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How to Generate new leads and customers with Target ROAS?

If you want to elevate your PPC campaigns the first strategy that would come to your mind may be choosing the right keywords. 

Nevertheless, google now offers a set of bidding strategies like Target ROAS that could make you experience a greater number of auction wins and new leads for your business.

With Bidding Strategies, you leave the task of finding new leads for your business in the hands of Google's artificial intelligence. Leaving the work of marketers in the hands of machines can be overwhelming for people, but let's remember that the next step in evolution is going there.

But the machines do not do all the work alone, you leave a predetermined budget for the AI to start making its offers, and that is where you can doubt or worry the most.

In this article, we will discover what bidding strategies are and how you could use the Target ROAS to generate new leads.

Keep reading!

What Is Smart Bidding?

This is an automated bid strategy that is run by the power of machine learning, it lets you automate your bids for every auction, which elevates the number of conversions and conversion value in each auction. You could work with us, the leading digital marketing agency to assist you with target ROAS.

With smart bidding, the AI can make fast decisions by leveraging data from past PPC campaigns, if you don't have enough PPC history the platform may lack the accuracy that you need in your campaigns. Find this resource on customer onboarding.

Smart bidding includes strategies like:

  • Maximize conversions
  • ECPC
  • Target CPA
  • Target ROAS

The meaning of ROAS stands for "return on ad spend" which is how much you receive through covers for every dollar spent on PPC ads. Meanwhile, ROI or "return on investment" focuses on calculating profits.

Source: YouTube.

How to calculate ROAS?

The formula for "return on Ad Spend" is:

Return on Ad Spend = Revenue ÷ Ad Spend × 100

So, if you spend $30 on PPC ads and your return in revenue is $60, then your total ROAS would be 200%.

The target ROAS strategy focuses on optimizing the quality of conversions instead of the number, it prefers quality over quantity.

When you use this bid strategy, machine learning is in charge of most of the work, your only task would be to enter the maximum cost per click you want to pay and the desired ROAS. After this, the AI will work to get you as close to that number as possible.

The downside is that you cant manually make your bid adjustments, except in mobile ads.

Here is a complete guide on B2B lead generation.

What’s A Good ROAS?

This is a question we all ask, but, like many questions in life, the most accurate answer is that: It depends.

Every business has its expenses that will affect what a great ROAS would look like. Imagine your gross margins are too tight, so, it is not recommended to spend too much on ads because it will damage your revenue. You can even lose money if you aren't careful. Find this complete guide on digital marketing funnel.

For this, your most viable option is to work with the accounting department to determine a suitable ROAS for your bidding strategies, mostly because this metric is related to revenue.

Source: YouTube.

How Do I Setup A Campaign With Target ROAS?

If you are on Google ads, it's simple to change your bidding strategy to Target ROAS. These are all the steps to do it:

  • Go to your Google Ads account
  • Select which campaign you want to optimize with Target ROAS
  • Select the "Settings" tab within this campaign
  • Go to "All settings"
  • "Change Bid Strategy" and click on "Edit"
  • Select "Target ROAS"
  • Enter your desired ROAS as a percentage
  • Save campaign!

Read this guide on PPC campaign strategy. It is good to know that Target ROAS will work differently depending on your campaign type and network. For search network only and search networked with display select, the ROAS feature will optimize for an average across all ad groups and keywords. This is what you need to know about B2B sales outsourcing.

Meanwhile, display network only and shopping campaigns will experience and optimization for your targeted ROAS amount across all ad groups and campaigns.

Ways to generate new leads with Target ROAS

Use the correct return metric

First, it is imperative to select the correct return metric to calculate your ROAS, this mainly depends on your sales cycle.

When you choose a return metric you have to make sure that it matches your business goals without taking a long time to obtain the data, also it must be measurable with the level of a campaign because the main focus of ROAS is to optimize your campaigns.

Read this article for B2B marketing strategies.

Usually, ROAS takes up to two to three months - sometimes six - to get the right amount of data, but it can be difficult sometimes to get all this amount of information. For companies with a shorter sales cycle, they could use revenue, but unfortunately, this won't help you optimize your campaigns.

Instead, a good idea is to use the Sales Accepted Opportunity, it takes only a month to measure and leaves you to obtain more ROAS data at the same time. 

