Can you use Target ROAS with a low budget in Google Ads?

By: Jyll Saskin Gales, Google Ads Coach

Dreaming of maximizing your return on ad spend (ROAS), but worried your budget might not be up to the task? Many small business owners and marketers wonder if it's possible to achieve their ROAS goals with limited funds. Today, we're tackling this burning question head-on to help you make informed decisions for your Google Ads campaigns.

The Target ROAS Dilemma: Can It Work on a Small Budget?

Target ROAS is Google Ads' most sophisticated Smart Bidding strategy, designed to help you achieve a specific return on your ad investment. For example, a Target ROAS of 325% means that for every dollar you spend on Google Ads, you want to get $3.25 back in revenue. While this bidding strategy can be incredibly powerful, it's not always the best fit for every budget. In fact, my short answer: you probably can't use Target ROAS with a small budget.

Why Target ROAS Struggles With Small Budgets

To understand why Target ROAS might not be ideal for smaller budgets, let's look at Google's recommendations for Smart Bidding strategies.

For most Smart Bidding strategies, like Maximize Conversions or Target CPA, Google suggests having at least one conversion per day, or 30 conversions per month, to provide enough data for the AI to learn and optimize effectively.

However, Target ROAS is a different beast. It aims not just for conversions, but for maximizing the value of those conversions relative to your ad spend. This requires even more data for the AI to make informed decisions. Google recommends at least three conversions per day, or 90 conversions per month, to ensure Target ROAS can work its magic. In my experience, that recommendation is pretty accurate.

The Budget Reality Check

For many businesses with smaller Google Ads budgets (less than $50 per day per campaign), achieving 90 conversions per month can be a tall order. This means that with a limited budget, there might not be enough data for the Target ROAS algorithm to learn and optimize effectively, potentially leading to inferior results than a strategy like Target CPA.

Alternative Strategies for Low Budgets

If you're working with a smaller budget, don't despair! There are other Smart Bidding strategies and workarounds that can be effective for your situation:

• Maximize Conversions: This strategy focuses on getting you the most conversions possible within your budget.
• Maximize Conversion Value: Ideal for businesses with varying revenue per conversion, this strategy aims to maximize the total value of your conversions.
• Target CPA: This strategy focuses on getting you the most conversions possible at a set cost per conversion (CPA)
• Optimizing for microconversions: To feed the Target ROAS bidding algorithm sufficient data, optimize for a more frequently occurring conversion than a purchase, such as an "add to cart" or "begin checkout." This will make it much easier to get at least 3 conversions per day.

Once your campaigns start generating a consistent three conversions per day, you can then consider switching to Target ROAS.

Tips for Success with Target ROAS (When Your Budget Allows)

If you do decide to use Target ROAS, here are a few tips to set yourself up for success:

1. Start with your current ROAS as your target: Even if you want to improve your ROAS, starting with your current level gives the algorithm a baseline to work from.
2. Gradually increase your target: Once your campaigns stabilize, you can adjust your Target ROAS in 25% increments to gradually improve your results.
3. Be mindful of the trade-off between reach and efficiency: Higher ROAS targets often come at the cost of reduced reach, so find a balance that works for your goals.