Advertising
Value-Based Bidding
Value-based bidding is a paid media strategy where ad platform algorithms optimize bids based on the predicted value of each conversion rather than treating all conversions equally. It allocates more budget to clicks likely to generate higher revenue or lifetime value.
Examples
An ecommerce advertiser implements value-based bidding by passing actual purchase values back to the ad platform, enabling the algorithm to bid more aggressively for high-value shoppers.
Best Practices
Pass accurate conversion values including offline and downstream revenue, allow sufficient learning period before evaluating performance, and segment value-based campaigns by product category.