Set up Target ROAS for Shopping campaigns
The Target return on ad spend (ROAS) bid strategy fully automates the management of your bids to maximize the value you get from your Shopping campaign. You only have to provide one value: a target return on ad spend or target ROAS. The target ROAS is the total reported value divided by the total cost. For example, if you spend $1 on your Shopping campaign and get a revenue of $5, your return on ad spend is 500%.
This AdWords Smart Bidding strategy considers many different factors for every user search to estimate how likely it is to generate a conversion and what the value of the conversion will be. It uses these estimates to determine the right bid for every one of your products: If a user search is likely to generate a conversion with high value, target ROAS will bid high. If not, the bid strategy will bid low.
This article explains how to set up the Target ROAS bid strategy for your Shopping campaign.
Before you begin
Before you can turn on Target ROAS bidding, you first need to enable conversion tracking for your Shopping campaign. Learn more About conversion values.
For best results, each of your product groups should have more than 200 clicks per week. You can combine product groups to make sure you have a high enough number of clicks.
If you're not sure which AdWords Smart Bidding strategy to use with your Shopping campaign, first learn About automated bidding for Shopping campaigns.
To use the Target ROAS bid strategy, you'll need to complete 2 steps.
Step 1: Set up a Target ROAS bid strategy in your account
- Sign in to your AdWords account.
- Click Shared library in the left sidebar.
- In the Bid strategies section, click View.
- To create a bid strategy, click the + Bid strategy button, and select the "target return on ad spend" bid strategy. Configure your bid strategy based on the options available for "target return on ad spend."
Step 2: Apply the bid strategy to your campaign
Select your target
Your target ROAS is the average conversion value (for example, revenue) you'd like to get for each dollar you spend on ads. Try setting a target ROAS based on the historical conversion value per cost data for the ad groups or campaigns you'd like to apply this strategy to. As a rule of thumb, look into the average conversion value divided by cost from the last 4 weeks.
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 get.
Here are a few tips to check how target ROAS is performing for your campaign:
- Consider giving the bid strategy 15 days to run before you evaluate its performance. Allowing this time to pass gives the strategy time to adapt.
- Make sure that you have enough data to evaluate the strategy’s performance. Consider reviewing your data weekly as opposed to daily, especially if there is little traffic.
- Consider that a number of factors may affect your results over a period of time. Your results may be affected by holidays, weekends, special events, changes to your product data, and your competitors in the auction.
- Look at conversion value, then at conversion value / cost to verify that you are getting enough sales and that you’re close to your target ROAS.
- Remember that your clicks may go down but this is expected since the bid strategy reduces bids for clicks that don't meet your target. It then uses the savings to bid higher for when a conversion seems more likely to meet your target. For the same reasons, your cost per click may go up and down.
- Account for conversion delays. Some conversions take more time than others, in some cases up to days or even weeks. If you compare recent performance with past performance, your recent performance might not look as strong because of conversion delay. Learn how to find a report on your conversion delay.
Here are a few tips to optimize a campaign that's using target ROAS:
- If you want to increase conversion value, consider gradually reducing the target ROAS of your campaigns. This lets the bid strategy know that you are willing to spend more for each conversion, so the strategy will spend more to increase sales and conversion value. If you're familiar with max. CPC bidding, you can think of reducing your target ROAS as similar to increasing your bid.
- If you make significant changes to your campaign, like restructuring your product groups or changing your targets, give the bid strategy time to adjust. This could take a few days for smaller changes and up to 2 weeks for larger changes.
- Review your product groups and consider grouping together products with similar prices to make sure a product group has more than 200 clicks per week.
- In certain cases, you may want to make sure you remain competitive as other advertisers increase their bids. For example, this could apply during a sales period where you want to increase volume. In these cases, consider reducing your target ROAS. The strategy will adjust your bids up resulting in higher volume.