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Target ROAS Bidding Strategy

Target Return On Ad Spend (ROAS) is a new bidding strategy that helps you automatically set bids to maximize bookings and revenue for Hotel Groups.

This section describes the Target ROAS bidding strategy in the following topics:


The following video introduces you to Target ROAS:


Overview of Target ROAS

The Target ROAS bidding strategy helps you achieve an average Return On Ad Spend (ROAS) that is equal to a target amount. This target amount is a percentage value that you set in the Hotel Ads Center. The "ROAS" represents how much revenue you want to earn for each dollar that you spend on Hotel Ads.

You can apply this bidding strategy at the Hotel Group level only.

Target ROAS provides the following key benefits:

  • Automation: Automated, real-time bidding.
  • Flexibility: Define a return on your ad spend at the Hotel Group level.
  • Optimization: Maximize your conversion value, while trying to reach the target.

Prerequisites

This section lists the requirements of your account and your Hotel Groups before you can use Target ROAS.

All accounts must meet the account requirements, and each Hotel Group that you apply Target ROAS to must meet the group requirements (described below).
  • Account Requirements:
    1. Conversion tracking with the following required parameters:
      • hct_base_price
      • hct_currency_code

      While optional, the following parameters also help Google optimize your performance:

      • hct_checkin_date
      • hct_checkout_date
      • hct_partner_hotel_id
      • hct_total_price
    2. Include the following booking values:
      • net_booking_value
      • net_booking_value currency code
  • Hotel Group Requirements:
    1. At least 15 conversions in the past 7 days
    2. Minimum ROAS of 100% for the past 7 days

If your Hotel Group does not have at least 15 conversions in the past 7 days, set a Max CPC bid and accumulate conversions before using Target ROAS with that group.

How Target ROAS Works

The Target ROAS bidding strategy predicts future conversions and associated values by using your reported conversion values, which you assign through conversion tracking. Then, Target ROAS sets a maximum Cost-Per-Click (CPC) bid while trying to achieve an average return on ad spend (ROAS) equal to your target.

To help improve your performance in ad auctions, the Target ROAS strategy adjusts bids using real-time details such as the end-user’s device and location, Google property, geographic location, itinerary, and hotel price. Some conversions may have higher cost per value than others, but altogether, Hotel Ads attempts to keep the cost per conversion value equal to the target that partners set.

For general information on conversion tracking and how Google uses conversion tracking data, see Track sales and other conversions.

Calculating the ROAS percentage

The minimum ROAS percentage is 200%. The maximum is 3,000%.

To determine an appropriate ROAS percentage, determine how many bookings you want for your ad spend.

For example, if your goal is $500 worth of bookings for each $100 you spend on Hotel ads, then your Target ROAS is 500%. This means that for every $100 that you spend on ads, you want 5 times that in revenue. The following formula describes how the 500% figure is calculated:

$500 in sales ÷ $100 in ad spend x 100% = 500% Target ROAS

If you lower your ROAS percentage, then your bids will be more competitive, which can result in a higher ad rank position.

Conversion metrics

Conversion metrics including ROAS can be updated one or more days after a click occurs depending on when an individual user converts.

Final amount you're charged

Your actual ROAS may be above or below your target ROAS. Your actual ROAS depends on factors outside of Google's control, such as changes to your website or ads or increased competition in ad auctions. In addition, your actual conversion rate can be lower than the predicted conversion rate.

Setting up Target ROAS

Use Hotel Ads Center to define your bidding strategies and set the Target ROAS on Hotel Groups.

To set up Target ROAS for a Hotel Group:

  1. Open the Hotel Ads Center.
  2. Select Dashboard in the Navigation Bar.
  3. Click the Hotel Group you want to set up Target ROAS for in the Performance Summary Table.
  4. Click the Edit button in the Default Bid Editor.
  5. Select the Target Return on Ad Spend (ROAS) bid type.
  6. Enter a percentage in the Target input field, as the following example shows:

    NOTE: Google recommends that you set the initial ROAS target to the current ROAS achieved by the group. Note that your actual ROAS may be above or below the target that you set. For more information, see Viewing current ROAS.
  7. Click the Save button.

