Target CPA vs. Target ROAS: Which Strategy Is Best?

In the Google Ads world, determining the right bidding strategy is crucial to achieving a successful advertising campaign. Broadly speaking, the two strategies most often used in Google Ads are target CPA and target ROAS.

Although both use the Smart Bidding system, it is important to note that target CPA and target ROAS have different focuses and objectives. 

Before you run your business ads on Google Ads, it is better to understand the differences and how to optimize CPA and ROAS targets to make your advertising budget more efficient. Let's take a look at the complete information below.

Overview of Target CPA Bidding

Target CPA is one of the most popular bidding strategies in Google Ads because it helps advertisers control costs and get efficient conversions. Before using it, let's understand what it means and the best time to implement it based on the information below.

What Is Target CPA Bidding?

Target CPA (Cost Per Acquisition) bidding is a Smart Bidding strategy in Google Ads that helps you get as many conversions as possible at a specific average cost. 

This strategy automatically adjusts bids so that each customer action occurs according to the set cost target.

With a target CPA, you can control your advertising costs more efficiently. The Google system uses historical data and display context to determine the best bid for each ad auction.

This strategy is portfolio-based, which means the system focuses on the combined results of all conversions. If the target CPA has been achieved overall, Google will not pursue additional conversions that exceed the target. This makes your budget smarter and more effective.

When to Use Target CPA Bidding?

Target CPA bidding is suitable when your main campaign goal is to get more conversions at an efficient cost. The best time to use target CPA is when:

• The campaign goal focuses on increasing conversions, such as leads, transactions, or app downloads.
• You want to keep the cost per conversion stable according to the set target.
• Your business operates in a sector with high acquisition costs but significant impact, such as B2B or lead generation campaigns.

Read also: 6 Strategies to Maximize Lead Generation with SEO

Overview of Target ROAS Bidding

Unlike Google Ads target CPA, ROAS targets focus on increasing revenue from every rupiah spent on advertising. Before implementing it, understand the definition and the right time to use it to maximize campaign results.

What Is Target ROAS Bidding?

Target ROAS (Return on Ad Spend) bidding is a Smart Bidding strategy in Google Ads that aims to maximize revenue per advertising cost incurred. 

By setting a target ROAS, you inform the Google system what profit ratio you want to achieve compared to your total advertising expenses.

For example, if your ROAS target is 400%, Google will optimize bids so that every IDR1 generates IDR 4 in sales. The system will increase bids for high-value conversion opportunities and decrease them if the conversion potential is low. 

This strategy is suitable for businesses seeking to boost revenue while maintaining budget efficiency.

When Should You Use Target ROAS Bidding?

Target ROAS bidding is suitable when your primary campaign goal is to increase revenue and conversion value per rupiah spent. 

This strategy is effective for businesses or e-commerce sites with good profit margins and sufficient conversion data.

For optimal results, Google recommends a minimum number of conversions before using this strategy:

• Display Ads: At least 15 conversions in the last 30 days.
• App Ads: At least 10 conversions per day or around 300 in 30 days.
• Discovery Ads: At least 75 conversions over the previous 30 days, with at least 10 conversions in the last 7 days.
• Video Ads (Action): At least 30 conversions in the previous 30 days.

Read also: SEO and SEM Basic Guidelines and Which One You Should Use

The Difference Between Target CPA and Target ROAS Bidding Strategies

Overall, the main difference between target CPA and target ROAS comes down to the optimization goal. Target CPA focuses on the number of conversions at a specific average cost. Target ROAS focuses on the value of conversions, not just the number of conversions.

If you want to increase conversion volume at a stable cost, choose CPA. But if your goal is to increase revenue from each conversion, then ROAS is more suitable.

Both use Google's machine learning to optimize results. However, an effective strategy depends heavily on data and business goals.

Why You Should Choose the Right Bidding Strategy 

In digital marketing, choosing the right bidding strategy is crucial for the success of an ad campaign. Every business has different characteristics and targets, so bidding strategies must also be tailored specifically.

The right strategy can even maximize ROI, reach a quality audience, and achieve conversion targets without exceeding the budget. Conversely, an inappropriate strategy can result in wasted advertising costs without commensurate results.

Through Smart Bidding, Google automatically adjusts bids based on each user's conversion potential. If the potential is high, the bid is increased. If the potential is low, the bid is decreased to maintain cost efficiency.

This strategy can also save time by reducing the need for manual adjustments. Target CPA is suitable for keeping conversion costs stable, while target ROAS is for increasing revenue value.

With automation and flexible budget management, campaigns can run more effectively and profitably.

Read also: 5 Benefits of a Website for Business in Digital Marketing

Tips for Optimizing Target CPA and Target ROAS

To get maximum results from target CPA and target ROAS strategies, it is important to implement the following optimization steps:

1. Analyze and Evaluate Performance for Target ROAS

Monitor ad performance regularly to see which campaigns are most effective. For target ROAS, leverage performance data and remarket to users who have previously shown interest. 

Adjust your strategy to seasonal trends or periods of high demand to maintain optimal results.

2. Optimize Landing Pages and User Experience for CPA Targets

For CPA targets, ensure that landing pages are easily accessible, load quickly, and have a clear message. A good user experience will help lower acquisition costs and increase conversions.

3. Collaborate with Experts

If you want more targeted results, working with professionals may be the best option. 

At cmlabs, we provide SEM services to help businesses determine the most effective bidding strategies. Our team will review various factors, including the business sector and target audience, to ensure that campaigns run efficiently and profitably.

Confused on Choosing Between Target CPA or Target ROAS? cmlabs Can Help You!

If you are still unsure which bidding strategy between target CPA and target ROAS is best for your business, the cmlabs team is here to help. 

Through SEM Services by cmlabs, we can help analyze campaign data, business characteristics, and audience behavior to determine the most profitable strategy for your brand.

cmlabs team does not just focus on identifying the right target keywords, but also ensures that ad content, keywords, and landing pages are designed to generate maximum conversions. 

Everything is conducted in a data-driven manner, with continuous monitoring and optimization to maintain stable campaign performance.

Numerous major brands have entrusted their Google Ads campaigns to cmlabs and have successfully achieved significant results. Now, it is time for your business to experience the impact as well.

Want to know the most suitable bidding strategy for your campaign? Contact us now to get effective and targeted SEM solutions for your business growth.

Read also: Data-Driven Marketing: Definition, Benefits, & Methods