This is the last resort before a victory, and it's more in line with companies that want to grow recurring annual revenue, but take less time to gather information. When you use it you can identify which leads are of good quality and use it to measure your campaign performance. Here is a complete guide on CRM implementation.

Find this excellent article on online reputation management to take your brand image to the next level.

Source: Unsplash.

Accept that less is more

Many companies want to be on every channel possible because they don't want to miss all the new leads that run around all these platforms. While we can find the right customer in the most unexpected places, sometimes it is better to be in the right place than all around.

Yes, we all want to grow more, that's the main reason why you are reading this, but, it is better to have the right customers than to have too many people that you couldn't handle all around.

When you are in the right places you will find the perfect matches for your company, and with time and patience, you will grow to the amount you wish to have.

Being in all the channels could be possible if you have a huge team at your disposal, then and only then, you could leave the Target ROAS to find leads in every platform possible. This will take a greater budget. Here is how to skyrocket your B2B sales.

Source: Unsplash.

Segment Your Campaigns By Keyword Performance

Target ROAS can be a great strategy for eCommerce because it leverages the actual conversion value of a sale. But, it has its implications.

If your store has products with wide-ranging price points, some of them won't get the same visibility.

Imagine the AI can make 2 sales with a CPA of $10, one of them will result in $30 revenue while the other results in $300. In the perspective of Google, the first item results in a ROAS of 3, while the sale of the second item results in a ROAS of 30. This will make the algorithm favour the second one.

If you wish to control what brands or products you are selling, the best option is to group your keywords or products with similar ROAS performance in one campaign. 

If you want to get better results, try splitting branded and unbranded search queries, they will surely result in a very different ROAS.

How to Optimize Target ROAS Campaigns

Bidding strategies require too much attention to details, if you don't do it then it won't run at its best potential and returns will be minimized.

We will give you a set of tips to optimize yours.

Check your margins

To protect your business from setting a wrong ROAS percent you have to review your margins.

For this, you have to evaluate this concept for each campaign by taking a look at the product and services you are showing in your ads. Then answer these questions:

  • What are the margins for these products and services?
  • Where does your ROAS need to be to leave a wide room for profit?

Breakdown campaigns into smaller ad groups

To help you find the reason why your ads may be successful you have to separate campaigns based on similar offerings, then find which of them were more successful and sub-divide them into smaller ad groups.

When you finish use those insights to target audiences and receive better returns.

As you are applying this, pay close attention to the volume of conversions and their returns, then use information from past campaigns and bidding strategies to inform these decisions.

Source: YouTube.

Allocate budget according to profit

When you figure out how to measure your ROAS you can better understand where and how to place your advertising budget.

Let's imagine that your ROAS across Search Network campaigns is 3.64, this means you are returning $3.64 for every dollar spent on the Search Network. But, display ads are promoting a stronger return at $4.50 for every dollar spent.

Now you know that you need to push more spending towards the Display Network. Everything is about moving pieces around and understanding which is the best fit for you.

Final Thoughts

Bidding strategies are usually your last resort once you have taken full advantage of your ads, in this way Google's artificial intelligence will get the most out of your budget to get you new leads.

The Target ROAS is usually a metric quite forgotten by marketers, but if you manage to understand and manage it, it can give you a better vision of your entire company.

Follow our advice and get the best out of your bidding strategies.

See you in a new article!

About Bruno Gavino

Bruno Gavino is the CEO and partner of Codedesign, a digital marketing agency with a strong international presence. Based in Lisbon, Portugal, with offices in Boston, Singapore, and Manchester (UK) Codedesign has been recognized as one of the top interactive agencies and eCommerce agencies. Awarded Top B2B Company in Europe and Top B2C company in retail, Codedesign aims to foster personal relationships with clients and create a positive work environment for its team.  

He emphasizes the need for digital agencies to focus on data optimization and performance to meet the increasingly results-driven demands of clients. His experience in digital marketing, combined with a unique background that includes engineering and data, contributes to his effective and multifaceted leadership style.

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About Codedesign

Codedesign is a digital marketing agency with a strong multicultural and international presence, offering expert services in digital marketing. Our digital agency in Lisbon, Boston, and Manchester enables us to provide market-ready strategies that suit a wide range of clients across the globe (both B2B and B2C). We specialize in creating impactful online experiences, focusing on making your digital presence strong and efficient. Our approach is straightforward and effective, ensuring that every client receives a personalized service that truly meets their needs.

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