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About Target ROAS bidding - Google Ads Help

Our guided troubleshooter can help you identify, explain, and address potential causes of unexpected fluctuations in your Performance Max campaign spending.

Note: Starting July, you’ll find optional target fields in Search campaigns for new Maximize conversions or Maximize conversion value bid strategies. Be aware that for Video Action campaigns, these are 2 different bidding strategies. With an optional target, Smart Bidding will optimize to these goals the same way it would for Target CPA (cost per action) and Target ROAS (return on ad spend). Maximize conversions with a set target CPA will behave like a Target CPA strategy does today, and similarly, Maximize conversion value with a set target ROAS will behave like a Target ROAS strategy does today.

Hotel and Travel campaigns only support Maximize conversion value with a mandatory target ROAS.

Learn more about Changes to how Smart Bidding strategies are organized.

What is Target ROAS bidding

Using Google Ads Smart Bidding, this bid strategy analyzes and uses Google's AI to predict the value of a potential conversion every time a user searches for products or services you’re advertising. Then, Google's AI adjusts your bids for these searches to maximize your return on them.

In practice, this means if the bid strategy determines that a user search is likely to generate a conversion with high value, Target ROAS will bid high on that search. If this bid strategy determines that the search isn’t likely to generate a high-value conversion, it’ll bid low. Google's AI optimizes your bids at auction-time, allowing you to tailor bids for each auction. Review Your Guide to Smart Bidding.

Target ROAS is available as either a standard strategy for a single campaign or a portfolio strategy across multiple campaigns. If you don’t yet know what type of portfolio bid strategy is right for you, review About automated bidding first. If you have Shopping campaigns, review automated bidding for Shopping campaigns.

Note: If you have a Hotels or a Travel campaign, portfolio strategy is not available.

This article explains how Target ROAS bidding works and what its settings are.

On this page

Before you begin

Before you can apply a Target ROAS bid strategy to your campaigns, you’ll need to set values for the conversions you're tracking.
You can apply conversion value rules to better express the value of conversions as they relate to your business, and optimize towards conversions from the types of users who are more valuable to you. Use conversion value rules to apply a multiplication factor to conversion values for higher value types of customers, devices, or locations.
To use Target ROAS bidding, most campaign types need at least 15 conversions in the past 30 days.
- Display campaigns: At least 15 conversions (with valid conversion values) in the past 30 days across all of your campaigns combined. New Display campaigns no longer require you to have a history of conversions to use Target ROAS bidding.
- App campaigns: At least 10 conversions every day (or 300 conversions in 30 days).
- Demand Gen campaigns: At least 50 conversions in the past 35 days (10 of these conversions must have occurred in the past 7 days) in the campaign, or 100 conversions in the past 35 days (across all Demand Gen campaigns in the customer account).
  - Note: Conversions must have a value greater than 0 to be counted as eligible. Campaigns that are eligible for Target ROAS will be automatically allowlisted.
- Video Action Campaigns: At least 30 conversions in the past 30 days.
- Hotel campaigns: At least 50 conversions per week at a campaign level.
- Travel campaigns: At least 50 conversions in the past 7 days at a campaign level.
For Search campaigns, if you recently started reporting conversion value or changed the way conversion value is reported, we recommend you include the new values in the "Conversions" column and wait for 4 weeks or 3 conversion cycles for your campaign to receive conversion values at a similar rate before adopting.
We also recommend reviewing your budget settings to make sure you feel comfortable spending up to 2 times your average daily budget. Over a month-long billing cycle, you won't be charged more than your average daily budget would've allowed for over 30.4 days. For App campaigns, it's also recommended to run a Target Cost Per Action campaign type before running a Target ROAS campaign type to understand a baseline ROAS as you set your initial ROAS target. Failure to set a proper initial target ROAS can cause poor performance or low scale.

Note:

For App campaigns, you'll also have to install the Google Analytics for Firebase SDK in your app. The conversion events that you're bidding on (and sending values with) should come from the Firebase SDK.
Performance will generally improve if you run fewer, larger campaigns that get more conversions.

How it works

Google Ads predicts future conversions and associated values using your reported conversion values, which you report through conversion tracking. Then, Google Ads will set maximum cost-per-interaction (max. CPC) bids to maximize your conversion value, while trying to achieve an average return on ad spend (ROAS) equal to your target.

Note: Conversion tracking, purchase conversion values (full booking amount) and setting “Purchase” conversion category is required for all Hotel Ads using Smart Bidding strategies.

