The advantage of setting a maximum conversion value in Google Ads
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Maximum Conversion Value in Google Ads
Data and insights are often used by digital marketers to get the best return on ad spend (ROAS)
The tools and metrics provided by Google Ads help advertisers fine-tune their ad performance.
One such metric that often gets overlooked is the ability to set a maximum conversion value for a conversion action.
Let's explore how this can be helpful, especially when dealing with outliers in your conversion data.
Understanding ROAS disruption with high-value orders
When managing campaigns with a focus on ROAS, advertisers look to achieve the best return for every dollar spent.
The Google Ads algorithm is complex and adjusts itself based on conversion data.
Yet, occasional high-value orders can distort this delicate balancing act.
Imagine a scenario where your online store usually sees an average order value of $600. Suddenly, you get an order for $2,500.
While this is excellent for business, it's an outlier in terms of data.
When the Google Ads algorithm sees this high-value conversion, it might mistakenly interpret it as a new norm.
Consequently, this can lead the algorithm to make bids and decisions assuming more such high-value orders will come.
The solution: capping the conversion value
By setting a maximum conversion value, for instance at $1,000, you're effectively telling Google Ads to consider any conversion above this value as just $1,000. This helps in a few ways:
- Preventing over-optimization: By capping the conversion value, you prevent the algorithm from over-optimizing for those infrequent high-value orders. This ensures that your ads continue to target and serve to the more consistent and average-value audience.
- More stable ROAS: With a more consistent conversion value data set, your ROAS remains more predictable. Advertisers can therefore make more informed decisions and expect more consistent results from their campaigns.
- Balanced adspend: By preventing over-optimization for high-value orders, advertisers ensure a balanced ad spend, targeting a broader audience and not over-allocating resources hoping for another high-value order.
Create your own GTM variable
If you're keen on implementing a capped conversion value to ensure a more balanced and effective ad strategy, I've got you covered!
Visit this detailed guide to learn how you can easily set up a new variable in Google Tag Manager that caps the conversion value.
This tutorial will help you use data to make your campaigns more targeted and efficient. Don't miss out!
Conclusion
Data is the backbone of digital advertising, but not all data points should weigh the same.
By using features like setting a maximum conversion value, advertisers can tell the Google Ads algorithm to perform more in line with their business goals and realities. This will make their advertising strategy more consistent and better.