Target return on ad spend (ROAS) helps you specify where you want your ROAS at the bid strategy level. Target ROAS is based on cost per click, and it optimizes bids against predicted conversion value as opposed to predicted conversion rate.
Target ROAS is suitable for you if you would like to automatically optimize bids to maximize ROI (return on investment). You can also choose Target ROAS if you have already passed or want to pass conversion values through Google Ads Conversion tracking pixel, imported GA goals, or offline imported conversions.
Benefits
With Hotel Ads Target ROAS, you get several benefits that can help you save time and improve performance.
- Spend less time managing bids
- Use a diverse set of signals in your bid optimizations, including: device, location, browser, check-in date, and time of day
- Only platform on the market to set a bid for each and every auction.
- Smart bidding at no additional costs
Target ROAS lets you weigh each individual conversion action based on the total value it provides to your business. This gives you increased alignment between business and advertising objectives.
How it works
Things to note before setting up Target ROAS:
- Conversion tracking implementation is required before setting up Target ROAS. Learn more about how to set up conversion tracking.
- Only booking values is compatible with Hotel Ads campaigns.
- Conversion category must be set to "Purchase" to be used for Hotel ads Smart Bidding campaigns (ECPC, tROAS).
The Target ROAS bid strategy uses Google AI to manage your bids in any Hotel Ads campaign. In practice, this means that if the Target ROAS determines that a user search is likely to generate a conversion with high value, Target ROAS will bid high on that search. If it determines that the search isn’t likely to generate a high-value conversion, it’ll bid low.
In addition to using Target ROAS, conversion value rules are also compatible with Hotel Ads campaigns. By using conversion value rules, like within Search campaigns, you can better express the value of conversions with Target ROAS as they relate to your business and easily adjust for conversions based on geographic location, device, and audiences at auction time bidding in real time. Learn more about conversion value rules and the impact of conversion rules on Smart Bidding and performance.
Instructions
There are 2 parts to setting up Target ROAS: add the bidding strategy to your account, and then tell it what return on ad spend it should target.
Step 1 of 2: Set up a Target ROAS bid strategy in your account
- In your Google Ads account, click the Campaigns icon
.
- Click the Campaigns drop down in the section menu, then click Campaigns.
- Hover over the campaign you want to edit and select the Settings icon.
- Under the “Bid settings”, click the “Bidding” drop down, and then click Change bid strategy. In the drop down menu under Change bid strategy, select “Maximize conversion value” and add the Target ROAS percentage by selecting the “Set a target return on ad spend (optional)” checkbox.
- Click Save.
Step 2 of 2: Select your target
Your Target ROAS is the average conversion value (for example, revenue) that 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 general rule, look into the average conversion value divided by cost from the last 4 weeks.
Example
Let’s say you’ve set the conversion value as $5 USD and the cost is $1 USD. Your tROAS will be 500% per following formula and calculation:
Conv. value / Cost * 100% = tROAS
5 / 1 * 100 = 500%
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. Learn more About Target ROAS bidding.
Set a target ROAS that’s right for you
Before transitioning to value-based bidding, ideally you will be already bidding to the desired conversion goal using a tCPA bid strategy. Be sure to report values across all relevant campaigns for 4 weeks or 3 conversion cycles (whichever is longer) before determining your ROAS target and activating value-based bidding. Learn more about changing biddable conversion goals.
Your ROAS target should be at or below the ROAS compared to your historical performance.
To find this, 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.
Ensure the time frame of your ROAS evaluation excludes the most recent conversion delay period to get an accurate view of campaign performance.
Target recommendations can also be found in the Recommendations tab, during campaign construction or while creating a strategy at the campaign or portfolio levels.
Monitor Target ROAS performance
Here are a few tips to check how Target ROAS is performing for your campaign:
Analyze over time
- Consider giving the bid strategy at least 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 campaign data, and your competitors in the auction.
Wait for changes
- Account for conversion delays. Some conversions take more time than others, in some cases up to days or even weeks after a click. If you compare recent performance with past performance, your recent performance might not look as strong because of conversion delay. Learn how to Find out how long it takes for your customers to convert.
- Change your ROAS targets to meet your changing marketing objectives. Target ROAS reacts to your target changes quickly, but may take some time to calibrate based on your conversion delay.
Track conversion value
- Look at conversion value and then at conversion value divided by cost. This can help you verify that you’re getting enough sales and that you’re close to your Target ROAS.
- Remember that Target ROAS might reduce your clicks. Don’t worry, because 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.
Optimize campaigns
Here are a few tips to optimize a campaign that's using Target ROAS:
Adjusting bids and budgets is the best way to control performance
- Adjust Targets: When using value-based bidding with a target ROAS, if you want to increase conversion volume, consider gradually reducing the target ROAS. This allows the bid strategy to enter more auctions and generate more volume. Alternatively, if you want to increase conversion value, you may raise the target ROAS. When you change targets, the bidder will react immediately but will need some time to hit the new target (give it 1-2 conversion cycles). Learn more about How to make target adjustments with Search Smart Bidding.
Review your strategy
- Review your bid strategies and determine if each Target ROAS bid strategy gets at least 50 conversions per week at the campaign level and fully benefits from Target ROAS. Performance can improve with fewer, larger campaigns, and more conversions.
- You might consider ways to make sure you remain competitive as other advertisers increase their bids. For example, bids might increase during a sales period or a change in season. In these cases, consider reducing your Target ROAS. The strategy will adjust your bids up, resulting in higher volume.
