Google Ads & ROAS
A specific advertising option that Google offers these days is the socalled Performance Max campaign. It involves you setting a target ROAS. Google then gets to work for you by advertising not only within the Google search engine, but also within Google’s Display and YouTube network. It’s super easy, you hardly have to do anything yourself and Google manages the campaigns. Google also doesn’t bother you with all kinds of details. For example, within a Performance Max campaign you won’t get to see what specific keywords people have used to find you.
What about insights?
Obviously there are some very smart people working at Google who can create great bidding algorithms, based on the information available to Google. On the other hand, however, Google is also the party that makes money from those very same ads. It’s like giving your wallet to a car dealer and telling him to find you a nice, reliable second-hand car.
In the case of Performance Max campaigns, you don't have complete insight into what is happening. If you make a sale to someone who wound up on your website by searching for your own brand name, for instance, Google will allocate that sale to itself. And why wouldn’t Google generate large numbers of clicks via the Display and YouTube network in order to build up a higher cookie share and claim more sales, without this actually amounting to extra sales?
Regardless of whether or not Google is impartial, though, you can ask yourself if Google has all of the information that is important to set your bids. There are many markets with specific characteristics and business models.
The next step
Why not take the next step and target margins? Or why not also consider the ROPO effect (Research Online Purchase Offline) and directly target your campaigns based on the Customer Lifetime Value (CLV) of customers?
The following graph shows the development in the targeting of ad campaigns. Hereby you should keep in mind that the more advanced your targeting model is, the greater the amount of data needed to arrive at the right insights and bids.
Want to read more about profitable campaigns?
In this guide, we take you through the shortcomings and deceptions of ROAS, but more importantly, we offer you a much better alternative, which is to drive campaigns on profitability instead of revenue. We call this Profit On Ad Spend (POAS).