---
title: "What is value-based bidding in Google Ads? | Product Metrics"
description: "Value-based bidding in Google Ads aims for the most conversion value, not the most conversions. See how it works, an example and why the value you send matters."
canonical: "https://www.productmetrics.io/glossary/value-based-bidding"
pageType: article
language: en
publisher: "Product Metrics"
author: "Berend Vrakking"
datePublished: 2026-10-16
dateModified: 2026-10-16
---

> Content index: https://www.productmetrics.io/llms.txt

# Value-based bidding

Value-based bidding is Google Ads Smart Bidding that aims for the most conversion value rather than the most conversions.

## Example

Illustrative data: two product orders with revenue and profit as the conversion value:

| Order | Revenue and profit |
| --- | --- |
| Headphones | €100.00 revenue, €10.00 profit before ad spend |
| Phone case | €40.00 revenue, €20.00 profit before ad spend |

Send revenue, and value-based bidding sees a headphones order as worth 2.5 times a phone case order. Send profit before ad spend, and it sees a phone case order as worth twice a headphones order. Same sales, opposite call. Illustrative data.

## Put it into practice

- [Calculate it: Break-even ROAS calculator](https://www.productmetrics.io/break-even-roas-calculator): Apply the definition to your products.
- [Read the guide: POAS](https://www.productmetrics.io/blog/poas-vs-roas): Work through the concept in more detail.

## For one product, and for an account

Google Ads Help says to report two or more unique values for your conversion goals, such as sales revenue or profit margins. Bidding then works from the value each order carries. It never sees your costs, only the number you send.

Send revenue, and a euro from a product with a 25% margin counts the same as a euro from one with a 50% margin. Send profit before ad spend, and the strategy can tell them apart. Full Signal Tracking sends profit to Google Ads as its own conversion action, next to revenue, from an endpoint on your own domain.

Product Metrics stays out of the auction and leaves bids and budgets alone. Its part comes before the auction: each product’s segment, one of six, written to a custom label, so you can set campaigns up per group.

## Common mistake

Switching on a value strategy while every conversion carries the same value. Google Ads Help asks for two or more unique values, because without differences there is nothing to bid on by value.

## Questions

### How does value-based bidding work?

Value-based bidding works from a value you report with each conversion, such as revenue or profit. Smart Bidding then sets the bid in each auction to get the most conversion value, either within your budget or at a target ROAS. Google Ads Help names two strategies: Maximize conversion value and Target ROAS.

### How is value-based bidding different from conversion-based bidding?

Value-based bidding differs from conversion-based bidding in what it aims at. Conversion-based bidding, such as Target CPA and Maximize conversions, aims for the most conversions, whatever each is worth. Value-based bidding aims for the most conversion value, so one large order counts for more than a small one.

### What do you need before you use value-based bidding?

Value-based bidding needs conversion tracking that reports a value with each conversion, with two or more unique values. Google Ads Help advises uploading values for at least four weeks or three conversion cycles before you switch, and aiming for at least 15 conversions a month at account level.

### Should you send revenue or profit as the value?

Send whichever value you want value-based bidding to maximise. Revenue is simplest, but it values a euro from a thin-margin product like a euro from a high-margin one. Profit before ad spend lets the strategy tell them apart, and conversion value divided by cost then reads as a POAS.

## Sources

- [Google Ads Help: About Smart Bidding using value-based bidding for Search and Shopping](https://support.google.com/google-ads/answer/15099424)
- [Google Ads Help: Value-based bidding best practices](https://support.google.com/google-ads/answer/14792795)

## Keep reading

- [Conversion value](https://www.productmetrics.io/glossary/conversion-value): The number value-based bidding aims at.
- [Smart Bidding](https://www.productmetrics.io/glossary/smart-bidding): The family of automated bid strategies it belongs to.
- [Maximize conversion value](https://www.productmetrics.io/glossary/maximize-conversion-value): The strategy that aims for the most value from your budget.
- [Set a target ROAS from your margin](https://www.productmetrics.io/blog/target-roas-from-margin): Turn the value you send into a target.
- [Full Signal Tracking](https://www.productmetrics.io/server-side-tracking): Send profit and revenue to Google Ads as conversion values.
- [Product Segmentation](https://www.productmetrics.io/product-segmentation): See each product in one of six segments, by volume and return.

---

Written by Berend Vrakking, founder of Product Metrics. Last updated 2026-10-16.

HTML version: https://www.productmetrics.io/glossary/value-based-bidding