Short answer: Target ROAS is a Smart Bidding strategy that tries to get as much conversion value as possible at the return you set. A target of 400% means you want 4 in revenue for every 1 spent. Start near your actual recent ROAS, make sure conversion values are accurate, and change the target in small steps of about 10 to 20% at a time. Set it too high and spend drops; set it too low and you may grow sales but lose profit.
How Target ROAS works
Google predicts the value of each auction and bids more when it expects a high value conversion. It needs:
- Conversion values that reflect real revenue or profit
- Enough conversion data, ideally steady weekly volume
- Reliable tracking, ideally with enhanced conversions
You can use it in Search, Shopping, Performance Max, Demand Gen and Display campaigns. In some campaign types it appears as an optional target inside Maximize conversion value.
Choosing a starting target
- Look at the campaign’s ROAS over the last 30 days.
- Set the first target at or slightly below that number.
- Work out your break even ROAS from margins. If your margin is 25%, break even ROAS is 400%.
- Aim above break even, but move there gradually.
| Margin | Break even ROAS |
|---|---|
| 50% | 200% |
| 33% | 300% |
| 25% | 400% |
| 20% | 500% |
A worked example
A store averages a 350% ROAS over the last month and has a 30% margin, so break even is about 333%. The campaign is barely profitable. A sensible plan is to set Target ROAS at 350% first, wait two weeks, then move to 385%, and later to 420%, watching how much volume is lost at each step. If sales fall too far, go back one step and work on conversion rate or margins instead.
Adjusting the target
- Raise the target if ROAS is too low and you can accept lower volume.
- Lower the target if you want more sales and have margin to spare.
- Change by 10 to 20% at a time and wait one to two weeks between changes.
- Avoid big changes right before major sales events.
Common problems
- Spend drops sharply: the target is too high for the auction. Lower it.
- ROAS looks great but sales are flat: the campaign may be mostly capturing brand or returning buyers.
- Values are wrong: tax, shipping or duplicate purchases inflate ROAS.
- Too few conversions: consider grouping products or campaigns to give bidding more data.
Target ROAS and profit
ROAS is not profit. If products have very different margins, consider passing profit based values, or split products by margin into separate campaigns with different targets.
Frequently asked questions
What is Target ROAS in Google Ads?
What target should I start with?
Why did my spend drop after setting Target ROAS?
How often can I change the target?
Does Target ROAS work without conversion values?
Who can manage Target ROAS bidding for my store?
Want bidding tuned to profit?
I can set targets from your margins and fix value tracking. See my Google Ads management service or request a free ads audit. Also read Google Ads bidding strategies and ROAS vs MER vs CAC.