If you have been reading our most recent blog posts, you will know that choosing the right bidding strategy has the potential to “make or break” your PPC campaigns. Simply put, by connecting your PPC goals with the right bidding strategy, you will achieve better results (whether that’s auction wins or overall conversions).
However, while you might think that results will only depend on choosing the right strategy, the reality is not as simple as that. On top of it, you would still need to pay close attention to how your bids are performing.
That is why in the paid advertising world, marketers constantly are working on improving prominent metrics, such as Quality Score, CTR, or Cost-Per-Conversion. But what happens is, we tend to only focus on the simple, core metrics and while not taking into account the bigger picture.
Even with a lot of experience, you could find that managing bids can be a painstaking part of your campaign management because they are taking part in thousands of auctions at any given moment.
Luckily, Google a while back good has introduced Smart bidding, which includes a few different useful strategies, such as Target ROAS, Maximize Conversions, ECPC, and Target CPA.
Specifically, Return On Ad Spend, or ROAS (which is the topic of today’s blog post), does provide a look at the bigger picture that we mentioned above. This metric offers greater insight into not only what’s leading to conversions, but also the amount of revenue our conversion actions are generating.
What is ROAS?
Before we dive into the topic, let’s take a look at what ROAS is. ROAS, or for Return On Ad Spend is a metric that helps you measure your business revenue for each dollar spent on advertising. If you look more into this metric, you can see the there are a lot of similarities with the metric called ROI (or return on investment), that we are sure you are already familiar with.
These are very common strategies that most businesses use. Whether advertisers are targeting ROAS manually or with a bid strategy such as this, ROAS targets are very common.
In the case of ROAS, the money you’re spending on digital advertising is the investment on which you’re tracking returns, meaning that this metric measures the effectiveness of your ad campaigns.
The conclusion that you will come to after you research this metric is: The higher your ROAS is, the better the campaign is performing. As long as you know how much you’re spending and earning, you can calculate ROAS.
Return on ad spend is calculated by dividing the revenue from the cost of the ad campaign. More often than not, this calculation is measured as a percentage, meaning anything above 100% is a profit and anything under is a loss, with 100% being break even.
That is why the Target ROAS bidding strategy (the topic of today’s session) is so useful because it will aim to hit a specific value.
Google themselves have said: “When you value conversions differently and you want to meet a target return on ad spend (ROAS) a Target ROAS bid strategy can help you meet your goals. Over time, you may want to fine-tune your strategy to make sure it’s working as effectively as possible. This article contains a few tips for measuring Target ROAS performance so you can identify areas for improvement.”
With this strategy, Google Ads will adjust bids in real-time to maximize conversion value while trying to achieve the Target ROAS goal you’ve set. What is also useful about this strategy is that Google will work to balance the conversions to achieve your ROAS target.
On top of all of that, you can set min and max bid limits to keep the algorithm from burning away your budget, which has a side effect of limiting Google from making the decisions that it thinks it’s best for your campaign.
Even Tim Katlic, the Director of Marketing at Savings.com, had this to say about tROAS: “The tROAS bid strategy consistently drove an increase in high-value conversions while maintaining the desired campaign ROAS.“
Best Practices For Improving Your tROAS Campaigns
Even though your campaigns that are using the Target ROAS bidding strategy may have a different end goal in mind, they still function just like your other PPC ad campaigns. They also benefit from the same best practices as well. These are all tips that you can apply and ultimately benefit from.
In the past few years, smartphones have increasingly been the weapon of choice for online shoppers. They also use their mobile phones to go through every other step of the sales journey, from researching the product, comparing prices, finding discounts, etc.
Specifically looking at tROAS campaigns, this means that many of the clicks and conversions are arriving from smartphones. Having said that, don’t jump to conclusions the reason why your ROAS is performing poorly is because of a keyword or improper campaign optimization.
Sometimes, the issue could lie in your poor mobile optimization. If the loading time and overall UX/UI are not on point, this is likely the reason why you are getting low-performing campaigns. We recommend that you focus on these areas to improve your customer experience via mobile:
- Utilizing services that are location-based to further personalize the page (based on the location of course)
- Removing consent that could increase the load time of the page
- Adding mobile-friendly design elements
- Trimming the checkout process with just the absolute most important steps
- Making sure it’s mobile-friendly both in vertical and horizontal browsing
As you may find out, most of the steps above will significantly improve your mobile load time.
