Target ROAS vs Maximize Conversion Value After the Google Ads Update

Most people don't know how to use target ROAS or they use it in a completely incorrect way. They set it too early, they set it too high, they set it too low. And especially since the last Google update, the rules have changed massively and it works in a very different way and it can backfire massively if you don't know how it works and if you don't understand completely. But let's look at what

changed first, right? The old trick basically that we always used was, let's see, for example, we set a target of 200% in the ad account, right? Again, depends on the niche, on the type of client, on the type of customer, but let's say 200% kind of like a level where we are at least break even or slightly above that, right? Kind of like as a fallback. So, we wanted to exercise some control with that instead of like giving it full freedom, we set like this minimum target, right? Again, as a fallback. But you still have the opportunity, if you do well, if you have great products, you have a winning offers, you're scaling, you can, for example, get the ROAS of 270% and above, right?

So, the thing is, I could set that fallback ROAS, but could still massively outperform it, right? It was more of a like I said, a security layer. I set it on purpose not too high, so I have this like fallback, but I don't restrict it too much and we can push, push and scale, right? So, that worked really

well until the latest Google update because that thing is completely dead now, right? It doesn't work anymore. Because what Google changed basically is that the target you set is what you will get. So, they will not outperform it anymore. It's It's a suggestion anymore, they will stick it, right? Of course, that doesn't mean whatever target you set you will magically reach it. There are there still a lot of variables that go into it. You still need a great product, a great offer, and it needs to convert, right? But, the idea is Google will stick closer to it. So, let's see how it looks like. So, as we just outlined, it works differently now, completely different story compared to what we had before, right?

So, how it works now,

let's say this is our target, right? Let's say Let's use the same example of 200%. That's kind of our barrier, right? So, here we have our budget. The thing is now you will not outperform your target in the long run, right? You will still see really good performance on one day, but over a 30-day period it will come back to this, right? Because Google is like, "Okay, that's the target. That's what you are happy with, so we don't give you more, right?" So, the idea is the whole idea, the whole essence of this update is that Google will stick closer to the target, right? Again, with a little bit of variance, right?

Especially on a daily timeframe, but this is your barrier now. You cannot go above that if you stick to this target, right? So, this is super important to understand. And also, what we said before,

like, "Yo, Chris, you also said there are multiple variables. What if I cannot even reach this target, right? Otherwise, it's easy. I just say I don't know. I set the budget at like 4K spend a day and the target at eight 800, right? Then I have a money printer, but like obviously doesn't work. When you are not able to reach the target, Google will start to lower the spend, right? So, let's say we have a budget of Let's write it down. 1K a day, right? Let's say in euro, US dollar, whatever. And then, if it sees, "Hey, I cannot reach this target with this spend over a longer period of time, it would start to spend less and less and less and you might just only spend like 400 a day, right?

So, also not ideal. Basically, and that's why I'm not like the biggest fan of this update, although it makes sense, right? Google tries to stick to your target, but one of the two main things that we see is like, okay, either you are not able to outperform it anymore and you really have to check your target or it will massively uh throttle your spend. Throttle your spend or at least you will have more fluctuations, right?

So, this is something you have to consider. And then on the other hand, regarding targets, what you can use as an alternative, and this is what we will discuss in this video, right? Like we said, difference between target ROAS and maximize conversion value. There you basically also have your budget. The difference here is, and like I said, it's in the name, right? You have your budget and you try to maximize the conversion values. Google will try to give you the maximum amount of revenue that you can have with this budget, right? So, that's in theory way more straightforward. I mean, who wouldn't like to have maximum amount of revenue, right?

That sounds great. That's why we typically start with that so you don't have too many restrictions and you can really push without these issues of, hey, it might limit you too much, right? The downside of course with that is, and we will check in a minute on when to use what specifically, but the downside is like you give Google complete freedom, right? And everybody who ran ads before knows that doesn't always work the way you want it to. That's why we have certain control aspects of like, okay, I need this

minimum CPA. I need this minimum target, right? All right, and to make this as easy as possible for you to understand, Here, a quick reminder, as simple to understand as possible. Quick and easy breakdown. With target drawers, basically just two super simple. You have basically two options. It can't reach the target, right? So, you're underperforming, or at least not reaching it, and it reaches the target. These are basically like the two only options you have here, right? Again, there's like nothing in between. There's nothing like, "Oh, I set it wherever." And like, sometimes it goes above, sometimes it goes beyond. This is in the end what you will [clears throat] have.

It either doesn't reach it, or it reaches it. And then the problem and the consequences if it doesn't reach it, spend will go down eventually, right? It means like you will throttle that spend, whatever you have in the account. And the problem here with it reaches the target is you're stuck there, right? This is the bar that you have set. So, you have two options in in this case. Frankly speaking, either you start to increase the target with the current budget, because you're reaching it and you want to like optimize for higher target, higher profit margin, or you're genuinely happy with the target you have set, but then you need to to scale the budget, right?

Otherwise, you set this cage for yourself, this limit, this bar where it's like you cannot go beyond it. These are like the two main things to

consider here in regardless of target drawers and maximize conversion rate, right? With the budget, you obviously define the volume. How much do you spend? How much sales can I get with that? And with the target, you basically set the the quality bar, right? Like, okay, what do I need to get? What do I need in this account? By the way, I make this video because I get these kind of questions around the target and maximize conversion value in my Skool community almost every single day. So, we'll break it down there in detail as well. Check it in the link below. It's basically free. We have over 1,600 members already.

