Target ROAS lets you bid based on a target return on ad spend (ROAS). This bid strategy helps you get more conversion value or revenue at the target ROAS you set.
Target ROAS is available as either a standard strategy for a single campaign (for Google Ads client accounts only) or a portfolio strategy across multiple campaigns (for all client accounts). This article explains how Target ROAS bidding works and what its settings are.
How it works
The automated bidding system predicts conversions and associated values using your reported conversion values, which you report through conversion tracking. Then, the bidding system will set maximum cost-per-click (max. CPC) bids to maximize your conversion value, while trying to achieve an average ROAS equal to your target across all campaigns using this strategy.
Some conversions may return a higher ROAS and some may return a lower ROAS, but the bidding system will try to keep your conversion value per cost equal to the target ROAS you set. For example, if you set a target ROAS of 500%, the bidding system will use AI to adjust your bids to try to maximize your conversion value, while reaching this target ROAS. To help improve your performance in the ad auction, this strategy adjusts bids using real-time signals like device, browser, location, time of day, etc. Google's AI also adjusts bids based on whether or not someone is on one of your remarketing lists.
The bidding system will recommend a target ROAS value after you’ve set up a new bid strategy in the Shared library and chosen which campaigns to apply it to. This recommendation is calculated based on your actual ROAS over the last few weeks. The bidding system will exclude performance from the last few days to account for conversions that may take more than a day to complete following an ad click. You can choose whether to use this recommended target ROAS value or to set your own.
Example
Let's say you're measuring sales for your online women's shoe store and you want to optimize your bids based on the value of a shopping cart total. Your goal is $5 worth of sales (this is your conversion value) for each $1 you spend on ads. You'd set a target ROAS of 500% - for every $1 you spend on ads, you'd like to get 5 times that in revenue.
Here's the math:
$5 in sales ÷ $1 in ad spend x 100% = 500% target ROAS
Then, the bidding system will use AI to set your max. CPC bids to maximize your conversion value, while trying to reach your Target ROAS of 500%.
Bid adjustments and Target ROAS
Bid adjustments allow you to show your ads more or less frequently based on where, when, and how people search. Because Target ROAS helps optimize your bids based on real-time data, your existing bid adjustments are not used. There is one exception: you can still set mobile bid adjustments of -100%. Note that you don’t need to remove bid adjustments—they just won’t be used.
Settings
Target ROAS
Your target ROAS is the average conversion value (for example, revenue) you'd like to get for each dollar you spend on ads. Keep in mind that the target ROAS you set may influence the conversion volume you get. For example, setting a target that's too high may limit the amount of traffic your ads may get.
Here are a few tips to help you set a target ROAS that’s right for you:
- Try setting a target ROAS based on the historical conversion value per cost data for the campaigns you'd like to apply this strategy to. This will help you maximize your conversion value, while reaching the same return on ad spend your campaigns have been getting.
- To find your historical conversion value per cost data, you'll need to select Modify columns from the “Columns” drop-down and add the Conv. value/cost column from the list of "Conversions" columns. Then, multiply your conversion value per cost metric by 100 to get your target ROAS percent.
Bid limits
Setting bid limits for target ROAS is not recommended because it can restrict the bidding system from optimizing your bid using Google's AI. It can also prevent the bidding system from adjusting your bids to the amount that best meets your target ROAS. If you do set bid limits, they’ll be used in Search Network auctions only.
- Max. bid limit: The highest manual CPC bid you want the bidding system to set for any keywords, ad groups, or campaigns using target ROAS.
- Min. bid limit: The minimum max. CPC bid you want the bidding system to set for any keywords, ad groups, or campaigns using target ROAS. Note that the bidding system might set a max. CPC bid that's below your minimum bid limit, generally due to smart pricing. This means that the bid limit you set here isn't the absolute lowest bid that could be set.
Ad group targets
You can apply Ad group targets for both Standard and Portfolio bidding strategies
Keep in mind, if you don’t need to set targets for individual ad groups, a portfolio strategy may be able to offer better performance.
Average target ROAS
Your average target ROAS is the cost-weighted average ROAS that your bid strategy optimized for. It averages the changes you’ve made to your target ROAS for any given time period. For this reason, your average target ROAS may be different from the target ROAS that you set.
This metric lets you measure the ROAS that your bid strategy targeted for specific time periods. By changing the date range, you can see what your strategy actually optimized for over that period. Keep in mind, you won’t have an average target ROAS for time periods without traffic.
You can find this metric in your bid strategy report beside your “Actual ROAS”, which represents the actual ROAS that this strategy was able to achieve. You can also find this metric in the campaigns table by selecting “Avg. Target ROAS” from the “Performance” category when adding a new column, or by adding it to the performance chart. Average target ROAS is available for both standard and portfolio bid strategies.