About Target ROAS bidding

Note: Starting in 2021, you’ll see optional target fields in Search campaigns for new Maximize conversions or Maximize conversion value bid strategies. With an optional target, Smart Bidding will optimize to these goals the same way it would for Target CPA (cost per action) and Target ROAS (return on ad spend). Maximize conversions with a set target CPA will behave like a Target CPA strategy does today, and similarly, Maximize conversion value with a set target ROAS will behave like a Target ROAS strategy does today.

Learn more about Changes to how Smart Bidding strategies are organized

Using Google Ads Smart Bidding, this bid strategy analyzes and intelligently predicts the value of a potential conversion every time a user searches for products or services you’re advertising. Then, it automatically adjusts your bids for these searches to maximize your return on them.

In practice, this means if the bid strategy determines that a user search is likely to generate a conversion with high value, Target ROAS will bid high on that search. If this bid strategy determines that the search isn’t likely to generate a high-value conversion, it’ll bid low.Your bids are automatically optimized at auction-time, allowing you to tailor bids for each auction. Review Your Guide to Smart Bidding.

Target ROAS is available as either a standard strategy for a single campaign or a portfolio strategy across multiple campaigns. If you don’t yet know what type of portfolio bid strategy is right for you, review About automated bidding first. If you have Shopping campaigns, review automated bidding for Shopping campaigns.

This article explains how Target ROAS bidding works and what its settings are.

Before you begin

  • Before you can apply a Target ROAS bid strategy to your campaigns, you’ll need to set values for the conversions you're tracking.
  • You can apply conversion value rules to better express the value of conversions as they relate to your business, and optimize towards conversions from the types of users who are more valuable to you. Use conversion value rules to apply a multiplication factor to conversion values for higher value types of customers, devices, or locations.
  • To use Target ROAS bidding, most campaign types need at least 15 conversions in the past 30 days.
    • Display campaigns: At least 15 conversions (with valid conversion values) in the past 30 days across all of your campaigns combined. New Display campaigns no longer require you to have a history of conversions to use Target ROAS bidding.
    • App campaigns: At least 10 conversions every day (or 300 conversions in 30 days).
    • Discovery campaigns: At least 75 conversions in the past 30 days (10 of these conversions must have occurred in the past 7 days). Target ROAS is currently in beta for Discovery campaigns.
Tips:
  • For Search campaigns, If you recently started reporting conversion value or changed the way conversion value is reported, we recommend you include the new values in the "Conversions" column and wait 6 weeks for your campaign to receive conversion values at a similar rate before adopting.
  • We also recommend reviewing your budget settings to make sure you feel comfortable spending up to 2 times your average daily budget. Over a month-long billing cycle, you won't be charged more than your average daily budget would've allowed for over 30.4 days. For App campaigns, it is also recommended to run a Target Cost Per Action campaign type before running a Target ROAS ;campaign type to understand a baseline ROAS as you set your initial ROAS target. Failure to set a proper initial target ROAS can cause poor performance or low scale.
Note:
  • Target ROAS is currently in beta for App and Discovery campaigns.
  • For App campaigns, you'll also have to install the Google Analytics for Firebase SDK in your app. The conversion events that you are bidding on (and sending values with) should come from the Firebase SDK.
  • Performance will generally improve if you run fewer, larger campaigns that get more conversions.

How it works

Google Ads predicts future conversions and associated values using your reported conversion values, which you report through conversion tracking. Then, Google Ads 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.

Some conversions may return a higher ROAS and some may return a lower ROAS, but altogether Google Ads 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%, Google Ads will automatically adjust your bids to try to maximize your conversion value, while reaching this target ROAS (see details of the example below). To help improve your performance in the ad auction, this strategy adjusts bids using real-time signals such as device, browser, location, and time of day. It also automatically adjusts bids based on whether or not someone is on one of your remarketing lists.

Google Ads will recommend a target ROAS value after you’ve created a new bid strategy or selected an optimization score recommendation, and selected 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 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, Google Ads 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: You don’t need to remove bid adjustments—they just won’t be used.

Create a new bid strategy

You can create a Target ROAS bid strategy for a single campaign (standard strategy) or multiple campaigns (portfolio bid strategy) in the following ways:

  • Create with a new campaign.
  • Create or change from campaign settings.
  • Create from the Shared library “Bid strategies” page.

To create a bid strategy, review Set up Smart Bidding.

Settings

Target ROAS

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:

  • When available, use the target recommended in places like the Recommendations page in your account. Targets recommended are based on your historical performance, while accounting for conversion delays.
  • Try setting a target ROAS based on the historical data of conversion value per cost for the 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 campaigns have been getting. You should also account for conversion delays.
  • 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. Ensure the time frame of your ROAS evaluation is in line with your in-app action’s conversion window so that you get the most accurate view of campaign performance.

Bid limits

Setting bid limits for Target ROAS is not recommended because it restricts Google Ads from automatically optimizing your bid. It can also prevent Google Ads from adjusting your bids to the amount that best meets your target ROAS. Bid limits are available for Search and Shopping portfolio bid strategies. If you do set bid limits, they’ll be used in Search Network auctions only, and are only available for portfolio bid strategies.

  • Max. bid limit: The highest CPC bid you want Google Ads to set when using Target ROAS.
  • Min. bid limit: The minimum max. CPC bid you want Google Ads to set when using Target ROAS. Note that Google Ads 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 which conversions to bid for

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 about the "Include in 'Conversions'" setting

Cross-device conversions from Display Network, Video, Search, and Shopping campaigns are included by default.

Ad group targets

You can apply Ad Group Targets for both Standard and Portfolio bidding strategies. With a portfolio strategy, your campaigns, ad groups, and keywords are optimized collectively for a single target. Alternatively, you can set individual targets for each ad group but this is not recommended because it can restrict Smart Bidding.

Note: You can set individual target CPA or target ROAS bids at the ad group level, but the strategy used to place bids will now be controlled at the portfolio level.

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.

Note: This feature is not applicable with Target ROAS for App campaigns for installs, Shopping, or Discovery campaigns.

Average target ROAS

Your average target ROAS is the traffic-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’ll find the average target ROAS metric in the performance table at the top of your “Campaigns” page, so that you can evaluate actual performance against target performance. Select “Avg. Target ROAS” from the “Performance” category when adding a new column, or by adding it to the performance chart.

Where you’ll see these metrics

The average target ROAS 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 add a column to view your average Target ROAS metric in the performance table so that you can evaluate actual performance against target performance. At the top of your “Campaigns” table select the column icon A picture of the Google Ads columns icon under the “Performance” category, or by adding it to the performance chart. Select “Avg. target ROAS”, “Avg. target cost per install”, or “Avg. target cost per in-app action” from the “Performance” category when adding a new column.

You can also find this metric in your bid strategy report beside your “Actual ROAS”, which represents the actual ROAS that this strategy was able to achieve. Learn how to find your bid strategy reports

Average target ROAS is available for both standard and portfolio bid strategies.

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