Bidding & Budgets
Target ROAS (tROAS)
Target ROAS is a Google Ads Smart Bidding strategy that sets bids automatically to achieve an average return on ad spend you specify across a campaign or portfolio.
In practice
With Target ROAS you tell Google the return you want, and the algorithm predicts conversion value for each auction and bids accordingly. Set the target high and the campaign becomes conservative, skipping auctions it believes will not hit the number; set it low and it spends more freely. The strategy needs a stable stream of conversion value data, ideally dozens of purchases per month per campaign, or its predictions are noise.
The common mistakes are launching with a target the campaign has never achieved, changing the target every few days, and pairing tROAS with a budget so small the algorithm cannot explore. We set the initial target near the campaign's trailing 30-day ROAS, move it in small steps no more often than weekly, and never change it without noting the change so we can attribute what happened next.
A counterintuitive point: raising the target does not raise ROAS in a straight line. Past a certain point it just cuts volume, and you end up with a great ratio on a tiny number.
Why it matters
It is the most common bidding strategy in e-commerce accounts and the most common thing to be misconfigured.
See it in a real accountWhiskey Caviar: category Performance Max on target ROAS, $18.9M at 7.6x in 20 months
RELATED TERMS
ROAS (Return on Ad Spend)
ROAS is revenue attributed to advertising divided by the cost of that advertising, expressed as a multiple such as 5x or a percentage such as 500%.
Smart Bidding
Smart Bidding is Google's set of automated, conversion-based bid strategies (Target CPA, Target ROAS, Maximize Conversions, Maximize Conversion Value) that set auction-time bids using machine learning signals.
Target CPA (tCPA)
Target CPA is a Smart Bidding strategy that sets bids to generate as many conversions as possible at or near an average cost per conversion you specify.
Written by Ilya Bulychev, Founder, Live PPC Ads. Part of the PPC Glossary.
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