First, let’s define what is Target ROAS. This machine learning algorithm is used in search, display and shopping campaigns to get an average conversion value defined for each dollar spent on ads. For example, if you set a goal of 800% as a Target ROAS bid, Google Ads will aim to produce $8 in revenue for every $1 spent on ads. In general, as the algorithm is looking for conversions that bring a valuable ROAS, the higher the Target ROAS goal is, the less traffic it will bring. Indeed, the algorithm is only looking for “worthy” conversions, meaning conversions that will bring the ROAS goal you previously set.
Our PPC experts in ADCORE have been working for months now with the Target ROAS bidding strategy and want to share their best practices to help you achieve better results.
Timing and conversions numbers
This might be logical but do not start a shopping campaign using Target ROAS. Instead, start with enhanced CPC and then wait for your campaign to have at least 30 conversions per month with a ROAS on goal or not too far from your goal. Once you have reached this number, you can switch your campaign to Target ROAS but remember that once you have set your campaign to Target ROAS you should not touch it for the next week as the algorithm is in the learning period. When switching, we advise to set the target ROAS as the actual ROAS in the last 30 days and then every 3 days, if the ROAS adjust to its target, increase it. Important note, if you see that on manual bidding strategy, your campaign is on goal and reach its daily budget easily, make sure to adjust the budget to leave more room to your campaign to succeed. You do not want to miss out on conversions.
After one week, check your campaign to see where it stands at. First, compare the last two weeks with the period before to see if you got more conversions and/or if your conversion value improved as well as your ROAS. If you see positive results, check the budget and increase it if needed. But remember: do not do big changes. This means that all changes made should not be too extreme. For instance, if you increase or decrease your budget, avoid changes higher than 30%. Big changes can undermine the algorithm’s work. If you see poorer results, adjust the Target ROAS accordingly and then check it 2 or 3 days later. What is great about Target ROAS strategy is that you do not have to optimize the bids on the keywords level, audience level, or any other level since it is all automated and changing the bids would cause the campaign to start the learning process over.