What, When & Tips to Do It Right
For those who are conversion-focused in their paid search strategy, maximizing the profitability of your advertising efforts is a top priority. Google offers a variety of Smart Bidding strategies that can allow you to drive more conversions at a cost you are comfortable with. However, if you want to take that strategy to the next level and focus solely on driving a positive return on investment, you may want to consider Target ROAS (tROAS) bidding. This automated bidding strategy isn’t a one-size-fits-all solution to making every advertiser money on Google Ads, however, for many, it can make a huge impact. In this post, I will dive into:
- What is Target ROAS?
- Who should use it
- How to set your tROAS
I’ll also be sharing tips throughout to get the most out of your budget. Let’s begin.
What is Target ROAS?
Target ROAS or “tROAS” stands for “target return on ad spend” and falls under Google’s category of Smart Bidding strategies. These are automated bid strategies that use “auction-time bidding”—meaning Google will optimize for conversion or conversion value in every auction that you enter.
What is ROAS?
Return on ad spend measures the amount of revenue your business earns for each dollar it spends on advertising. It’s ROI, where the investment is your spend on ads—in this case, Google Ads. You can measure ROAS at the account, campaign, ad group, and ad level in Google Ads. In the case of bidding strategies, these are set at the portfolio, campaign, or ad group level.
The path to Target ROAS
Max Conversions
Maximize Conversions or “Max Conversions” is an automated bid strategy that is designed to get you as many conversions as possible within your daily budget.
Target CPA
Target CPA stands for Target Cost Per Action and is the next level on the conversion-focused automated bidding evolutionary scale.
Max Conversion Value
This bidding strategy works very similarly to the Max Conversions Strategy but instead of optimizing for conversion volume, it looks to maximize conversion value.
Target ROAS
Target ROAS is located under the Max Conversion Value option. Google Ads predicts future conversions and associated values using those conversion values you have assigned on the conversion tracking level.
When to use Target ROAS bidding strategy
In order to properly use tROAS, you have to assign values to conversion actions. By nature of the name “return on ad spend” these conversion values should reflect revenue that you generate as a result of the users converting on your ads.
- Don’t use tROAS if: your Google Ads conversions do not generate a direct return on investment (i.e., ebook downloads or free tools).
- Do use tROAS if: your Google Ads conversions do drive a direct return on investment (i.e, online sales).
How to set up Target ROAS
Setting up conversion values
You have the ability to assign conversion values to either existing or newly created conversion actions within your Google Ads account.
What should I set my target ROAS to?
When selecting tROAS as your bidding strategy, you’ll notice that you’ll have to specify a percentage of return that you would like the campaign to target.
Final tips for Target ROAS
On a platform as complex as Google Ads, choosing the right bidding strategy for your campaigns is one of many important decisions marketers have to make.
Google’s Smart Bidding has proven to be an effective method to optimize Search, Display, and Shopping campaigns. Outside of intelligent campaign planning and structure, the most important factor in efficient Smart Bidding is how much data Google is receiving to make the proper optimizations for you.
Correctly establishing the proper tracking is half the battle when it comes to running successful tROAS campaigns.
FAQs
1. What is the main difference between Target CPA and Target ROAS?
Target CPA adjusts your bids to meet a predefined cost per conversion goal, while Target ROAS adjusts bids to maximize the value of those conversions.
2. How do I know if Target ROAS is the correct strategy for my business?
If your Google Ads conversions drive a direct return on investment, such as online sales, then Target ROAS may be the right strategy for you.
3. Can I use Target ROAS if my conversions do not have a direct monetary value?
No, Target ROAS is best suited for conversions that have a direct return on investment associated with them.
4. What factors should I consider when setting my target ROAS percentage?
Consider the conversion values you are optimizing for and aim to maximize profitability while achieving a positive return on ad spend.
5. How important is proper tracking in running successful Target ROAS campaigns?
Correctly establishing the proper tracking is essential for the success of Target ROAS campaigns, as it allows for data-driven decisions and optimizations.
