If you’ve been checking up on the blog, you might have seen our post about AdWords’ new Flexible Bidding Strategies, a byproduct of the now-permanent transition to enhanced campaigns.

These strategies are intended to make automated bidding even more streamlined and efficient than in previous incarnations of AdWords.

In case you need a refresher, the four new strategies in enhanced campaigns are:

  • Maximize Clicks
  • Target Search Page Location
  • Target cost-per-acquisition
  • Enhanced Cost-per-click

The newest addition to the bunch, Target Return On Ad Spend (ROAS), is aimed at making your bidding more cost-efficient on a campaign-wide scale.

What Is Target ROAS, And What Sets It Apart?

Specifically, Target ROAS seeks to adjust bids in such a way that you get the best overall return on investment (ROI) from your direct ad spend. Whereas Target cost-per-acquisition, the updated version of Conversion Optimizer, allows you to make conversions the main target in automated bidding, Target ROAS gives you an extra degree of flexibility.

Targeting conversions only can be great for businesses that sell a single product, or a range of products whose conversion value is similar. The problem is, for many others, conversions can range greatly in value, and that means you can end up bidding too much for a low-value conversion – simply because you have an equal number of high-value conversions that Google is trying to bid for.

So, with Target ROAS, Google will take these different conversion values into account, bidding less for the lower values and more for the higher ones – improving your overall ROI by increasing the likelihood you’ll earn the more valuable conversions.

How Do You Use It?

Just like any other flexible bidding strategy, Target ROAS can be set up in your Shared library, by creating a new “Target ROAS” bid strategy. But first, you need to make sure your conversion values are set up properly, so Google can use that information to adjust your bids effectively.

If you don’t already have conversion values in place, check out Google’s own set of instructions.

Once you’ve done that, you need to determine for yourself what the best return on ad spend is for your business objectives: in other words, how much you want to earn for every dollar you spend in AdWords. (For instance, a ROAS of 500% would earn you $5 for every $1 spent.)

Then, simply enter that ROAS into the field provided on the “Create a new bid strategy” page. You’ll also have the option to set a maximum or minimum bid, though both are turned off by default. Save the strategy to your shared library, and you’re good to go!

Like your other bidding strategies in enhanced campaigns, you can choose to apply it individually to your campaigns, ad groups, and/or keywords.

Have you tried out Target ROAS? If so, how does it compare to your other bidding strategies? Is it performing as Google promised, or is it too early to tell?

Let us know in the comments!

About Brendan Silk

Brendan Silk is the lead content strategist at Ethoseo and a regular contributor to the Ethoseo blog. In addition to blogging and copywriting, he's spent the past three years honing his SEO and inbound marketing skills, with an emphasis on link building and social media. In his spare time he can usually be found chasing cats, playing drums, or listening to Phish. You can find more posts by Brendan at his bio page on Ethoseo, or follow him on Google+.

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