Google Shopping Ads ROAS Bidding

What’s the ROAS Bid Strategy for Google Shopping Ads?

Google AdWords shopping campaigns make up a large portion of many eCommerce businesses PPC marketing budgets and website traffic. For many, an effective Google AdWords shopping campaign contributes to a large part of their revenue. But for a lot of digital marketing managers, the range of options, importance, and effectiveness of the different Google campaign types is enough to give anyone a case of paralysis.

If the shopping campaign is working, should you even try to “fix” it? Even the smallest reduction in AdWords campaigns can hurt a company’s bottom line. But as they say – no risk, no reward. Testing, tweaking, and optimising Google AdWords shopping campaigns with a target ROAS bid strategy will increase traffic and maximise conversions. Here’s how to get started.

What is target ROAS bidding?

A successful digital marketing team understands that measuring returns of an online advertising strategy is critical to the company’s bottom line. With older forms of advertising, measuring the effectiveness of such a campaign was always a cause for debate. But for today’s digital marketers, Google AdWords makes conversion tracking easy. So, how does a target ROAS bidding strategy help you track conversions?

ROAS stands for Return on Ad Spend. The ROAS of a Google shopping campaign is the average conversion value you’ll get for every dollar you spend on Google shopping ads. With a target ROAS bidding strategy, your digital marketing efforts are focused on getting the maximum return on investment or value for conversions instead of just the amount or volume of conversions.

How is target ROAS calculated?

Google calculates a shopping campaign target ROAS with the following formula:

  • Return on Ad Spend = Revenue/Ad Spend x 100.

An example of this would be if a company spent $10 on a Google AdWords shopping ad, and the ad netted $100 in total revenue. In that case, the formula for the ROAS would look like this:

  • ROAS = $100/$10 X 100 = 1,000%

Where can digital marketers see the ROAS of their Google shopping ad?

Keeping track of your Google shopping campaign ROAS is essential for tracking conversions and see how well the campaign is performing. An inability to track conversions and maximise return on investment can, in the worst-case scenario, harm the company’s bottom line. Best case? The Google ad won’t reach its potential. To find your Google shopping campaign ROAS, follow these steps in your Google Ads account:

  1. Select “Ads and Extensions” in AdWords
  2. Click the “column” icon on the right
  3. The popup menu will expand
  4. Click “Conv. Value/cost and then click “save.”

When you follow these steps, it will multiply your current ROAS by a factor of 100. So when you look at your ROAS, you’ll see a whole number indicating the campaign’s conversion value instead of a percentage.

How does target ROAS bidding work?

Now you know what ROAS is and how to find it for your Google shopping campaigns. But how does this target ROAS bidding strategy work, and how can it maximise your conversion rates? Fortunately, it’s not too tricky to figure out how ROAS works and how you can set one up for your Google shopping campaign.

At its core, target ROAS campaigns are simply Automated Bid Strategies for Google AdWords. That means when you set up a target ROAS bidding strategy, and Google AdWords will automatically change your shopping campaigns so they will hit the ROAS target you want. When you set up a target ROAS bid, Google AdWords will use the historical data of your conversion rates to predict further:\

  • Any future conversion opportunities
  • The max ROI these future opportunities could produce for your shopping ad

AdWords will then set a maximum CPC bidding rate to target the ROAS you’ve selected effectively. Any bids that use target ROAS are dynamic – meaning they change in real-time subject to auction. So, it’s not possible to create custom bid adjustments for target ROAS, with one exception. Technically, you can set mobile bid adjustments up to -100%, but you cannot increase the bid adjustments.

What are the benefits of setting a target ROAS bid?

Target ROAS is a smart campaigns strategy that helps you automatically adjust your bids based on network settings and the AdWords campaign type. Automated bidding can make life easier for marketers looking to get the maximum return-on-investment for their Google shopping ads. Below are the different settings and benefits for target ROAS bidding strategies:

  • Search Network Only and Search Network with Display Select

In this setting, AdWords will optimise average ROAS bids for all of your Google AdWords campaigns, keywords, and ad groups.

  • Display Network Only (Mobile Apps)

At this time, setting target ROAS bids is not available.

  • Display Network and Shopping Campaigns Only

Every Google ad campaign and ad groups you have running are optimised for target ROAS bids.

Google’s target ROAS automated bidding strategies can make it easier to manage ads for shopping campaigns. However, an automated bidding strategy with target ROAS is not intended to be a “set it and forget it” kind of option. Automated bidding strategies may make it easier to get ads in front of a target audience. Still, there’s no promise that these automated bid settings will outperform a manual targeting strategy.

Marketers should look at any bidding strategy as a test. Plus, digital marketers should have a healthy tolerance level for risk. To make the most of any digital marketing campaign, there will be some risk involved. The business could go above and beyond their goals for Google shopping ads, or take a hit to their bottom line. One particular caveat with target ROAS bids is that a target set higher than historical data for conversions will limit the campaign’s growth. In these situations, the ad will perform well in the beginning, but traffic and conversions won’t increase.

In general, a strategic Google shopping campaign will give businesses the ROI they want when an experienced digital marketing team manages the account. At Australian Internet Advertising, we’ve been running and managing Google AdWords campaigns for a range of eCommerce businesses for many years. Reach out to us today to learn more about what we can do for your Google shopping ads.