At Google Marketing Live 2019, Google announced a new bidding strategy, Maximize Conversion Value, which allows retailers to optimize campaigns to values like sales revenue or profit margins. Google then sets bids based on these targets to drive the greatest possible return.
In this installment of Keeping Up With Google–a series that helps you stay up-to-date on the latest changes shaking up Google Ads–we define Maximize Conversion Value and uncover how this tool can affect your performance marketing strategy.
Google announced the release of Maximize Conversion Value on May 14, 2019 at Google Marketing Live.
What It Does:
Maximize Conversion Value does not optimize to conversions alone, which sets it apart from the similar bidding strategy Maximize Conversions. Instead of capturing as many conversions as possible, regardless of cost, the new bidding strategy takes into account revenue metrics like profit margin or sales revenue. The tool tempers bids when necessary in order to meet revenue goals.
For example, if a retailer wants to achieve a specific profit margin with each sale on Google Ads, Google will adjust bids in real time to help meet that goal. Like other smart bidding tools, Maximize Conversion Value uses in-auction insights like user device, location, and time of day to determine the best bid.
Because Maximize Conversion Value focuses on sales growth as opposed to efficiency, the bidding strategy will attempt to use the full daily budget. Before implementing Maximize Conversion Value, retailers should review their daily budget and ensure it is within an acceptable range.
Retailers can set Maximize Conversion Value for an individual campaign, but they cannot implement it at the portfolio level at this time.
This smart bidding strategy is available on Google paid search, shopping, and display ads.
What It Means for Your Business:
Google continues to invest in automated campaign management in order to attract more retailers to its platform and encourage existing retailers to increase their spend. Many small or mid-sized retailers with limited marketing resources are attracted to these tools because they allow them to participate in Google Ads despite limited time or experience.
Google’s Maximize Conversion Value bidding tool is designed to drive the greatest revenue at a set budget and is not tied to an efficiency target. Retailers with set monthly budgets may have the greatest interest in this bid methodology. When retail marketers implement Maximize Conversion Value, they must raise or lower the budget to achieve the minimal acceptable ROAS. This will help the marketer avoid diminishing returns.
One of the challenges is that Google will try to maximize retailers’ revenue within their daily budget, but revenue opportunity will vary depending on the day of the week. Retail marketers will need to set automated budget rules to ensure they are allocating their monthly budget appropriately by day. Google can also overspend daily budget by up to 20% on a given day and will make up for that overspend by underspending on other days. Marketers using automated budget rules should be cautious when implementing Maximize Conversion Value.
Another downfall of Google automated bidding tools like Maximize Conversion Value is that they sacrifice transparency into the campaigns themselves. Retailers have no way of knowing what bid level drove the greatest results for a given ad or product. With these solutions, retailers lose some granular level insight and rely fully on Google to optimize their marketing.
That can be problematic when small or mid-sized retailers grow their business and decide to invest in more sophisticated strategies for Google Ads. They will have no data on which to base their strategies and will effectively need to start over testing campaign structures and bids in order to scale their business.
Automation tools like Maximize Conversion Value can be helpful time-saving tools, but retailers need to decide if the loss of control is worth this benefit.