So, please explain the different types of smart bidding. I can never get any impressions from these and they never work. Call to action, or that conversion action, which you want. What most people do is when they have got zero data in their account and you are let's say starting a brand-new campaign today, because the default settings in Google Ads is the automated bidding. Obviously, you as a newbie or a newcomer, you would set that up and you'll find that you are not getting any impressions, forget conversions or clicks or conversions. You're not even getting any impressions and you will find that the campaign will go into the learning phase where you get the message called eligible learning.
So, what that means is the system, the algorithm, the robots, is trying to work out what you want, because it doesn't have any data in the account. Are you looking for visitors to your website? Are you looking for email subscribers? Are you looking for somebody to make a purchase on your website? So, it needs to learn, and this is what it is trying to do without any data. The second thing is the bidding. So, let's start with the first one, the target CPA. So, the target CPA means... TCPA. It means target cost per acquisition. Now, it's the same as conversion. But, if it was TCPC, that means cost per click. So, then confusion will arise. So, that's why it is called acquisition. So, you are acquiring a lead or a customer. I'm gonna put this down so you don't get confused.
Okay. What this means is, how much are you prepared to pay for an acquisition? Now, our acquisition could be a lead or a customer, right. So, if you are a lead generation business where you are generating leads, your acquisition would lead. If you are an e-commerce website and you're selling physical products or digital products, then you are trying to get customers to your website to make a purchase. Now, you need to give a [Inaudible]... Because they want to get or acquire a customer as cheaply as possible, which is understandable. But if your cost per click, let's say in your niche is ten dollars, then how can you get a conversion at five dollars? It's impossible. Google will not have any leeway. So, what you need to do is, and this is my opinion and my workflow, before I start any of these automated campaigns, I always run manually. First of all, run a manual campaign, get the data in and the minimum is about thirty. Google says, well, if you speak to any of the Google reps on the support, they will say, well start on the automated bid from day one, you can try it, and then you can also set up a manual campaign and run both of them and see which one starts to work. So, don't take my word for it.
You set up a manual campaign, start to get first the impressions, then the clicks, and then hopefully you'll start to get conversions. Once you've got about more than thirty, the system knows exactly what you're looking for. It knows that now you are looking for an acquisition for twenty dollars or thirty or a hundred, and then you switch it over to the automated TCPA. If that's what you want to do. So, what you will say to Google is get me a lead or a customer. It doesn't matter whatever you are selling or whatever. You're running the campaign for fifty bucks. Sometimes, it will go up. Sometimes, it's going to go down. But initially what it might do is it may go up quite a bit, maybe one hundred and twenty, a hundred and thirty dollars. Don't get scared and don't stop. That's the worst thing you can do with any of these automated buildings stopping and starting the campaigns because everything gets reset.
And then it has to start learning from scratch. So, don't ever do that, let it run, and then you'll start to see that as the system is working and optimizing, Google is going out and getting those conversions at around that target CPA or lower and once that happens, it is going to work seamlessly and it works wonderfully well. The other important thing for running TCPA is your budget. So, you need to give Google at least four to five times your TCPA. What that means is if your TCPA is fifty dollars, then your budget will be or should be around two hundred dollars or two hundred and fifty dollars. Because it needs to have that leeway. If you keep fifty dollars as your budget or less, it's never going to work.
So, this is where you need to keep in mind that you need to have more budget and it will spend from time to time, a lot more than what you had budgeted, but overall, over the thirty days, you will see that it is the same budget you want. But what you want to do is once you are getting a positive return on investment and you know that, okay, every time Google gives you a lead or a customer, it is around fifty or less. Now, this is just an example. It could be five dollars for you. So, please don't take this as a number that you should be shooting for. So, whatever your target CPA is, what you want to do is, give it four times, at least four times the budget, the daily budget, and then let it run and see what happens. Because if you're getting a positive return on investment then the budget should not matter, you could be spending two thousand a day because you're getting more and more business, unless you've run out of stock or you cannot cope up with the number of leads. So, that's the TCPA, version bidding. Now, we go to that TROAS, target ROAS is the return on ad spend. The ROAS.
How much are you getting back on your ad spend? So, if you are giving one dollar to Google, how much are you getting back? Are you getting back 10 cents? Or are you getting ten dollars? If you are getting less than one dollar, 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 one thousand dollars. 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 ten dollars... Beg your pardon.
So, what you are doing is you got a ROAS often, every time you give one dollar to Google, you're getting ten back. So, that's a profitable campaign. If after you've taken out your cost of goods and taken 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 has 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 e-commerce websites where you are selling products.
You need to set up dynamic conversion tracking because every transaction will be different. Whereas on a lead generation, it will be just the same value or the same... You can allocate the same attribute, the same value for each lead for your business. But when you're selling something from a shop or e-commerce 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 bit less. So, conversion tracking is extremely important for each one of these. So, the TROAS the target ROAS bidding is for selling products. The target CPA is for lead generation.
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