Target ROAS and Target CPA

Target ROAS and Target CPA: Maximizing returns from your Google Shopping Campaigns

If you have been paying attention to PPC news lately, you may have heard about the new PPC automated bidding tools: the Target Opt-in Recommendations and Target CPA Simulator. These tools are designed to maximize for conversions or revenue from spend (ROAS).

What Target Opt-in Recommendation does

The new target opt-in recommendations enable you to select the right performance target when choosing one of two automated bidding strategies: Target ROAS and Target CPA. These are a part of Google AdWords’ flexible bidding strategies. Once you choose the campaigns to which you want to apply the Target Opt-In Recommendations, you are provided recommended performance targets based on historical CPA and ROAS performance from the past few weeks.

As an experiment, we implemented the Target ROAS strategy on an enterprise client using over 15 shopping campaigns and over 20 different ad groups. We ran the bid strategy for 11 days until we decided to end our test. The result of the test was inconclusive; while performance dropped, there were several other issues that came to light.

What Our Experiment Taught Us about Target ROAS  and Target CPA

Our experiment helped us discover what works and what does not from an ROAS maximization perspective. Here are a few tips for you to consider when enabling either of these flexible bid strategies for your shopping campaigns:

Allow the flexible bidding strategy to run for at least a month

It can often be tricky for Google train itself on existing data before it is capable of optimizing results.

The requirements for Target CPA/Target ROAS are that campaigns must have 30 or more conversions over last 30 days. But if your campaigns are too large 30 may not be enough; in which case we recommend at least 30 or more conversions in the last 30 days at the Ad Group level. A few thousand clicks a month at a steady 2.5% conversion rate should provide enough conversions for the Google algorithm to run effectively. More on this below.

Keep your account structure simple

Having too much granularity can provide too little information for the Target ROAS and Target CPA algorithm to determine the appropriate bid. Think about it like this: A 10% increase in converted clicks from 10 converted clicks to 11 converted clicks is not significant enough – only a single click difference. There is a good possibility that the incremental click was a product of pure chance.

Don’t keep your account TOO simple

While having a simple structure helps avoid the pitfalls of not acquiring enough information to make a valid bidding decision, having too much information can also cause problems. Having too many products rolled into one ad group will make it too difficult for Google to observe trends from the various queries that are triggering the ad.

Keep checking on your account

As with any automated bidding program, you do not want to set-it and forget-it. Routinely check into your account to ensure that the strategy is providing the desired results. Additionally we recommend pulling search term reports to draw conclusions and comparisons from how the bidding strategy is optimizing on search trends – it may be leaving terms that you felt were decent off the table or optimizing on terms that you find having less value.
Have more questions about how you can optimize your automated bidding campaigns? Give us a shout and we’ll work on them together.