Google Ads Tip: Target ROAS (Return On Ad Spend)

Now we go to TROAS. Target ROAS is Return On Ad Spend.

How much are you getting back on your ad spend? If you're giving $1 to Google, how much are you getting back? Are you getting back 10 cents or are you getting $10 if you are getting less than $1, that means you are making a loss? If you are getting four times or five times or whatever industry, depending on what you're selling, then obviously you will be making a profit.

Now the way to see this number is it is not called TROAS in the columns. It is called conversion value over cost. So let's say your conversion value is $1,000 you earn from your new leads or new customers, and then you divide that by let's say a hundred, which is your Google ad spend, that equals to $10. What you are doing is, you've got a ROAS of 10. Every time you give $1 to Google, you are getting 10 back.

So that's a profitable campaign. If after you've taken out your cost of goods and taking that into account.

So whether it's profitable or not, I can't say, but let's assume that it is profitable. So the ROAS is worked over like this where you divide your conversion value. Now, how do you get that conversion value? You must set up for all these automated biddings. You must set up conversion tracking properly, otherwise, it will not work. For eCommerce websites where you are selling products, you need to set up the dynamic conversion tracking because every transaction will be different. Whereas on a lead generation, it will be just the same value or you can allocate the same value for each lead for your business.

But when you're selling something as from a shop or eCommerce website, every transaction will be different. Every order will be different. Then you need to set up all your conversion tracking and your conversion value and link it, set it up properly, and then you'll be able to see that conversion value within Google ads as to how much each keyword is bringing in the value for your campaigns, and then the valuable keywords you bid very aggressively and the less valuable you bid a bit less. So conversion tracking is extremely important for each one of these. So the TROAS, target ROAS bidding is for selling products, the target CPA is for lead generation.

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