     

    After you set your Target ROAS, Hotel Ads sets your CPC bids for that group to maximize your conversion value, while trying to reach the target. This setting replaces any individual hotel bids in that group.

Note that your actual ROAS may be above or below the target that you set.

Viewing current ROAS

You can view the current net ROAS for a Hotel Group by using the Dashboard view of the Hotel Ads Center. This gives you a general idea of what your Target ROAS should be. When you first set up Target ROAS, best practice is to set your initial bid to match the current ROAS for each Hotel Group. Note that your actual ROAS may be above or below the target that you set.

To view current ROAS for a Hotel Group:

  1. Open the Hotel Ads Center.
  2. Select Dashboard in the Navigation Bar.
  3. Select a Hotel Group.
  4. From the Select columns drop-down list, select ROAS (net), as the following example shows:

     

    Hotel Ads Center updates the Dashboard view with the new column.

The Target ROAS bid strategy uses the "ROAS (net)" metric as the target, if one is available. If you report only your gross booking value, then Target ROAS falls back to "ROAS (gross)" as the target. Use the instructions above to view this column.

Best practices

This section lists some best practices when setting up and using the Target ROAS bidding strategy.

Setting up Target ROAS

  1. To get the best Target ROAS bids, your Hotel Groups should have at least 20 conversions per day. (The minimum is 15.) If your groups do not have this many conversions per day, consider merging some groups together when using Target ROAS.
  2. When creating a Hotel Group with which you want to use Target ROAS, include only hotels that have similar ROI.
  3. Before applying Target ROAS to a Hotel Group, ensure that the group has at least 15 conversions in the past week. If not, you should set a Max CPC bid and accumulate conversions before using Target ROAS with that group.
  4. Allow the Hotel Group to accumulate traffic for at least 7 days.
  5. Ensure conversion tracking is well implemented on all Points of Sale and all devices. Outages in conversion tracking (complete or partial) can significantly impact the Target ROAS bid optimizer, and lead to reduced volumes for some time.

Defining a target

  1. Set reasonable targets and use current performance as a starting point. Review the ROAS (net) column in the Dashboard view for each Hotel Group for the last 30 days. When you initially set up Target ROAS, best practice is to set the Target ROAS to be the same as the group's current ROAS; you can then adjust as needed after performance reaches the initial target. For information on viewing ROAS data, see Viewing current ROAS.
  2. Organize hotels into different Hotel Groups, depending on margin value or volume. Target ROAS may perform better when partners group hotels with similar ROI goals. For more information, see Group Editor Tab.
  3. Tune the ROAS gradually.
  4. Do not change your target ROAS more than once every few weeks. This gives you time to account for any conversion delays and give ROAS bidding strategy time to adjust.

Tuning and evaluating

  1. The more data Hotel Ads has, the more able it is to make optimized ROAS bids.
  2. Keep in mind that changes in ad performance are natural, and you may need to use ROAS bidding strategy for some time to get an accurate understanding of its effects on your campaign's performance.
  3. Do not make large changes to a campaign while running the Target ROAS bidding strategy. (For example, do not remove all hotel IDs and replace them with new ones.)
  4. Do not remove your conversion tracking code from your website or move it to a different location while running the Target ROAS bidding strategy. These kinds of changes can result in significant changes in which clicks lead to reported conversions. If you do change your conversion tracking code, the Target ROAS bidding strategy might need up to several weeks to adjust to these changes.
  5. Compare your ROAS and conversion rate before and after using the Target ROAS bidding strategy to gauge its impact on your campaign.

Frequently Asked Questions

This section lists common questions and their answers for using the Target ROAS bidding strategy.

Q: Does Target ROAS ever bid above the Maximum Bid Cap set in the budget tab?

No, the Target ROAS bid strategy will never use a bid higher than your Maximum Bid Cap. Note that this might impact performance and lead volume if your Maximum Bid Cap cap is set too low.

