How it works
The Target ROAS (return on ad spend) bid strategy uses Google Ads' AI to manage your bids in any Shopping campaign.
Using Google Ads Smart Bidding, this bid strategy analyzes and uses AI to predict the value of a potential conversion every time a user searches for products you’re advertising. Then, it adjusts your bids for these searches to maximize your return on them.
In practice, this means that if it 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.
This article explains how to set up Target ROAS for any Shopping campaign, and how to monitor and optimize your strategy once it’s in place.
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 tracking
There are 2 parts to setting up Target ROAS: add the bidding strategy to your account, and then tell it what conversion value it should target.
Step 1: 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.
- Select the campaign you want to edit.
- Click Settings in the page menu for this campaign.
- Open Bidding and then click Change bid strategy.
- Select Target ROAS from the drop-down menu.
- Click Save.
Step 2: 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 general rule, 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. Learn more About Target ROAS bidding
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 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.
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 more about 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.
Here are a few tips to optimize a campaign that's using Target ROAS:
Increase conversion value
- If you want to increase conversion value, consider gradually reducing the Target ROAS of your campaigns. This lets the bid strategy know you're willing to spend more for each conversion, so the strategy will spend more to increase sales and conversion value.
- If you're familiar with maximum CPC bidding, you can think of reducing your Target ROAS as similar to increasing your bid.
Review your strategy
- Review your bid strategies and determine if each Target ROAS bid strategy gets at least 15 conversions per month and fully benefits from Target ROAS. Performance will generally 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.