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Value-Based Bidding (Maximize Conversion Value, tROAS)

glossary google ads updated 2026.05.20 6 min read
// contents · 9 sections
  1. What Value-Based Bidding is
  2. How it works: components and the proxy-value formula
  3. What changed in 2025-26
  4. Common misconceptions
  5. Can I use Value-Based Bidding without sending revenue back from my CRM?
  6. Does tROAS need more conversions than tCPA?
  7. Doesn't sending high values just inflate my CPCs?
  8. Related concepts
  9. Sources

Value-Based Bidding (VBB) is the family of Smart Bidding strategies that optimize toward conversion value — Maximize Conversion Value with optional tROAS — instead of conversion count.

What Value-Based Bidding is

Value-Based Bidding is the subset of Smart Bidding that asks Google to allocate spend toward the highest-value conversions rather than the highest number of conversions. Two strategies belong to it: Maximize Conversion Value (spend the full budget for the most reported value) and Maximize Conversion Value with a tROAS target (deliver value at or above a return-on-ad-spend target). Google frames the distinction explicitly: VBB "differs from conversion-based bidding (Maximize Conversions with an optional Target CPA), which aims to maximize conversion volume" (Google Ads Help, 2026-01). The signal Smart Bidding actually optimizes against is the value field on each conversion event — if every conversion carries the same value, VBB degenerates to Maximize Conversions.

How it works: components and the proxy-value formula

VBB consumes three inputs at every auction: the predicted probability the click converts, the predicted value if it does, and the cost of winning. Two requirements gate the strategy. First, conversion tracking must carry transaction-specific values — Google requires you to "set up conversion tracking with transaction-specific values" before enabling Maximize conversion value (Google Ads Help, 2026-02). Second, you must "report two or more unique values for your conversion goals" or the model has no value distribution to learn (Google Ads Help, 2026-02). Real economic values (revenue, gross profit) are preferred; proxy values are the documented substitute when revenue is delayed or absent.

For B2B SaaS lead-gen accounts the canonical proxy formula chains four levers:

Stage value = Close Rate × ACV × Margin × Stage Probability
  • Close Rate — historical lead → closed-won percentage from CRM
  • ACV — annual contract value (or first-year revenue) for closed-won deals
  • Margin — gross margin, so VBB optimizes against profit not topline
  • Stage Probability — likelihood this funnel stage converts to the next (raw lead → MQL → SQL → closed-won)

A worked example: with a 35% quote-to-close rate and $8,000 ACV, an industry-documented proxy is "Proxy Sales Value = Quote Value × Conversion Rate ... $8,000 × 35% = $2,800" (WhatConverts, 2025). The same logic stacks at every funnel stage: a raw form-fill gets the value of a downstream closed deal multiplied by the joint probability of reaching it. Google supplements static values with conversion value rules that adjust value at auction time based on location, audience, and device dimensions (Google Ads Help, 2026-02).

What changed in 2025-26

Three shifts matter for the audit playbook. First, value-based bidding for Search graduated out of beta with a dedicated documentation surface and a campaign-experiments pathway, making it possible to A/B-test a VBB switch against tCPA on the same campaign (Google Ads Help, 2026-01). Second, Google expanded VBB to Demand Gen and Video Action campaigns, so the strategy is no longer Search/Shopping/PMax-only. Third, Google now requires a conversion value on new conversion actions — accounts that previously left value blank cannot keep doing so on new actions, which forces the proxy-value conversation earlier in onboarding. The practical takeaway is that VBB is now the assumed default for any revenue-bearing account; absence of values is a finding, not a neutral choice.

Common misconceptions

Can I use Value-Based Bidding without sending revenue back from my CRM?

Yes — for lead-gen, proxy values calculated from Close Rate × ACV × Margin are the documented substitute. Google's own best-practice guidance recommends choosing "a single stage in your lead-to-sale journey to use for bid optimization" and weighting it with a proxy if the closed-won event is too delayed to model (Google Ads Help, 2026-02). Sending no value is worse than sending an imperfect proxy: the model has no way to separate a $50k enterprise lead from a tire-kicker.

Does tROAS need more conversions than tCPA?

Yes — measurably so. tROAS predicts both probability and value, which doubles the dimensionality of the model. The general industry guidance is to give tROAS at least 15 conversions in the last 30 days at the conversion tracking level before targeting, and Google's documentation recommends waiting "1-2 full conversion cycles before comparing average target ROAS to the actual ROAS performance" (Google Ads Help, 2026-02). Under-volume tROAS thrashes more than under-volume tCPA.

Doesn't sending high values just inflate my CPCs?

No — VBB targets value per dollar of spend, not raw bid size. What changes is the bid distribution: queries the model predicts will yield high-value conversions get bid up; low-value queries get bid down. If you also set a tROAS, total spend is shaped by the target. The frequent failure mode is the opposite — flat $1 values across every conversion teach the model that all conversions are equal, which is what Maximize Conversions already does.

Methodology note. Whitead checks VBB readiness in three layers. (1) Are there at least two distinct conversion values flowing in the last 30 days? If 95%+ of conversions share one value, the account is "VBB-named but not VBB-functional." (2) For lead-gen accounts, is there a documented proxy formula tying form-fill value to downstream close rate × ACV × margin? Absence is flagged at MED severity. (3) For accounts already on Maximize Conversion Value + tROAS, is the offline conversion import (closed-won values from CRM) live and uploading within the conversion-lookback window? A live tROAS strategy without OCI is optimizing against the proxy-value model alone, which drifts from real revenue over multi-quarter cycles. The fix-priority order is fixed values → proxy values → OCI feed → tROAS target, never tROAS first.

VBB is the top of a measurement stack. See Smart Bidding for the bid-strategy family it belongs to, Conversion Tracking for the value parameter that feeds it, Enhanced Conversions for Leads for the GCLID-to-CRM bridge VBB needs in lead-gen accounts, Offline Conversion Import for closing the loop with closed-won revenue, Data-Driven Attribution for the credit model VBB optimizes against, and Smart Bidding Learning Phase for what happens when you switch a campaign onto a tROAS target.

Sources

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