New Bid Strategy – Target Return On Ad Spend (ROAS)

Google announced a new bid strategy to target return on Ad spend. Google did this as a part of a larger initiative to give more flexibility and control over the performance of Ad spends. In the next few weeks you will see target ROAS bid strategy roll into your account.

This new strategy will no doubt help you increase your revenue as it allows you to automatically adjust your ad group, keywords, and campaign level bids. This in turn improves revenue. This new feather essentially allows you to fix your desired revenue for each and every penny you spent on AdWords. For example if your goal is to earn $10 for every dollar you spent, your target ROAS should be 1000%.

The technology used for this feature is the same as the one used for Enhance CPC and Target CPA. ROAS considers signals like browser, location, operating system, time of the day, and many more and adjusts your bids accordingly so that you go close to your desired performance.

For example you are marketer that has multiple products. You would generally bid higher on keywords that get you bulk orders and lower on keywords that get you smaller orders. But doing this manually takes a lot of time.

Here is how ROAS can help you:

  • Setting up conversion values in conversion tracking enables AdWords to understand the order value on your site.
  • You can choose your ROAS percentage that closely matches your marketing objectives.
  • You can create Target ROAS strategy in a shared library.
  • Integrate your target ROAS with flexible bid strategy
  • Apply the new ROAS bid strategy for ad groups, keywords, and campaigns

Once you have applied this strategy to certain keywords in your account AdWords takes over and predicts if a click will lead to higher value orders or not. Based on the probability it sets unique bids for each click. All this is done while keeping your ROAS target in mind. All these processes happen in real time whenever your ad is shown to potential consumers. Thus your bids are optimized and you achieve your goals or reach very close to them.

If this explanation is falling short of your expectations, please do visit the AdWords Help Center and learn more about it. This is truly a remarkable addition by Google.