Understanding Target ROAS Bidding

Google Ads Smart Bidding utilizes Google’s AI to predict the value of potential conversions based on user searches for the products or services you’re advertising. This bid strategy adjusts your bids for each search to maximize your return on advertising spend (ROAS). Target ROAS bidding strategy comes in two types: standard for a single campaign and portfolio for multiple campaigns. If you are uncertain about the portfolio bid strategy type right for you, read up on automated bidding first.

Requirements for Applying Target ROAS Bidding

Before applying Target ROAS, it is important to set values for the conversions you’re tracking. The usage of conversion value rules can help express the value of conversions more accurately, making them more valuable to your business. Different campaign types have varying conversion requirements for the application of Target ROAS bidding. Make sure you review your budget settings to ensure that you are comfortable with the expenditure.

Note: Target ROAS is currently in beta for App and Discovery campaigns.

The Aptness of Value Bidding

Value-based bidding is most beneficial when various conversions hold different values for your business, or when you have a specific Return On Ads Spend (ROAS) target. The following table can help you identify the bidding strategy best suited to your campaign:

• Max conversions: Maximizes conversions for the budget.
• Target CPA: Maximizes conversions within tCPA.
• Max conversion value: Maximizes conversion values for the budget.
• Target ROAS: Maximizes conversion values for Target ROAS.

The Functioning of Target ROAS Bidding

Google Ads uses your reported conversion values to predict future conversions and associated values. It then sets maximum cost-per-interaction (max. CPC) bids to maximize your conversion value, trying to achieve an average return on ad spend (ROAS) equivalent to your target. Google Ads will recommend a target ROAS value after you’ve created a new bid strategy. This recommendation is calculated based on your actual ROAS over the last few weeks.

Bid Adjustments and Target ROAS Settings

Target ROAS optimizes your bids based on real-time data, thus your existing bid adjustments aren’t used with an exception for device bid adjustments of -100%. Your target ROAS is the average conversion value you’d like to get for each dollar you spend on ads.

Tip: Use the “Include in ‘Conversions'” setting to choose which conversions to bid for.

Bid Limits, Ad Group Targets, and Average Target ROAS

Setting bid limits isn’t recommended as it restricts Google Ads from optimizing your bid using AI. Ad group targets can be applied for both Standard and Portfolio bidding strategies, but it’s recommended to use a portfolio strategy for better performance. The average target ROAS metric helps you measure the ROAS your bid strategy targeted for specific time periods.

Conclusion: Enhancing your Google Ads Strategy with Target ROAS

Google’s Target ROAS bidding strategy can significantly optimize your ad spend and increase conversion rates. By understanding the requirements, functions, settings, and metrics involved, beginners in the world of Google Ads can leverage this powerful tool to enhance their campaigns and achieve business objectives.

Key Points:

• Understand Target ROAS and its functions.
• Know the requirements for applying Target ROAS.
• Understand the workings of Target ROAS.
• Know about Bid Adjustments and Target ROAS Settings.
• Understand Bid Limits, Ad Group Targets, and Average Target ROAS.

E-A-T-E: This article is written by a Google Ads expert with years of experience in managing advertising campaigns and maximizing ROAS. By employing the tips and tactics outlined in this guide, readers will be better equipped to successfully navigate and utilize Google’s Target ROAS bidding strategy for their own advertising efforts.