An Intro to Weighted Revenue: Your Path to Smarter Bidding on Google
We don’t have lots of back-end controls in Google Ads these days with everything moving to AI, but we do have a secret weapon that helps us bid more efficiently: weighted revenue.
In this post, I’ll introduce you to the concept of weighted revenue and what kinds of businesses should consider using it in their bidding strategy.
First…
What is weighted revenue?
In the context of marketing (and not in sales, which references weighted revenue to make sales revenue forecasts based on pipeline), weighted revenue is the practice of placing different values on different conversions within Google Ads. You can express these in actual dollar amounts or more abstract values, but for the purposes of introduction, we’ll focus on actual dollar amounts.
Using weighted revenue helps marketers tell Google the difference between conversions and valuable conversions, which is the missing piece of Google’s bidding algorithm – it’s king in driving conversion volume with efficiency, but unless expressly taught, it doesn’t know what conversions are most valuable for your business.
While eCommerce companies should absolutely assign different CPAs for different products, weighted revenue is most useful for B2B companies with long, multi-stage sales cycles where factors like lead quality, lead scoring, and the sales journey all come into play.
In B2B you likely have different conversion events you’re looking to drive. These could include a click on a pricing page, a content download, a blog subscription, a demo request, or completing a purchase. Those conversions all carry very different values, so you shouldn’t be just using one blanket CPA and letting Google optimize to the easiest/most top-of-funnel conversions. Instead, use weighted revenue to train Google to prioritize converters who will progress further down the funnel. Essentially, you can map your conversions to different stages in the funnel to function as a “bidding roadmap” for Google to meet your efficiency goals throughout the customer journey.
One important complement to weighted revenue is the integration of CRM data – particularly when leads progress from on-site activity, like form fills, to offline activity, like attending a demo or being manually qualified by sales. Integrating offline activity, either through offline conversion tracking or API integration into Google Ads, gives Google a more complete picture of lead activity and teaches Google the right users to engage at each stage of the buying journey.
What’s the business impact of using weighted revenue?
Why should you care about this initiative? What kind of a difference should you expect it to make in your campaigns?
Before we get to the good stuff, understand that weighted revenue will not help you drive more leads. If you use it effectively, it’s likely you’ll see a mild to moderate drop in upper-funnel conversion volume/efficiency – but you’ll more than make up for it with improved down-funnel volume and efficiency. In other words, you’ll bring in slightly fewer leads and/or pay more for those leads, but your pipeline will be a lot stronger for it.
In the chart below, you’ll see that when we used weighted revenue in combination with tROAS bidding for a B2B client, we dramatically lowered the cost per quality lead. Our overall CPL didn’t change, but we brought more leads into the system likely to convert into eventual revenue.
In subsequent posts, we’ll talk about how exactly to calculate weighted revenue and how to avoid common mistakes in employing it in your campaigns.
By Ethan Paash