What is target ROAS (tROAS) bidding?
How does target ROAS work?
ROAS is the conversion value credited to ads divided by ad spend. In target ROAS bidding, you set the number. Google sets the bids at auction time to aim for it across the campaign1.
Google's example is a target of 500 per cent, which means 5 units of conversion value for every 1 unit spent1. It is an average, not a promise for each click.
It is one of several automated bid strategies. It is the sibling of target CPA, which aims for a cost per conversion instead of a return.
Why is a target ROAS not a business target?
The target is a setting. It says what return you ask Google to aim for. It says nothing about whether that return makes money.
Break-even is a different number. Break-even ROAS is the lowest ROAS at which ads do not lose money on the orders they bring: 1 divided by margin. Sources differ on which margin. Our convention is contribution margin before marketing: what is left per order after goods, shipping, payment fees and returns. A target ROAS set below break-even asks Google to lose money efficiently.
The conversion values also matter. Google predicts future conversion values from the values you report1. If returns, discounts or fake orders are in those values, they shape the bids.
For ZFD: In our view, the target starts from break-even and gets checked against a test where one is affordable. A ROAS in the panel is where the question starts. Our wider view is in paid media strategy for ecommerce. For where to set the bar, read what is a good ROAS for ecommerce.
Worked example
Easily confused with
Target ROAS vs Break-even ROAS
A business number, from your margin. Target ROAS is a platform setting. Do not use them as synonyms.
Target ROAS vs A "good" ROAS
There is no universal good number. It depends on your margin.
Target ROAS vs Target CPA
Aims for a cost per conversion, not a return.
Target ROAS vs POAS
Profit on ad spend. Counts profit, not revenue.
FAQ
Is target ROAS the same as ROAS?
No. ROAS is a result. Target ROAS is the result you ask Google to aim for.
Why is the target a percentage?
Google asks for it that way. A target of 500 per cent means 5 units of value per unit spent1.
Does a target ROAS guarantee that return?
No. Google says some conversions may return a higher ROAS and some a lower one, and that a target set too high may limit how much traffic your ads get1.
Sources
- About Target ROAS bidding - Google Ads HelpPrimary source
Let’s find what’s actually working.
Next step. Check what your ROAS looks like on explicit assumptions. Use the Is your ROAS real? calculator.