Value-based bidding is an advanced digital advertising strategy that optimizes bids based on the expected value of conversions rather than just clicks or conversion volume. It uses machine learning and predictive analytics to prioritize ad spend toward users or leads that are likely to generate higher revenue or long-term value for the business, rather than simply maximizing the number of conversions. Here is how value-based bidding works:

• Conversion values are assigned based on the business impact of different actions. For example, in ecommerce, a high-value product purchase might be assigned a higher conversion value than a lower-priced item. In lead generation, more qualified leads might be valued higher than basic form submissions.
• The bidding algorithm uses data such as user behavior, device, time, and historical conversion value patterns to predict the potential value of a click or lead.
• Bids are automatically adjusted in real time to prioritize ad spend on higher-value prospects or conversions.
• This approach aligns campaign optimization with business goals like maximizing return on ad spend (ROAS) or customer lifetime value (CLV).
• Value-based bidding systems continuously learn and improve by integrating conversion performance data back into the model.

Overall, value-based bidding focuses on optimizing for the quality and profitability of conversions instead of just quantity, resulting in more efficient use of marketing budget and better ROI.