracking, dynamic bid adjustments, and enriched data sources, advertisers can achieve a higher return on ad spend and drive better business outcomes.
Tealium’s robust suite of tools—EventStream for real-time data collection and AudienceStream for comprehensive customer profiling—provides the perfect foundation for implementing an effective value-based bidding strategy. With accurate data, continuous monitoring, and strategic integration, you can ensure that every bid you place is optimized for maximum value.
Next Steps
- Assess Your Conversion Tracking:
Ensure your current tracking setup captures all key conversion events along with their true business value. - Integrate Tealium EventStream:
Begin collecting and enriching real-time event data across your digital channels. - Leverage Tealium AudienceStream:
Enhance your conversion data with deep customer insights for more precise bidding strategies. - Implement and Optimize VBB:
Configure your advertising campaigns with value-based bidding strategies and continuously monitor performance to refine your approach.
Embrace value-based Bidding with Tealium and transform your advertising efforts—maximizing every dollar spent by focusing on what truly matters: customer value.
