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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 optimised 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 CPA bidding works and what the settings are.

Before you start

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, find out 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 that 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 maximise 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 Target ROAS based on the conversion value (for example, revenue) that you'd like to get for each pound that you spend on ads. The conversion can be based on installs or in-app events.

Some conversions may return a higher ROAS and some may return a lower ROAS, but all together AdWords will try to keep your conversion value per cost equal to the target ROAS that you set. For example, if you set a target ROAS of 500%, AdWords will automatically adjust your bids to try to maximise 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 such as 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.

Example

Let's say that you're measuring sales for your online women's shoe shop and you want to optimise your bids based on the value of a shopping basket total. Your goal is £5 worth of sales (this is your conversion value) for each £1 that 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 maths:

£5 in sales ÷ £1 in ad spend x 100% = 500% target ROAS

Then, AdWords will automatically set your Max. CPC bids to maximise 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 optimise 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 adjustmentsthey just won’t be used.

Settings

Target ROAS

Your target ROAS is the average conversion value (for example, revenue) that you'd like to get for each pound that you spend on ads. Bear in mind that the target ROAS that you set may influence the conversion volume that you get. For example, setting a target that's too high may limit the amount of traffic that 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 that you'd like to apply this strategy to. This will help you to maximise your conversion value, while reaching the same return on ad spend that 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 per cent.

Bid limits

Setting bid limits for target ROAS is not recommended because it can restrict AdWords’ automatic optimisation 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 that 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 that 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 customise how you bid for conversions:

  • The Include in "Conversions" setting lets you decide whether or not to include individual conversion actions in your "Conversions" reporting column. The data in this column is used by bid strategies like target CPA, target ROAS and ECPC, so your bid strategy will only optimise based on the conversions that you've chosen to include. Find out more
  • The Include cross-device conversions setting lets you include cross-device conversions in your “Conversions” column and in your conversion-based bid strategies. Find out 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 optimised collectively for a single target. But by using a standard strategy, you can set individual targets for each ad group.

Bear in mind that 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 optimised for. It averages the changes that 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 optimised for over that period. Bear in mind that 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.

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