A Beginner’s Guide to Target ROAS in Google Ads

Creating a target return on ad spend (ROAS) campaign isn’t as easy as inputting a number and letting the algorithm do all the work.

 

This smart bidding strategy requires careful planning, continuous tracking of campaign KPIs, and intentional optimization to effectively onboard clients with this automated bidding setting and deliver their desired ROAS.

 

Learn how to effectively implement, track, and optimize Target ROAS campaigns with this comprehensive guide.

 

Table of contents

• What is Target ROAS? 
• Tips on how to use Target ROAS effectively 
• Other Google Ads bidding strategies to consider 
• Which cost effectiveness metrics should you track for your advertising campaigns?
• How to track ROAS and other advertising KPIs with DashThis
• Automate your digital advertising campaign reporting with DashThis

 

 

What is Target ROAS? 

 

Target ROAS is an automated bidding strategy in Google Ads designed to maximize conversion value. By optimizing for high-value conversions, this strategy helps drive the most revenue or profit for your business.

 

These conversions can look like:

• Premium product sales in an e-commerce business
• Multi-year subscription upgrades in a SaaS business
• Recurring service contracts in a service business

 

Target ROAS uses Google AI to predict the value of potential conversions when someone searches for your advertised products or services. This allows dynamic bid adjustments without you managing campaign settings as auction dynamics and consumer behavior shift in real-time.

 

For instance, if you set a Target ROAS of 1%, you tell Google you want $1 in revenue for every $100 spent on ads. Google uses AI and machine learning to meet your goal, ensuring you get the most conversion value within your targeted return on ad spend while staying within budget and maximizing campaign efficiency.

 

To use this bidding strategy effectively, you’ll need to have: 

• Revenue data and profit margin targets for your campaign
• Conversion history of at least 50 conversions in the past 30 days
• Transaction values that are clearly defined, like set revenue per sale in e-commerce businesses

How to find the Target ROAS setting for your Google Ads campaigns

 

To access the Target ROAS bidding option, select the conversion value bidding strategy in your Google Ads campaign bidding setup.

Who should use Target ROAS?

 

Target ROAS aims to achieve the highest conversion value for your Google Ad campaigns, making it suitable when conversions drive revenue and you want to maximize revenue per sale. It’s more effective if you’re focusing on a specific product and know the conversion value.

 

How do marketing professionals discuss a Target ROAS strategy with their clients? Here are a few tips from the marketing professionals we asked.

 

“When discussing Target ROAS to clients, we focus on the fact that it’s a long-term strategy suitable for mature campaigns. Compared to Target CPA, which is great for acquisition-focused goals, we explain that Target ROAS aligns better with bottom-line profitability—especially when multiple conversion values are in play (e.g., product bundles vs. single items).”

 

Maggie Swift, Founder and CEO of Unframed Digital

 

Nicolas De Resbecq, CRO specialist at Oppizi, says:

 

“I always bring clients into the conversation with clear trade-offs. If their goal is to drive revenue and they know their margins, tROAS makes sense. For one of our clients in luxury fashion, where margins were strong and consistent, we used tROAS to scale revenue by over 40% quarter-over-quarter. For another in lead gen, we stuck with Target CPA because they cared more about controlling acquisition costs than revenue.”

 

When evaluating whether Target ROAS is right for a campaign, Nicolas recommends looking at several key business metrics:

 

“High ROAS doesn’t always mean high profit. If your margins are slim, a great ROAS can still mean losses. So we dig into the numbers behind the numbers, lifetime value, average order value, fulfillment costs, before setting any targets. Clients appreciate that transparency, and it helps build trust.”

Who shouldn’t use Target ROAS?

 

Target ROAS isn't as effective for:

 

Campaigns involving conversions that don't directly correlate with revenue, such as:

• Newsletter signups
• Add-to-cart actions
• Free trial activations
• Demo requests

 

Businesses with long, complex sales cycles (like B2B software or real estate) where:

• Multiple touchpoints occur before purchase
• Revenue attribution occurs across numerous interactions
• Conversion values fluctuate significantly

 

In such instances, Target CPA delivers more consistent results as it concentrates on achieving conversions at a set cost per acquisition.

 

Tips on how to use Target ROAS effectively 

 

Target ROAS is a powerful automated bidding strategy that becomes even more effective when you know how to optimize it. Here are practical tips to help you get the most out of your Target ROAS campaigns in Google Ads.

Set up and verify conversion tracking

 

Accurate conversion data is crucial for Target ROAS’s success. Here’s an overview for checking if your conversion tracking is set up correctly.

1. Set up conversion actions and conversion value rules in Google Ads
2. Install the Google Tag on your website
3. Confirm the tag is set up correctly with Google Tag Assistant
4. Verify conversion value is tracking accurately
5. Monitor data for 1-2 weeks to ensure proper tracking

Get enough conversion data before switching to Target ROAS

 

Since Google’s smart bidding optimizes your bids based on existing data from your campaigns, make sure you collect enough data to ensure Google optimizes your bids properly. Use manual bidding strategies or other strategies like maximizing clicks to collect data before switching to a more conversion-focused bidding strategy.

