About Target ROAS bidding
Target ROAS lets you bid based on a target return on ad spend (ROAS). This AdWords Smart Bidding strategy helps you get more conversion value or revenue at the target return-on-ad-spend (ROAS) you set. Your bids are automatically optimized at auction-time, allowing you to tailor bids for each auction.
Target ROAS is available as either a standard strategy for a single campaign or a portfolio strategy across multiple campaigns, ad groups, and keywords. This article explains how Target ROAS bidding works and what its settings are.
Before you begin
If you don’t yet know what type of portfolio bid strategy is right for you, read About automated bidding first. If you have Shopping campaigns, learn more About automated bidding for Shopping campaigns.
Before you can apply a Target ROAS bid strategy to your ad groups or campaigns, you’ll need to set values for the conversions you're tracking.
To use Target ROAS bidding, your campaign must have at least 15 conversions in the past 30 days. To maximize results and give machine learning algorithms enough data to make informed bidding decisions, we recommend that you have at least 50 conversions in the past 30 days. It also helps if your keyword, ad group, or campaign has received conversion values at a similar rate for at least a few days.
How it works
AdWords predicts future conversions and associated values using your reported conversion values, which you report through conversion tracking. Then, AdWords will set maximum cost-per-click (max. CPC) bids to maximize your conversion value, while trying to achieve an average return on ad spend (ROAS) equal to your target.
Using Target ROAS with different campaign types:
- For Search Network and Search Network with Display Select campaigns, AdWords will try to achieve an average ROAS equal to your target across all keywords, ad groups, and campaigns using this strategy.
- For Display Network campaigns, AdWords will achieve an average ROAS equal to your target across all ad groups and campaigns using this strategy.
- For Shopping campaigns, AdWords will try to achieve an average ROAS equal to your target across all ad groups, and campaigns using this strategy.
- For Universal App campaigns, AdWords will try to achieve an average ROAS for your campaign based on installs or in-app events you selected.
Some conversions may return a higher ROAS and some may return a lower ROAS, but altogether AdWords 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%, AdWords will automatically 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. It also automatically adjusts bids based on whether or not someone is on one of your remarketing lists.
AdWords 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. We’ll 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.
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, AdWords will automatically 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.
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 keywords, ad groups, or 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 keywords, ad groups, or 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.
Setting bid limits for “target ROAS” is not recommended because it can restrict AdWords’ automatic optimization of your bid. It can also prevent AdWords 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 AdWords to set for any keywords, ad groups, or campaigns using “target ROAS.”
- Min. bid limit: The minimum max. CPC bid you want AdWords to set for any keywords, ad groups, or campaigns using “target ROAS”. Note that AdWords 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.
Tip: Choose what conversions to bid for
The following conversion tracking settings let you customize how you bid for conversions:
- The Include in "Conversions" setting lets you decide whether or not to include individual conversion actions in your "Conversions" and "Conversion value" reporting columns. The data in these columns are used by bid strategies like target CPA, target ROAS, and ECPC, so your bid strategy will only optimize based on the conversions that you've chosen to include. Learn more
- The Include Display cross-device conversions setting lets you include cross-device conversions from Display Network campaigns in your “Conversions” column and in your conversion-based bid strategies. Cross-device conversions from Search and Shopping campaigns are included by default. Learn more
Ad group targets
You can apply an individual target ROAS to your ad groups by using a standard campaign strategy. With a portfolio strategy, your campaigns, ad groups, and keywords are optimized collectively for a single target. But by using a standard strategy, you can set individual targets for each ad group.
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.
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. Average target ROAS is available for both standard and portfolio bid strategies.