Little Known New AdWords Feature that you Can't Afford to Miss!

When dealing with Google AdWords bidding in the past, the choice would be between three different bid strategies; CPC (cost-per-click) bidding, CPM/CPI (cost-per-impression) bidding or CPA (cost-per-acquisition) bidding. The strategy suitable for a campaign would depend on what type of goal you had with your website. For people wanting to a lot generate traffic, CPC bidding would be the best choice, to increase brand awareness, CPM bidding would be fitting, while websites with the main focus on conversions would be likely to choose CPA bidding.

Recently Google announced a whole new way of bidding in AdWords called Target ROAS (return on Ad Spend) as a part of the ongoing flexible bidding strategies initiative to improve real-time bidding in AdWords.

Before we explain this new bidding strategy in deeper terms, let’s quickly remind ourselves what ROAS is in the first place. In simple terms, it is the total revenue generated for a specific marketing channel divided by the total spend on that vertical. Basically the percentage total of your profit vs advertising cost

As a formula it looks like this: Ad revenue/Ad Spend * 100. As an example, if you spend $500 on advertising and your revenue is $1000, your ROAS is 200%.

Fairly simple, but how does this apply to AdWords bidding? Google's new automatic bidding algorithm looks at the reported conversion values you report to them through Conversion Tracking, and by looking at those values, AdWords predicts future conversion and associated return or profit. In accordance to these values and conversion you will be able to set your personal ROAS % goal of how much revenue you want to make for each ad-dollar spent. From there your job in technically done. In accordance to this goal, AdWords' automatic bidding will set a maximum CPC bid to maximize your total conversion value, at the same time as trying to produce an average ROAS equal to your set goal.

The reason why I say your job is 'technically' done is that even though this is an automatic bidding service, you do not want to just leave it assuming it will take care of itself. As with all automatic bidding strategies, you need to check-in now and then to make sure that you are achieving the results you strive for. Since it is automated, there are factors like seasonal trends, problems with tracking etc. that will not be taken into considerations, which you will need to adjust manually. The feedback from this new bidding strategy has been very positive, and it is something which should be considered or at least be studied more in order to decide if it can be profitable for your campaign.

At VIP Affiliates we encourage everyone to be cautious with automatic bidding. If you do not have a great deal of experience with AdWords or bidding, or don't have a deep insight in how it works, it would be better to take advice from experts and run your bidding manually. We are happy to share with you our experience, and give you the right tools to succeed with your biddings, so contact us today!