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Keeping Up With Google: What Is Target ROAS?

Steve Costanza

ROAS is one of the most common KPIs retailers use to measure success on Google Ads. Because of its critical importance, Google developed Target ROAS, an automated bidding tool that adjusts retailers’ CPC bids based on data at auction to optimize–you guessed it–ROAS.

Target ROAS has undergone several iterations since its creation in 2013, leaving retailers with questions about whether this solution is right for their business. For many retailers, this tool may not be the best fit for their campaigns because it is a set-it-and-forget-it solution rather than a means for strategy refinement and growth.

In this installment of the Keeping Up With Google–a series that helps you stay up-to-date on the latest changes shaking up Google Ads–we define Target ROAS and explore how it can impact your performance marketing strategy.

Release Date: Google rolled out Target ROAS in late 2013, around the same time it unveiled other automated bidding tools like Target CPA and Maximize Clicks.

What It Does: Target ROAS is a bidding tool that allows retailers to set a ROAS goal for campaigns, ad groups, and keywords or products. Google automatically sets maximum CPC bids to impact conversion value and achieve an average ROAS that equals the goal set. Google uses retailers’ historical sales to further refine bids.

In order to implement Target ROAS, retailers need to set conversion values for their products in their Google Ads account. Setting conversion values allows Google to more accurately measure return on investment (ROI) and adjust bids.

Which Channels: Target ROAS is available on Google Shopping and paid search.

What It Means for Your Business: Target ROAS is a tool often used by retailers who are new to Google Shopping or paid search. Typically, these are retailers who want to have a presence on these channels without actively managing their accounts. They implement target ROAS because Google sets the bids and automatically manages them to a specific goal, freeing up time and resources.

On the other hand, Target ROAS is not an ideal solution for retailers looking to grow their business on Google Shopping and paid search. This approach optimizes to a stagnant goal, and Sidecar has found that retailers need to regularly reevaluate the market and their business to set the most realistic targets when it comes to ROAS. Seasonality shifts or even changes within a retailer’s own business will not always be taken into account when setting bids with Target ROAS.

Limited insight into the bids and how much or how little Google adjusts them at the auction can also hinder retailers’ success. Having greater transparency into bids can help retailers understand market shifts and continually refine their campaigns for success in the future.

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