 

Google advises having at least 50 conversions in your chosen timeframe before switching to target ROAS. Likewise, Alan Muther, founder and CEO of Ardoz Digital advises not to rush into using target ROAS. He says:

 

Target ROAS works best when the data is stable and the sales cycle is short. We learned that the hard way. I once inherited an account that jumped straight to Target ROAS from manual CPC with no conversion history. Cost per clicks exploded 300% and conversions dropped off. These days, we do not activate Target ROAS until we have 30 days of steady performance and at least 75 conversions logged. The algorithm needs input. Turn it on too early and you are just lighting budget on fire hoping for luck. 

 

It takes time for Google’s algorithms to collect data and learn what a successful campaign looks like. You’ll need to manage expectations with your clients and give your campaigns space to breathe.

 

Start with manual bidding or maximize conversions to gather clicks and start the algorithm learning process. Once you’ve gathered the data, try Target ROAS with a reasonable ROAS target. Once your campaign is performing consistently, experiment with more targeted changes like:

• Adjusting bids for different audience segments or demographics to identify and focus on high-value sales opportunities
• Gradually increasing your target ROAS by 10-20% increments
• Expanding to new match types for your keywords
• Adding or removing specific locations from targeting

Set reasonable ROAS targets

 

Too ambitious ROAS targets can affect your Google Ads performance. A higher ROAS target forces Google to restrict bid adjustments to only the highest-value opportunities, decreasing overall conversion volume and preventing your campaign from performing at it’s best.

 

When we asked marketers for their input, many said starting with an overly ambitious ROAS target can harm your campaign. Stephen Do, Founder of UpPromote says:

 

“One of the most common mistakes I see is setting the target too high right from the beginning. When merchants are aiming for something like a 500% ROAS without having the data to support that goal, they end up restricting their own campaigns. Google doesn't have enough flexibility to explore and test different placements, and the campaign stalls. 

 

It's much more effective to start with a number that's just slightly above your average ROAS, let the algorithm learn, and then increase it gradually once performance becomes stable. I've seen campaigns completely shift after three or four weeks of consistency—but only if no one panicked and hit the reset button halfway through.”

 

Instead, refer to your campaign’s historical data to find a more reasonable ROAS target that’s right for your industry, campaign goal and product type to guide your decisions. 

Track and explain your campaign results regularly 

 

After setting up your Google ad campaigns, set a schedule for performance reviews.

 

For instance, you can set up a weekly dashboard to track ROAS goals, campaign performance metrics, and ad spend trends. This can involve your clients in the campaign optimization process, detect issues early, and provide insights to optimize your Google Ads strategy.

 

In this dashboard, consider using segmentation to track your campaigns in detail based on your business objectives. Here are some ideas to start:

• ROAS and cost-per-conversion by device and audience segments
• Campaign KPI performance by type or device
• Changes in Quality Score across campaigns affecting cost-per-click and overall ad spend 

 

Make this data easily digestible for clients using reporting tools like DashThis. Start with our advertising report template as a foundation for your weekly client dashboard.

Get this advertising report template with your own data! 

 

Other Google Ads bidding strategies to consider 

 

Target ROAS maximizes conversion value, but other automated bidding strategies might better suit your digital advertising strategy depending on your business goals. Here are a few other strategies to consider.

 Target CPA (Maximize conversions)

 

Besides target ROAS, target cost per action (CPA) is another way to control ad spend for your advertising efforts while maximizing the number of conversions. CPA bidding is accessible when you select a conversion focus in Google Ads. Google automatically sets a cost-per-click for each keyword or product according to your target CPA. So, if you set a CPA of $10, Google aims to max conversions at or below $10.

Pros and cons of using Target CPA 

 

Pros: 

• Allows precise budgeting by keeping CPA fixed, making it easier to forecast daily ad spend.
• Controls customer acquisition cost
• Shows a clear relationship between ad spend and conversion results

 

Cons: 

• Treats all conversions equally regardless of purchase amount
• Affects campaign performance on limited budget

 

Key differences between Target ROAS and Target CPA

• Target CPA focuses on the number of conversions, while Target ROAS emphasizes revenue generation.
• Target ROAS needs an understanding of business revenue and ROAS calculations to be effective, while Target CPA focuses on customer acquisition cost 

 

Should you use Target CPA or Target ROAS as your automated bidding strategy? It depends on your campaign goal and product structure. Kirk Williams from ZATO PPC Marketing says: 

 

Target CPA is best when we’re aiming for a flat(ter) cost-per-conversion model, usually for lead gen or simpler funnel actions. TROAS, however, tends to work better for e-commerce where not all conversions are equal in value. We educate clients on the tradeoff: greater ROAS efficiency often means lower volume, while a more flexible target gives Google room to find high-volume wins. That being said, we're also a big fan of running tests in your account with Experiments, since we've also seen TCPA outperform TROAS in Ecommerce clients. So, as always, test smartly!

