Calculate a starting ROI target

How do you decide the best CPA, ERS, or ROAS target for a Search Ads 360 bid strategy? The best practice is to start with a target that closely matches your current CPA, ERS, or ROAS. That is, establish a baseline based on current spend, and see if you can use bid strategies to improve upon your baseline.

For example, if you've been spending $25 on search advertising for each car rental, the best practice is to start off your bid strategy with a $25 CPA.

Search Ads 360 provides a couple of options for finding a starting target:

• Bid strategy opportunities:  Bid strategy opportunities automatically find campaigns that direct traffic to a goal that you define, and then recommend a starting spend target for those campaigns that would benefit from a Search Ads 360 bid strategy.

• Campaign report with Floodlight metrics: You can use the same campaign report from the previous step to find your current CPA, ERS, or ROAS

Use a campaign report to find the current target

Instead of performing the calculations to find the current target, let bid strategy opportunities do the calculations for you. 

1. View the campaign report from the previous step.
2. Make sure you've selected one of the following from the View menu:
   • Actions if your goal is to increase the number of conversions
   • Sales if your goal is to increase revenue
3. Make sure the date range is the past 30 days.
4. If you're only planning to include one campaign in the bid strategy, the current spend amount will be in one of these columns:
   • Cost/action: Appears in the Actions view by default. Displays the CPA for the report's time range.
   • ERS: Appears in the Sales view by default. Displays the effective revenue share for the report's time range.
   • ROAS: Appears in the Sales view by default. Displays the return on advertising spend for the report's time range.
5. If you're planning to include more than one campaign, you'll need to calculate the spend amount:
   • CPA: To calculate CPA for multiple campaigns, sum up the total Cost for the campaigns. And sum up the total number of Actions for the campaigns.
     Then divide total cost by total actions:
     total cost / total actions
   • ERS: To calculate ERS for multiple campaigns, sum up the total Cost for the campaigns. And sum up the total Revenue for the campaigns.|
     Then divide total cost by total revenue:
     total cost / total revenue
   • ROAS: To calculate ROAS for multiple campaigns, sum up the total Cost for the campaigns. And sum up the total Revenue for the campaigns.
     Then divide total revenue by total cost:
     ​total revenue / total cost

Once you establish a starting target and let the bid strategy run for a couple of weeks, you can use a Search Ads 360 bid strategy forecast to try out other targets and view the tradeoffs between them. For example, you can start a bid strategy with a $25 CPA target and let it run for a couple of weeks. Once the bid strategy is established, a forecast can estimate whether a lower or higher CPA might be more efficient for your business.

Controlling spend

Within each campaign, bid strategies never spend more than the budget you specify in the campaign's settings. But the best way to control the amount spent by a bid strategy is through the ROI target that you specify for the bid strategy.

Think of the bid strategy's target as the ideal spend amount, and the campaign budget as a stopgap to prevent the bid strategy from going beyond the absolute maximum you'd ever want to spend.

That's another reason why it's best to start with a target that matches your current spend amount. It's likely that the bid strategy will spend the same as the current amount, or within range that's close to the current amount.

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