ROAS (Return on Ad Spend): Google introduced flexible bidding strategy

If you are taking benefit from Google AdWords since last few years, then Google brings good news to your door by automated bidding strategy also called ROAS (Return on Ad Spend). On base of conversion value shown in conversion tracking, Google Adwords will predict future conversions values and set maximum CPC (cost-per-click) bids to optimize conversion value while achieving ROAS. Return on Ad spend helps you to get the most out of your revenue by automatically setting bid for your keyword, campaign, and ad group. Target ROAS will work like AdWords Target CPA also provides organized vision for settled targets with better ROI (Return on Investment).

flexible bidding strategy (ROAS)

How ROAS works:

ROAS removes complexity of manual bids and to calculate ROAS you should have past 30 days conversion value data. Conversion value helps you to get the best ROI on your ad spend and Google use this value to regulate your bid. In ROAS, you need to set the expected return for your business targets. For instance, if you want to earn $5 for each $1 you spend on AdWords, then your ROAS will be 500%. The formula is as below.

ROAS removes complexity of manual bids and to calculate ROAS you should have past 30 days conversion value data. Conversion value helps you to get the best ROI on your ad spend and Google use this value to regulate your bid. In ROAS, you need to set the expected return for your business targets. For instance, if you want to earn $5 for each $1 you spend on AdWords, then your ROAS will be 500%. The formula is as below.

ROAS = (Revenue from Ads) / (Ad Cost) x 100
ROAS = $5 / $1 x 100 = 500%

You can sign in to Google AdWords and follow the below process to set ROAS for bidding.
• Set conversion value in conversion tracking so that AdWords can easily check placed order value.
• You have to browse into shared library and create “Target ROAS” bid strategy.
• Enter target ROAS into new bid strategy for instance. 500%
• To apply new bid strategy to keywords, ad groups and campaigns click on save button.

Now after applying the above setting, system will set unique bid for each click considering set ROAS target. Whenever your ad appears, your bids will automatically optimize for your goal without entering manual bid. Therefore, you will have to bid according to conversion value types like higher or lower.

How ROAS is beneficial:

• It will provide hassle free and automatic bidding rather than manual bidding.
• All conversion value are different so each higher conversion value gets higher bid as well lower value gets lower bidding.
• It will offer optimized rate on return by giving freedom to choose the return on base of your Ad spending.
• It will give advertisers more suppleness to allocate dissimilar keyword targets and website placements within campaigns.
• To improve your performance, ROAS integrates real-time information such as device, browser, place, and time of day to decide your bids in each ad auction.

Finally, we can say it is a good idea to track the company’s return on Ad spending that helps to get the best return according to set performance targets. It measures that the money spent after marketing efforts are worth it or not. Compare to banner advertisement that offers lower return, Pay per click offers large profit margin by implementing ROAS.
For additional information on this article, readers are requested to visit: https://support.google.com/adwords/answer/2979071?hl=en

This entry was posted in Google Adwords and tagged , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

Captcha *