Posted 3 hours ago3 hr comment_12523 Target ROAS is the most sophisticated of Google’s smart bidding strategies. In previous articles, we’ve tackled Maximize Conversions, Target CPA and Maximize Conversion Value. This article explores the ins and outs of Target ROAS bidding, including: What does conversion value mean in Google Ads? What does ROAS mean? How Target ROAS bidding works in Google Ads 8 Expert Tips for using Target ROAS effectively Should you use Target ROAS bidding in Google Ads? What does conversion value mean in Google Ads? Before we can discuss Target ROAS bidding, or even ROAS, we need to understand what “conversion value” means in Google Ads. Conversion value typically means the revenue generated from a conversion. However, if you’re a lead generation business, this could represent a value you assign to different types of leads based on your internal scoring system. In this case, conversion value is not revenue, but rather, how much a conversion is worth to your business. What does ROAS mean? ROAS is a common paid ads acronym that stands for Return On Ad Spend. You can calculate it by dividing conversion value / cost. This is why, in Google Ads, the column you’ll see isn’t labeled “ROAS” but rather “Conv. value / Cost.” In plain English, what is conversion value / cost? Let’s illustrate with an example: If your Conv. value / Cost, is 2.46, that means for every dollar you spent on ads, you got $2.46 back in revenue, or value. How Target ROAS bidding works in Google Ads Now that we have a handle on conversion value and ROAS, let’s explore how the Target ROAS bid strategy operates. With Target ROAS, you’re telling Google the level of efficiency you’re aiming for from your campaigns. For example, if your desired ROAS is 3, you’d input “300%” as your target ROAS in Google Ads. Google’s AI will then work to spend your budget and set your bids in a way that aims to achieve this average return on ad spend for you. To do so, Google considers millions of contextual and audience signals, to determine each user’s likelihood to convert, and the potential value of their conversions – all in the pursuit of hitting your target ROAS. Your “Conv. value / Cost” column will write your ROAS as a decimal (e.g., 3.0) – whereas the Target ROAS field will write your ROAS as a percentage (e.g., 300%). Don’t accidentally put a Target ROAS of 3%, or you will not like the results! 8 expert tips for using Target ROAS effectively Here are some crucial tips to keep in mind if you’re considering or currently using Target ROAS: Conversion volume is key: Generally, you’ll want to have at least 50 conversions within the last 30 days to allow Google’s algorithms enough data to learn and optimize effectively. It’s absolutely possible to use Target ROAS at lower conversion volumes, but it will take longer for the smart bidding algorithm to learn and drive consistent results. Value tracking is essential: If your conversions don’t have associated values, Target ROAS won’t be the right strategy for you. In such cases, consider Target CPA or Maximize Conversions. Set realistic targets: When you first implement Target ROAS, aim for a target that is at or even slightly below your actual ROAS from the previous 30 days (or a longer period if your conversion cycle is longer). Budget management: Ensure your campaigns aren’t consistently limited by budget. A limited budget can restrict the bid strategy’s ability to achieve your target ROAS. If your campaign is budget-constrained, and you can’t or don’t want to increase your budget, then you should gradually increase your ROAS target to limit your opportunity size. Growth vs. efficiency: A high ROAS might sound desirable, but it will limit your reach and growth potential. For example, while bidding only on your brand terms might yield a high ROAS, it won’t help you acquire new customers. Conversely, a ROAS below 2 might mean you aren’t profitable, but perhaps when lifetime value is considered, that calculation changes. Analyze your business metrics to pick the right ROAS target to balance growth and efficiency objectives. Bid adjustments don’t apply: Manual bid adjustments for devices, locations, or audiences are ignored when using Smart Bidding strategies like Target ROAS. Leave bid limits alone: While you can set bid limits with Target ROAS in certain campaign types, I don’t recommend this as it can hinder smart bidding’s ability to optimize effectively. Ad group vs. campaign vs. portfolio targets: You can set a Target ROAS at the ad group level, campaign level, or a portfolio strategy across multiple campaigns. I recommend a campaign or portfolio approach. Should you use Target ROAS bidding in Google Ads? If you’re new to Google Ads, Target ROAS is not the best starting point. It’s a strategy designed for advertisers who: Have been running campaigns for a while. Have consistent conversion data with values. Are looking to scale their results while maintaining a specific return on ad spend. If that sounds like you, then Target ROAS could be the key to achieving your growth and efficiency goals with Google Ads. This article is part of our ongoing weekly Search Engine Land series, Everything you need to know about Google Ads in less than 3 minutes. Every Wednesday, Jyll highlights a different Google Ads feature, and what you need to know to get the best results from it – all in a quick 3-minute read. View the full article