Maximize clicks 

Maximize clicks does exactly what it says - it optimizes for the most ad clicks possible. It's ideal for new campaigns that need initial conversion data before switching to other bidding strategies.

Target impression share 

Target impression share focuses on making your ads visible in search results. With this bidding strategy, Google targets your ads to appear in search results according to your target percentage impression share. It’s perfect for brand awareness campaigns for product launches or go-to-market campaigns for clients.

 

Which cost effectiveness metrics should you track for your advertising campaigns?

 

When optimizing Target ROAS campaigns, track these core cost-effectiveness metrics alongside your campaign performance data to get a complete picture of campaign health and identify optimization opportunities:

Cost per action (CPA)

 

The cost per action refers to the total ad spend you pay for a conversion. These can be revenue-generating (product sales) or non-product-generating (form submissions).

Return on ad spend (ROAS)

 

Return on ad spend (ROAS) calculates the revenue your company earns for each dollar spent on advertising. A ROAS of 3x or more is good, but for accuracy, refer to industry benchmarks and historical campaign performance data.

 

Need help calculating your ROAS? Use DashThis’s free ROAS calculator!

Conversion rate

Conversion rate calculates the percentage of visitors who complete a specific action, like filling out a form or subscribing to a newsletter, within a certain time. A high conversion rate boosts ROAS since it means more revenue from each ad interaction.

 

Conversion rate calculation: Conversions ÷ total visits.

Average order value (AOV) 

The average order value tracks how much money your existing customers spend on every order with an e-commerce business. Improving AOV by emphasizing higher-value products or employing cross-selling and up-selling directly improves your ROAS.

Total profit & profit margins

 

While maintaining a target ROAS ratio is important, review other key metrics like total profit and profit margins. These metrics consider various costs - including shipping, production, and other expenses - to reflect your business’s financial health.

Customer lifetime value

 

Customer lifetime value focuses on your customers' long-term revenue potential. Knowing and tracking this metric can help inform your target ROAS value and guide your campaign strategy.

 

Formula: CLV = customer value X average customer lifespan

 

With so many vital metrics to track, manually collecting and analyzing this data can quickly become overwhelming. Let's explore how you can automate your advertising metrics tracking and reporting using DashThis.

 

How to track ROAS and other advertising KPIs with DashThis

 

If you’ve been spending too much time creating reports or managing data instead of doing your job, you’re not alone. According to Funnel's 2023 surveys, marketers spend 63% of their data-related time on tasks that could be automated, like collecting, analyzing, and presenting data.

 

No worries. DashThis is here to help! Let’s walk through how DashThis can simplify your digital advertising reporting process and make raw advertising KPIs easier for your clients to understand. 

 

Let’s start creating your digital advertising dashboard in DashThis. 

 

After signing up for DashThis’s 15-day trial, follow these steps.

1. Click +New Dashboard
2. Choose one of our reporting templates. We’ll use the digital advertising reporting template in this walkthrough.
3. Name it and click Next

 

Add your Google Ads, Meta ads and TikTok ads as a data source to DashThis. 

Use our drag-and-drop feature to add the metrics you want to analyze and report on. For example, if you’re presenting on campaign profitability and reviewing ad spend across your Google Ad accounts for an e-commerce client, include widgets to compare performance across different shopping campaigns or ad groups

Or break down campaign metrics like this table widget.

For Target ROAS initiatives in Google Ads, focus on these analyses to highlight your bidding strategy’s impact:

• Track current ROAS vs target ROAS
• Compare weekly sales revenue and ad spend, while referencing overall campaign and business goals 
• Reference before/after revenue or profit metrics 

Share your report with your clients 

 

Once your report is ready, share it with your clients. DashThis offers various report-sharing options, from automated scheduling to a URL link for online viewing.

 

Beyond reporting results, you can explain their meaning to your clients using DashThis’s built-in notes and comments feature.

Using these reporting features together can help you explain your client results and deliver better service for your agency clients. Search Station, a digital marketing agency, has developed an effective client communication approach: they pair automated reports with personalized video walkthroughs. 

 

This combination allows account managers to highlight key insights and explain complex data while maintaining efficiency through automated reporting. The result? Higher client satisfaction and better retention rates, as clients receive both comprehensive data and expert interpretation of their campaign performance.

Track your ROAS in minutes with DashThis’s advertising report template 

 

If you're new to ad reporting, consider using DashThis's pre-built advertising report template. It connects with Google Ads, Facebook and Instagram Ads, and Google Analytics 4. Plus, it features logical sections to keep your report organized, making it easier to explain your digital ad results to clients, including target ROAS initiatives.

 

Get this advertising report template with your own data! 

 

Automate your digital advertising campaign reporting with DashThis

 

Target ROAS is a powerful tool for your Google Ads campaigns, especially if you’re aiming to maximize ROAS while ensuring efficient ad campaigns.

 

Implement these strategies today, and watch your campaigns shift from cost centers to revenue-generating tools. Use reporting automation tools like DashThis to share progress and maintain transparency with your clients. They’ll appreciate it! 

 

Start by signing up for your free 15-day trial of DashThis today.