Research Your Competition
One of the steps that are often overlooked (but is vital for your success) is researching your competitors and their strategies. By studying them, you will be better equipped to offer something better and different. In a way, it’s also a reflection on how your campaigns are performing.
This is more so important to new marketers than to those who are seasoned since they can’t rely on data of past successful campaign and bidding strategies. There are a bunch of tools out there that can help you gather the data that you need of your competition. Those that help you see which keywords they are targeting are especially useful ones.
Just like these, some tools could help you see long-term trends which will help you make data-driven decisions, which in term will help your ad campaign be more successful.
Once you gather all the data you need of the strategies of your competition, there two things you can do with it:
- Get inspiration for your ad campaigns – As we mentioned above, researching your competition is a must-do task, especially for new businesses, and this is one of the reasons why. Implementing your competition’s strategies is a great short-term plan, that is until you have your data and can expand and think long-term.
- Counter their strategies – As you begin to gather the data, you will get a bigger picture of what kind of direct competition you will be fighting with for the customer. Simply put, if you know where they are focusing their budget, time, and effort, you can easily find a way to counter it. This for example could mean finding less competitive keywords.
Perfect Landing Page UX
There could be moments when your campaigns are attracting enough clicks, but are simply not converting. That means we are spending a lot on clicks that we are not getting a return from. In short, the campaign is doing its job, but the landing page unfortunately isn’t. But, we can take a look at that as a positive and find a way to improve that area as well.
Here are the things you need to watch out for:
- Having only one landing page – Many new marketers are using the same landing page for all of the ad campaigns that are currently active. This also is one of the reasons why the campaign is not performing well, since every campaign has a unique audience with unique problems, wants, etc.
- Using past performing landing pages – Even though that particular landing page has been successful in the past, it doesn’t mean that it will always work. You can dig deeper in the landing page to specifically find what was the reason for those past conversions and use it for the future. But, keep in mind that it copying and pasting the same copy, creative and offer could not work as well with the new campaigns.
- Being consistent – Think about the whole journey that the person needs to go through to buy the product that you are selling. They don’t just look at the ad and automatically buy the product. They also need to take a look at the landing page as well, which has to be consistent with the ad itself. Meaning if you have an offer in the ad, make sure to have it shown on the landing page as well.
- Testing, testing, testing! – Veteran marketers never stop testing the landing pages and make small (but significant) changes along the way to optimize both the ad and landing page for conversions. This is another step that we highly recommend that you do.
When talking about PPC strategies in general, it is simply impossible to form an accurate list without going more in-depth about keywords. Keywords are considered the backbone of any business since they will largely dictate the success of any campaign.
Specifically for tROAS campaigns, this is even more so the case. Keywords are the reason why we have conversions, which in term will itself dictate how much we are willing to spend on our ad budget.
Just as the other practices mentioned above, for keywords you also need to keep an eye on a few different things:
- Purchase intent – Specific keywords are intertwined with your campaign’s overall objective, and those are the ones that are most valuable to you. What this tells us is that a potential lead could be ready to convert. For example, “buy denim jeans,” “book store near me.” are searches that suggest someone that is looking for something that will provide an immediate solution to their problem.
- High-spend, no-conversion keyword – Needless to say, that if you are getting these kinds of “results” from your ad campaign, something is not right. It could mean that the keywords that we have selected don’t have the purchase intent we are looking for, or it could mean your landing page and keywords are not in sync. If there is no solution to them, make sure to add them to your “negative keyword” list so you don’t waste your budget on them.
- Relevance – The point of your campaign, keywords, and landing page is to attract people that want to convert. You will not be able to do that if your keywords don’t match what you are offering. Think about your Quality Score and long-term ad rank, which will go down as a result of “bad keywords”. Make sure to keep in mind the keywords and also generally the targeting of your campaign. If all of the pieces of the puzzle fit, you will have a masterpiece.
One of the most underrated bidding strategies that Google offers is Target ROAS. While some think that it is only best applied in the e-commerce industry, it provides you with a clear vision of how your campaign is performing so far.
With this strategy, you will exactly know if your implemented tactics are successful and if that translates to actual revenue for your business. That is why ROAS is an extremely important metric to look at.
Sometimes we tend to get lost in the CPA or conversion rates while neglecting the bigger picture and understanding the true value of the PPC campaigns and individual ads.
If you are not convinced yet, think about: With tROAS you can spend less time managing your bids and focus more on optimizing your campaigns for maximum conversions.
Have you used the tROAS strategy so far? Let us know your opinion in the chat section below.