What is Target Return On Ad Spend?

What is target ROAS?

Target ROAS is a flexible bid strategy which represents the average conversion value (for example, revenue), an advertiser would like to reach for each dollar spent on ads. An example of target ROAS is a 500% bid, where the target is to generate, or return $500 worth of sales for every $100 of advertising spent.

How does target ROAS work?

Using conversion tracking data, target ROAS will attempt to achieve an average return on ad spend (ROAS) equal to the target set by predicting the associated values of future conversions and then setting maximum CPC bids to maximize the conversion value while trying to achieve an average return on ad spend equal to the target set. Target ROAS will adjust the bid strategy using real-time details like device, browser, location and time of day. AdWords will also recommend a target ROAS value after successfully setting up a new bid strategy in the Shared library and selecting which campaigns to apply it to. Advertisers can choose whether to use the recommended target ROAS value or set their own.

What are the requirements for target ROAS?

In order to configure target ROAS the following conditions must be met:

  • Conversion values must have been configured.
  • That the campaigns using “target ROAS” have achieved more than 15 conversions in the last 30 days and have consistently reported 30 days of conversion history.
  • That the keyword, ad group or campaign has experienced  a consistent rate of conversion values for at least a few days.

Precautions

  1. Target ROAS cannot be used for “Display Network Only – Mobile apps” campaign type or the “Display Network only” campaign type with “Install your mobile app” or “Engage with your mobile app” objectives.
  2. Because target ROAS optimizes bids based on real-time data, the existing bid adjustments are not used. With the exception of being able to set mobile bid adjustments of -100%.
  3. Setting bid limits for target ROAS is not recommended. It can restrict AdWords’ automatic optimization of the bid and also prevent AdWords from adjusting bids to the amount which best meets the target ROAS. Bid limits will be used only in the Search Network auctions.

Tips

  1. To find the target ROAS percent, multiple the conversion value per cost metric by 100.
  2. The “Include in Conversions” setting lets advertisers decide whether or not to include individual conversion actions in the “Conversions” reporting column. The bid strategy will optimize based on the conversions that were chosen to be included. Choosing not to include a conversion action in the conversion column means that the automated bid strategy won’t bid for these particular conversions.
  3. The “Include cross-device conversions” setting lets advertisers include cross-device conversions in the “Conversions” column and in the conversion-based bid strategies. Cross-device conversions.