Target ROAS lets you bid based on a target return on ad spend (ROAS). This Google Ads 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. 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 campaigns, you’ll need to set values for the conversions you're tracking. For App campaigns, you'll also have to install the Google Analytics for Firebase SDK in your app. The conversion events that you're bidding on (and sending values with) should come from the Firebase SDK.
Note: Target ROAS is currently in beta for App campaigns.
- To use target ROAS bidding, most campaign types need at least 20 conversions in the past 45 days. The exception is Search campaigns, which need at least 15 conversions in the past 30 days. To maximise 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.
- If you recently started reporting conversion value or changed the way that conversion value is reported, we recommend you include the new values in the ‘Conversions’ column and wait six weeks for your campaign to receive conversion values at a similar rate before adopting target ROAS. For App campaigns, you'll need at least 10 conversions every day (or 300 conversions in 30 days).
- We also recommend reviewing your budget settings to make sure you feel comfortable spending up to two 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's also recommended that you run a target cost-per-action campaign type before running a target return-on-ad-spend 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.
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 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, Google Ads will try to achieve an average ROAS equal to your target across all campaigns using this strategy.
- For Display Network campaigns, Google Ads will achieve an average ROAS equal to your target across all campaigns using this strategy.
- For Shopping campaigns, Google Ads will try to achieve an average ROAS equal to your target across all campaigns using this strategy.
- For App campaigns, Google Ads will try to achieve an average ROAS for your campaign based on installs or in-app events you selected within the conversion window of your selected conversions.
Some conversions may return a higher ROAS and some may return a lower ROAS, but all together Google Ads 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%, Google Ads 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 like device, browser, location, time of day, etc. It also automatically adjusts bids based on whether someone is on one of your remarketing lists.
Google Ads 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 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 five times that in revenue.
Here's the maths:
£5 in sales ÷ £1 in ad spend x 100% = 500% target ROAS
Then, Google Ads 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 display 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 aren't used. There is one exception: You can still set mobile bid adjustments of -100%.
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 campaigns that you'd like to apply this strategy to. This will help you maximise your conversion value, while reaching the same return on ad spend that your 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. 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.
Setting bid limits for 'target ROAS' isn't recommended because it can restrict Google Ads’ automatic optimisation of your bid. It can also prevent Google Ads 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 that you want Google Ads to set for any keywords, ad groups or campaigns using 'target ROAS'.
- Min. bid limit: The minimum max. CPC bid that you want Google Ads to set for any keywords, ad groups or campaigns 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 that 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 optimise 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 optimised collectively for a single target. But by using a standard strategy, you can set individual targets for each ad group.
Bear 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 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. You can also find this metric in the campaigns table by selecting “Avg. Target ROAS” from the “Performance” category when adding a new column, or by adding it to the performance chart. Average target ROAS is available for both standard and portfolio bid strategies.