New Flexible Bid Strategy and Webinar: Target Return on Ad Spend

In May, we introduced flexible bid strategies as part of our ongoing initiative to improve real-time bid automation in AdWords. Today, we are announcing target return on ad spend (ROAS), a new bid strategy, as part of this broader initiative to provide greater flexibility and control over performance targets and better overall return from your ad spend.  You should see the target ROAS bid strategy rolling out to your account over the coming weeks.

Target ROAS helps you maximize revenue by automatically adjusting your keyword, ad group, and campaign-level bids to meet a custom target return on ad spend. Your target ROAS represents how much revenue you want to earn for each dollar you spend on AdWords. For example, if your goal is to earn $7 for each $1 you spend on AdWords, your target ROAS would be 700%.

Harnessing the same real-time bidding technology behind Target CPA and Enhanced CPC, target ROAS takes into account signals such as location, browser, time of day, operating system and more to adjust your bids based on your ad’s predicted performance.

Grow sales and hit your ROAS goals with ease

To demonstrate the power of target ROAS, we’ll walk you through an example. Let’s say you’re an advertiser whose conversion values vary from product to product. Ideally, you’d love to bid higher on keywords that lead to larger orders, and lower for keywords that lead to smaller ones, however, this would be time consuming and complex to do manually.

You can use target ROAS to help you dynamically select the right bid for each auction. Here’s what you’d do next:
  1. Set up conversion values in Conversion Tracking so that AdWords understands the value of orders placed on your site.
  2. Choose the ROAS percentage that matches your business goals. You can learn about setting an appropriate target ROAS here.
  3. Create a new “Target ROAS” bid strategy in the Shared Library. (see image below)
  4. Enter your target ROAS into your newly created flexible bid strategy.
  5. Apply the new bid strategy to keywords, ad groups or campaigns.
Once you’ve applied this bid strategy to keywords in your account, AdWords will predict the likelihood that a click will lead to a high-value sale. Based on this likelihood, the system then sets unique bids for each click, taking into account your specified ROAS target. Since this happens automatically and in real time every time your ad is shown, your bids are optimized toward your goals without  having to enter a single manual bid.

Once you begin using target ROAS, you’ll see a rough average of the Max CPC bids Google is setting in Search Network auctions in your Max CPC column. This helps illustrate the auctions’ bids for keywords that are using the bid strategy.

Learn more

To learn more about getting started with target ROAS, visit the AdWords Help Center. You can also tune into the Target ROAS webinar on October 22nd for a live walkthrough on setting up conversion values and using this new strategy. You can sign up for the webinar here.

Posted by Wilfred Yeung, Product Manager, Bidding in AdWords
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