Some conversions may return a higher ROAS and some may return a lower ROAS, but altogether Google Ads will try to keep your conversion value per cost equal to the target ROAS you set. For example, if you set a target ROAS of 500%, Google Ads will adjust your bids to try to maximize your conversion value, while reaching this target ROAS (find details of the example below). To help improve your performance in the ad auction, this strategy adjusts bids using real-time signals such as device, browser, location, and time of day. It also uses AI to adjust bids based on whether or not someone is on one of your remarketing lists.

Google Ads will recommend a target ROAS value after you’ve created a new bid strategy or selected an optimization score recommendation, and selected which campaigns to apply it to. This recommendation is calculated based on your actual ROAS over the last few weeks. We’ll exclude performance from the last few days to account for conversions that may take more than a day to complete following an ad click or interaction (such as an engaged view). You can choose whether to use this recommended target ROAS value or to set your own.

Example

Let's say you're measuring sales for your online women's shoe store and you want to optimize your bids based on the value of a shopping cart total. Your goal is $5 USD worth of sales (this is your conversion value) for each $1 USD you spend on ads. You'd set a target ROAS of 500% - for every $1 USD you spend on ads, you'd like to get 5 times that in revenue.

Here's the math:

$5 USD in sales ÷ $1 USD in ad spend x 100% = 500% target ROAS

Then, Google Ads will set your max. CPC bids to maximize your conversion value, while trying to reach your target ROAS of 500%.

When to use value bidding

Value based bidding is most helpful if various conversions have different value for your business or if you have a specific Return On Ads Spend (ROAS) target that you're trying to achieve.

The table below can help you find out which bidding strategy is best for your campaign.

Max conversions

Target CPA

Max conversion value

Target ROAS

Goal

Maximize conversions for budget

Maximize conversions within tCPA

Maximize conversion values for budget

Maximize conversion values for Target ROAS

When

Priority is to spend the budget
No specific ROI target.
Conversions optimized to have similar values for your business.

Specific ROI target.
Conversions optimized for similar values for your business.

Priority is to spend the budget.
Conversions have different value for your business.
No specific ROI target.

Specific ROI target.
Conversions optimized for different values for your business.

Bid adjustments and Target ROAS

Bid adjustments allow you to show your ads more or less frequently based on where, when, and how people search. Because Target ROAS helps optimize your bids based on real-time data, your existing bid adjustments aren't used. There is one exception: You can still set device bid adjustments of -100%.

Note: You don’t need to remove bid adjustments. They just won’t be used.

Implementation Create a new bid strategy

You can create a Target ROAS bid strategy for a single campaign (standard strategy) or multiple campaigns (portfolio bid strategy) in the following ways:

Create in a new campaign.
Create or change from campaign settings.
Create from the Shared library “Bid strategies” page.

To create a bid strategy, review Set up Smart Bidding.

Settings Target ROAS

Your target ROAS is the average conversion value (for example, revenue) you'd like to get for each dollar you spend on ads. Keep in mind that the target ROAS you set may influence the conversion volume you get. For example, setting a target that's too high may limit the amount of traffic your ads may get.

Here are a few tips to help you set a target ROAS that’s right for you:

Before transitioning to value-based bidding, ideally you will already be bidding to the desired conversion goal using a tCPA bid strategy. Be sure you report values across all relevant campaigns for 4 weeks or 3 conversion cycles (whichever is longer) before determining their ROAS target and activating value-based bidding. Learn more about changing biddable conversion goals.
ROAS target should be at or below the ROAS compared to your historical performance.
- To find this, select Modify Columns from the “Columns” drop-down and add the Conv. value/cost column from the list of "Conversions" columns. Then, multiply conversion value per cost metric by 100 to get your target ROAS percent.
Ensure the time frame of ROAS evaluation excludes the most recent conversion delay period to get an accurate view of campaign performance.
Target recommendations can also be found in the Recommendations tab, during campaign construction, within the bid simulator or while creating a strategy at the campaign or portfolio levels.

Bid limits

Setting bid limits for Target ROAS isn't recommended because it restricts Google Ads from optimizing your bid using AI. It can also prevent Google Ads from adjusting your bids to the amount that best meets your target ROAS. Bid limits are available for Search and Shopping portfolio bid strategies. If you do set bid limits, they’ll be used in Search Network auctions only, and are only available for portfolio bid strategies.

Max. bid limit: The highest CPC bid you want Google Ads to set when using Target ROAS.
Min. bid limit: The minimum max. CPC bid you want Google Ads to set when using Target ROAS. Note that Google Ads might set a max. CPC bid that's below your minimum bid limit, generally due to smart pricing. This means that the bid limit you set here isn't the absolute lowest bid that could be set.