Q: Is ROAS bidding based on the net value reported in the conversion tracking pixel?

Yes, it’s based on net value, but partners are required to provide this by using the parameter listed above in the conversion pixel. If the conversion tracking pixel doesn’t provide the net price for a conversion, Hotel Ads will use the reported total price as a fallback.

Q: On what levels can partners apply Target ROAS Bid Strategy?

Partners can apply Target ROAS at the Hotel Group level only.

What if I set a different bidding strategy at the account level and Target ROAS at the Hotel Group level?

Hotel Group bids override the account default bid — the more specific bid takes precedence. For example, if you set the account default bid to a max CPC of 1%, and set the bid for a group to a Target ROAS of 700%, the group will use the Target ROAS bid; other hotels in the account (without overrides) will use the account default.

 

Q: What happens to my CPC bids when setting a ROAS bid?

When setting a ROAS bid at the Hotel Group level, all hotel-level CPC bids in that Hotel Group are deleted.

Q: Is it possible to run concurrent bid options when Target ROAS is set as the group default?

Target ROAS will override all other bids at hotel group level. If a hotel group is set to Target ROAS bid strategy, it can't have another bid strategy at group level.

Q: What data does Google use that differs from bidding strategies currently used by partners?

Hotel Ads ROAS bidding strategy takes into account different signals that adjust partner bids based on the ad’s predicted performance. Hotel Ads uses signals such device, Google property, location, itinerary, and hotel price. Note that Target ROAS can set different bids for desktop vs. tablet traffic based on differences in conversion rates.

Q: What kind of information/data does Google use to begin an initial bid estimate?

The Target ROAS bid strategy uses past performance of the account to generate and update bids. In cases where there is no historical conversion data, the ROAS bid strategy uses a generic model to estimate performance until enough historical conversion data is gathered.

 

Q: How does Hotel Ads report on Target ROAS?

Reporting is available in the Hotel Ads Center dashboard where ROAS and other conversion metrics can be found in the column selector, in the performance reports available via the Intelligence tab, and via the Reports API.

Q: How does the Target ROAS bid strategy interact with the CPC auction?

When using the Target ROAS bid strategy, Hotel Ads sets cost-per-click (CPC) bids for partners’ hotels to help achieve the specified return on ad spend.

Q: Can partners use Target ROAS if they also use the commission (net of cancellations) bidding strategy?

Yes, all partners who implement the requirements can use Target ROAS on their Hotel Groups, regardless of other bidding strategies they have available. However, groups can use only one bidding strategy at a time.

For example Partner A has 3 Hotel Groups and is eligible to also use commissions:

  • Group 1 can have a CPC (percent bid) and hotels in that group can have bid overrides.
  • Group 2 can have a Target ROAS bid.
  • Group 3 can have a commission bid.

Q: What is the difference between Target ROAS and the commission bidding strategies?

Both Target ROAS and the commission bidding strategies try to automate your bids and achieve maximum booking value at the partner’s cost target:

  • The Target ROAS bid strategy optimizes bids based on the value reported by the conversion tracking pixel (i.e. at booking time), and advertisers pay per click. It is available only at the Hotel Group level.
  • The commission bidding strategy optimizes bids based on the reported value of consumed guest stays, and advertisers pay per guest stay. Commission bidding is available for qualified partners through the Google Hotel Ads Commission Program (GHACP).

Q: Can I limit my campaign to specific countries when using target ROAS?

No, to try to maximize bookings at the specified ROAS target, the Target ROAS bidding strategy bids for traffic in all user countries. Target ROAS will not bid to limit coverage, but normal account-level settings such as Point of Sale configuration and any rate rules and private rates can limit your participation. These would limit participation for any other bidding strategy as well.

Q: What do I do if I use a Target ROAS bid strategy but am unhappy with the performance of clicks and/or impressions?

Target ROAS optimizes for conversion value and not for clicks or impressions. If you're interested in optimizing for clicks, consider using the Max CPC bidding strategy.

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