Choosing the right bidding strategy can make a significant difference in achieving your marketing goals. When you’re managing your PPC campaigns, two automated options stand out: Target Return on Ad Spend (tROAS) and Target Cost Per Acquisition (tCPA). However, which one is the better choice? tROAS or tCPA?
In this blog post, we’ll explore tROAS and tCPA, helping you understand how to use each for better campaign results.
What is tROAS?
Target Return on Ad Spend (tROAS) is an automated smart bidding strategy used in pay-per-click (PPC) advertising, particularly on platforms like Google Ads.
It focuses on optimizing ad spend to achieve a specific return on investment. In simpler terms, tROAS helps advertisers get the most revenue possible from their advertising budget.
When you set a tROAS target, you specify the desired return on your ad spend.
For example, if you set a tROAS of 500%, you are aiming to make $5 in revenue for every $1 spent on advertising. The advertising platform then uses this target to automatically adjust your bids in real-time to achieve this goal.
When to use tROAS?
For e-commerce businesses, maximizing revenue is key, and tROAS is the perfect way to do it. tROAS ensures that every dollar spent on ads generates the most revenue possible.
With a focus on maximizing revenue from ad spending, tROAS is the optimal bidding strategy for e-commerce businesses. It has been shown to improve conversion rates and ROAS by over 40%.
So, tROAS works best when your campaign’s main objective is to drive purchases. This bidding strategy is tailored to optimize your ad spend to maximize revenue generated from sales. So, if your goal is to boost sales and increase revenue, tROAS is the way to go!
Advantages of tROAS
The advantages of tROAS are clear, especially for e-commerce businesses focused on driving purchases:
Increased Revenue: With tROAS, you’ll see a boost in revenue because it ensures that every dollar you spend on ads brings back the highest possible return. By smartly managing your ad budget, tROAS helps maximize your overall earnings and profitability.
- More Sales: Using tROAS means more sales for you. It targets potential customers who are most likely to buy, resulting in higher conversion rates and a noticeable increase in your sales volume.
- Optimized Spending: tROAS helps you make the most of your advertising budget. Analyzing data and adjusting bids ensures that you spend your money wisely, achieving your sales goals without overspending.
- Targeting Valuable Customers: With tROAS, you attract valuable customers who are ready to make purchases. By focusing on these customers, you can increase the average value of each sale and boost your overall profitability.
Challenges of tROAS
Addressing these challenges requires a proactive approach, including thorough data analysis, strategic budget allocation, and ongoing optimization efforts to maximize the benefits of tROAS while mitigating potential risks.
What is tCPA?
Now, let’s say a little more about tCPA bidding strategy.
Well, tCPA stands for Target Cost Per Acquisition. It’s an automated bidding strategy in Google Ads where you set a target cost for acquiring a customer.
With tCPA, Google automatically adjusts your bids to help you get as many conversions as possible at or below your specified acquisition cost.
When to use tCPA?
TCPA is ideal for campaigns focused on generating leads or acquiring new customers at a specific cost.
If your primary goal is to increase your customer base or collect contact information from potential leads, tCPA can help you achieve this efficiently.
Also, to effectively use tCPA, you need a sufficient amount of historical conversion data. This allows Google’s algorithms to optimize your bids based on past performance and accurately predict future conversions.
Advantages of tCPA
Now that we explore what tCPA is, and what is the best way to use it, let’s see what are the advantages of using tCPA.
- Control Your Costs: With tCPA, you take charge of your advertising budget by setting a specific cost for acquiring each customer or lead. This ensures disciplined spending and prevents unnecessary expenses.
Efficient Bidding: tCPA automates bid adjustments to meet your cost-per-acquisition target. This streamlines the bidding process and optimizes your ad spend, allowing you to focus on running your business effectively.
- Optimized Performance: tCPA uses historical data and real-time insights to optimize bidding strategies. This results in improved campaign performance.
- Results-Oriented Approach: TCPA shifts the focus from vanity metrics like clicks to tangible outcomes such as conversions. This allows you to prioritize actions that drive meaningful results and contribute to your business objectives.
Challenges of tCPA
- Learning Period: Implementing tCPA requires a learning period for the bidding algorithm to understand campaign dynamics and optimize bidding strategies effectively. During this period, campaign performance may fluctuate, requiring patience and ongoing monitoring.
tROAS or tCPA?
tROAS and tCPA optimization difference
How to change bidding strategy on Google Ads
If you’d like to change your bidding strategy on Google Ads, you can do it easily and efficiently. Adjusting your bidding strategy can help you better meet your advertising goals.
Whether you want to switch to a manual approach or leverage automated bidding strategies, the process is straightforward.
Just follow these steps to make the necessary changes and optimize your campaign performance.
Step 1: Sign in to your Google Ads account.
Step 2: In the page menu on the left, click Campaigns.
Step 3: Select the campaign you want to edit.
Step 4: Click Settings in the page menu for this campaign.
Step 5: Open Bidding and then click Change bid strategy.
Step 6: Select your new bid strategy from the drop-down menu.
Step 7: Click Save.