Tip: Choose which conversions to bid for

The Include in "Conversions" setting lets you decide whether or not to include individual conversion actions in your "Conversions" and "Conversion value" reporting columns. The data in these columns are used by bid strategies like Target CPA, Target ROAS, and ECPC, so your bid strategy will only optimize based on the conversions that you've chosen to include. Learn more About account-default conversion goals.

Smart Bidding will learn across all conversion actions reported in the “Conversions” column, even if they are configured for different goals and/or use different bidding strategy types. Cross-device conversions from Display Network, Video, Search, and Shopping campaigns are included by default. This isn't applicable for Hotel campaigns.

Ad group targets

You can apply Ad Group Targets for both Standard and Portfolio bidding strategies. With a portfolio strategy, your campaigns, ad groups, and keywords are optimized collectively for a single target. Alternatively, you can set individual targets for each ad group but this isn't recommended because it can restrict Smart Bidding.

Note

: You can set individual

target CPA

target ROAS

bids at the ad group level, but the strategy used to place bids will now be controlled at the portfolio level.

Keep in mind, if you don’t need to set targets for individual ad groups, a portfolio strategy may be able to offer better performance.

Note: Portfolio bid strategy isn't applicable with Target ROAS for App campaigns for installs, Shopping, Demand Gen, Hotel, or Travel campaigns.

Average target ROAS

Note: Average target ROAS is only supported for Performance Max, Search, and Shopping campaigns. It doesn't support Hotel campaigns.

Your average target ROAS is the traffic-weighted average ROAS that your bid strategy optimized for. It averages the changes you’ve made to your target ROAS for any given time period. For this reason, your average target ROAS may be different from the target ROAS that you set.

This metric lets you measure the ROAS that your bid strategy targeted for specific time periods. By changing the date range, you can learn what your strategy actually optimized for over that period. Keep in mind, you won’t have an average target ROAS for time periods without traffic.

You’ll find the average target ROAS metric in the performance table at the top of your “Campaigns” page, so that you can evaluate actual performance against target performance. Select “Avg. Target ROAS” from the “Performance” category when adding a new column, or by adding it to the performance chart.

It's recommended to monitor your campaign performance and average target over time.

Where you’ll find these metrics

The average target ROAS metric lets you measure the ROAS that your bid strategy targeted for specific time periods. By changing the date range, you can learn what your strategy is actually optimized for over that period. Keep in mind, you won’t have an average target ROAS for time periods without traffic.

You can add a column to view your average Target ROAS metric in the performance table so that you can evaluate actual performance against target performance. At the top of your “Campaigns” table, select the column icon under the “Performance” category, or by adding it to the performance chart. Select “Avg. target ROAS”, “Avg. target cost per install”, or “Avg. target cost per in-app action” from the “Performance” category when adding a new column.

You can also find this metric in your bid strategy report beside your “Actual ROAS”, which represents the actual ROAS that this strategy was able to achieve. Learn how to Find your bid strategy reports.

Average target ROAS is available for both standard and portfolio bid strategies.

Troubleshooting

Adjusting bids and budgets is the best way to control performance.

When using value-based bidding with a target ROAS, if you want to increase conversion volume, consider gradually reducing the target ROAS. This allows the bid strategy to enter more auctions and generate more volume. Alternatively, if you want to increase conversion value, you may raise the target ROAS. When you change targets, the bidder will react immediately but will need some time to hit the new target (give it 1-2 conversion cycles). Account for bid changes when assessing performance by assessing ROAS performance over time versus average target within the bid simulator. Learn How to make target adjustments with Search Smart Bidding.

Follow these troubleshooting tips to set a target ROAS that’s right for you:

Before transitioning to value-based bidding, ideally you will be already bidding to the desired conversion goal using a tCPA bid strategy. Be sure to report values across all relevant campaigns for 4 weeks or 3 conversion cycles (whichever is longer) before determining your ROAS target and activating value-based bidding.
Your ROAS target should be at or below the ROAS compared to your historical performance.
To find this, select Modify columns from the “Columns” drop-down and add the Conv. value/cost column from the list of "Conversions" columns. Then, multiply your conversion value per cost metric by 100 to get your target ROAS percent.
Ensure the time frame of your ROAS evaluation excludes the most recent conversion delay period to get an accurate view of campaign performance.
Target recommendations can also be found in the Recommendations tab, during campaign construction, within the bid simulator or while creating a strategy at the campaign or portfolio levels.