Reach Return on Ad Spend Goals With This Automatic Bid Strategy

Considering the whole of AdWords automatic bidding strategies, many campaigns choose to look at how they can best generate conversions. One way to maximize your conversions and get the most out of your advertising spend is with the strategy known as Target ROAS (return on ad spend). Today, Atria will discuss how you can use this strategy to your advantage. Prepare for some hard work, though, because this one demands some planning.

What is Target ROAS?

Before we get into the details, think back to Atria’s previous features on Target CPA and Enhanced Cost-per-click. Both those strategies try to gain you the most conversions possible for your dollar. They beg the question: Couldn’t I just tell AdWords how much return I want reflected in each conversion?

You can. In Target ROAS, you tell AdWords that you want to spend, for instance, $1 for every $5 a customer spends on your goods. Then AdWords adjusts your maximum cost-per-click bids to reach customers who, on average, will spend 500 percent more (in this example) than you spend on your ads.

Some customers will spend more and some will spend less. Of course, you may also find it easier to gain conversions if your demands are somewhat lower, say at a one-to-two or one-to-three return on your spend. No matter what you decide, however, AdWords will do its best to fulfill your needs and match your spending with conversions at an appropriate level.

Why Should I Use This Strategy?

AdWords notes in its own webinar that Target ROAS can allow marketers to “bid more intelligently to increase actual revenue or more valuable conversion types.” It addresses the fact that not all conversions are made equal – the differences coming potentially from of the type of user (desktop or mobile) or the products customers might purchase depending on their history (low- or high-end items).

This strategy can be useful for businesses that have already started tracking their conversions and have a solid idea about what return on ad spend level would be good for them. These businesses know that a high return-on-ad-spend setting, perhaps greater than 500 percent, could result in few customers responding to their ads. Target ROAS may be best for businesses that want to target a wide range of customers because they know that a mix of low-spending and high-spending consumers will average the expected return on the marketing dollar.

How Should I Get Started?

Remember how we said Target ROAS requires planning? Well, in order to get started, you should first begin tracking your conversions and set values for those conversions (such as static or dynamic values based on the importance of a customer’s action). Then you have to attain as least 15 or more conversions in the last 30 days with at least 30 days of overall conversion value reporting. Finally, your conversion values must be consistent across that 30-day period. You can relate conversions to keywords, individual campaigns, and ad groups, so one of those categories must show consistency across the month of reporting.

All this setup will become second nature once you get the hang of it. It is necessary to place all this work up front because AdWords needs as much data as possible to make sure its bid adjustments allow your ads to reach your intended audience.

What’s also interesting is that your up-front effort can help you set decent return-on-ad-spend rates. For instance, you should consider setting your expected return value at a level similar to what your history shows. This way, AdWords can keep your business humming at a constant level because it knows you are capable of reaching the levels you seek.

You can gain a few more tips and tricks from the official AdWords support page and, as always, you can call upon Atria for help getting started and maintaining your new Target ROAS ambitions.