What You Need to Know About Propensity Modeling and Value-Based Bidding - Adpearance

What You Need to Know About Propensity Modeling and Value-Based Bidding

Google Smart Bidding has transformed how we execute search ads over the past year, and new machine learning-powered bidding continues to offer new bidding strategies for advertisers. Adpearance starts testing new bidding strategies as they are rolled out with the goal of driving more conversions at a lower cost. One of the latest strategies we’ve been testing — maximize conversion value bidding — prioritizes generating conversions most valued by your business. In our testing, we’ve leveraged propensity modeling to maximize the results.

What is Propensity Modeling?

When it comes to any business, the ultimate KPI is sales. However, there are many steps that a user takes before completing the actual sale. These steps could be a website visit (or multiple), VDP views, get-directions page views,  time on site thresholds, pages/session thresholds, calls, form submissions, store visits, and more. A propensity model allows you to assign different values to each of these KPIs that are weighted by the value each of them plays in the path to an ultimate purchase. For example, we would value somebody who calls your dealership to ask about a certain vehicle more highly than a random site visitor.

How Does it Affect a Maximize Conversion Value Bidding Strategy?

A Maximize conversion value bidding strategy pairs propensity modeling and the value of specific conversions to your business with the data-informed AI that executes Smart Bidding. Whereas a maximize conversions bidding strategy attempts to generate the most conversions within a set budget, a maximize conversion value bidding strategy tries to generate the highest collective conversion value.

Maximize conversion value bidding could be the right Smart Bidding strategy for you if you have conversion types of significantly different values for your business. For example, if you know that phone calls convert to sales at 8% and forms convert at 30%, a strategy that prioritizes forms over calls could be a better fit for your business.

What Does This Mean for Adpearance Clients?

We’re testing, we’re learning, and just like max conversions, there’s a certain ‘recipe’ that needs to be developed to make this thing turn into a rocketship. We’re highly confident that we’re going to come out of this testing phase with a propensity model, campaign structure, and advertising strategy that not only exceeds manual bidding efforts but exceeds our current max conversion strategy as well.

Picking the Right Smart Bidding Strategy for Your Business

Do you need some help figuring out which strategy is the best for your business? Adpearance is here to help. Request a free digital analysis to get the conversation started and learn how Adpearance can deliver the performance you’ve been looking for.

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About the Author

Damon Melton

Damon is a senior digital advertising specialist at Adpearance. He stays at the forefront of digital advertising technology to help drive results for auto dealerships.

Adpearance is the digital marketing company obsessed with generating quality leads. Our solutions combine cutting-edge technology, premium tracking, and an expert team to transform business results.

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