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ROAS (return on ad spend) is a metric that allows you to set a conversion value you want for the amount spent on your ad. Once set, google optimizes your ad bids (amount paid for a keyword) to realize your expectation.
This metric help business running lead campaigns to see the bigger picture of their campaign. With it, they can determine if their ad provides the returns they want and the following action to take.
How does it work?
Target ROAS is a percentage-based strategy that requires past ad campaign data and conversion tracking to secure the best outcome in conversion value.
To exploit this strategy, you need to calculate what your target ROAS should be. You can easily determine this from your best-performing ad campaign under the Conv. Value / cost column.
Alternatively, you can do the same by calculating (amount) sales ÷ (amount) ad spend x 100.
If your target in returns is $200 for each $50 spent, your target ROAS will be 200 ÷50×100= 400%.
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Things to be mindful of in ROAS?
You need conversion tracking enabled to guarantee returns on your investment. Google won’t know if its actions result in the results you are after and when to adjust your bids to better your outcome without this.
To make this metric suitable for your lead efforts, you need to have data from a recently concluded ad campaign with at least 40 to 50 conversions within a month. This enables google ads to make more intelligent decisions on your bids to maximize returns.
Starting on your new campaign, you shouldn’t set your ROAS too high. This will restrict Google from testing and driving the most conversion value for your ad. Start a bit lower and optimize as you go. So, if your top-performing ad return is $50, you should start somewhere around $40.
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Frequently asked questions
Target ROAS improves your ad to achieve the desired profit from your investment. It is usually calculated as a percentage, but it requires conversion tracking, historical data, and realistic expectations. You can click here to learn more.
Maximize clicks is an automated bidding strategy that helps businesses drive the most click-throughs on their ads call-to-action while spending their daily budget. Click here to explore strategies for boosting your sales.
Maximize Conversion automatically adjusts bids based on lead performance, ensuring optimal results for your budget. To delve deeper into this strategy, click here for more insights.