But, yeah, a lot of people reach out to me via YouTube, Instagram, and everything. So, I always recommend join the Skool. We have our team there as well explaining you everything. Like I said, it's free to join and to watch this kind of content so you understand how it works.

And there's one more thing why I think people always trip over like, "I don't understand the target. It doesn't work for me. I cannot use it." And it's a very important difference you have to make. When people set the target, they always think about their store ROAS. Right? They're like, "Okay, I need a ROAS of three." And they mean like their the total what would basically right means like they invest $1, they need three out of it to achieve their ideal profit margin, for example, right? So, they talk about their overall shop ROAS to be more accurate, their shop ROI, right? They're like, "I need ROAS And then they set the ROAS at three {slash} 300% in the ad account, right?

Without understanding like you never track 100% in the ad account, right? You have either conversion delays, you never track 100% because of constant banner, uh ad blocker, and all of these things, right? It's impossible to even track 100%, which means and you might have noticed that already unless you have over tracking that your ad account ROAS is never as high as your shop ROAS, right? So, what gives you an ROI of 300 might have a ROAS of 240% in the ad account, right? When we look conversion value divided by cost metric, right? That's the ROAS we typically use and look at ROAS by time, but that's not what most of you have and for simplicity reasons, we look at that.

And you have to look at that in in the way when you set the targets as well. Why? Because that's what Google looks at

as well, right? So, that's the ROAS they look at. That's based on what they they do the whole calculation with the target. So, if you think, "Okay, my shop ROAS is three, I will set it at three." But, your actual ad account ROAS, right? Conversion rate divided by cost is just 240% and you set it at 300. Now, so what will happen? Basically, like we just discussed, right? Google thinks, "Oh, I'm not hitting the target." Because again, they look at this, not at this, all right? This. So, it will throttle spend because it's like, "Hey, we're underperforming." And that's not what you want, right? Because in your head, you're thinking, "Hey, we're actually achieving what we need here." That's super important to understand.

All right, now the real question is, "Chris, I understand it now at this point, all good, right? But,

when do you use what? When can I use a target? I understand now, okay, what it is, how to use it more or less. But, still, like, when to use it? How many sales do I need? At which budget level? Why does it work for my friend? Why does it not work for me, right? And I wanted again to keep it very simple. So, we look at three stages. We have the beginner stage. Your budget is less than 100 euro a day. Under that, right? Then we have the intermediate stage, we say 100 to 300 a day, 300 a day and plus. So, we keep it easy, those three stages, basically.

And again, we are not overcomplicating it here, super simple. In the beginning

stages, never ever a target under no circumstances. Why? You don't even have any data yet, right? So, you need to give it freedom, which means maximize conversion value is the best, because you basically give it a budget and you tell Google, "Okay, give me maximum amount of revenue." Right? And that's how you have to do it. You focus on data first and not profit. And the thing is, and that's what a lot of beginners get wrong as well, you cannot even use a target here in the beginning. You are able to set it in the ad account under campaign settings, but it literally cannot work, right?

You need a lot of day Think about it. Think about it. You're telling Google, "I need this target." But how is Google supposed to know which kind of person can give you this return if you have zero data in the ad account so far, right? Of course, it will look at your data, and the more there is, the more reliable a target can be, right? So, if you have two sales in 7 days, a target cannot work, right? So, you will completely up your algorithm, or spend will basically go down to zero, right? Probably both down the line. So, it doesn't make sense. You

have to understand in order for a target to work reliably, and you get the scores consistency that you need, that you want, you need a lot of data. I think Google's official documents say you need at least 30 conversions in your campaign or 30 conversions in the last 30 days. Doesn't really matter. And the reason why it doesn't really matter because I know from my own experience, like that's the bare minimum, right? That's like that's not enough. We see at least 50, 60, double of that in order for it to kind of start working, right? Which means you will never get it with this budget.

Even if you have good drawers, right? And then you have to scale anyway. So,

never at this level. Same here, at this level, it's also almost too early. Especially since the update, I don't like it that much anymore. We scale most accounts without a target, especially now in Q4, right? Where there's a lot of demand coming in, and we control the performance with a lot of our features that we're launching right now at Tech Stack. Uh controlling it on product level, controlling it with different campaign structures. That's how we do it personally. And at this level, we almost never use it. There's one main exception though. We use it here because like honestly, 300 spent a day for some people is a lot of money, right?

And they have to be a bit more aware of the cash flow. And at this point, you might run for multiple weeks, multiple months. You have more data. So, you might be able to use a target. Now, don't set it too high, but like a conservative fallback to exercise more control to achieve a certain level of profit margin because again, you kind of need it. 300 spent a day is like it's it's starting to get more serious for a lot of people, right? So, at this

point, it might make sense sometimes to to use a target to have this level of control. And then, if you're over 300 a day, of course, you can still use both, right? If you see, "Hey, account has crazy momentum and it just skyrockets." We we don't change too much, right? Like we will not switch the bid strategy, you know? Because these are like literally two different bid strategies. If it doesn't work, maximize conversion value, you don't have issues with the inconsistency. Your return is great. You're still scaling. Keep it at maximize conversion value. Like you did in the beginning. If you reach a level where it's like, "I'm kind of hitting a plateau.

No, profit margin is not too too good. I have a lot of inconsistency, right? It goes up, down, up, down." And you have the data though, right? Let's say you spent 1K a day already. Then it's like, okay, we set a target now. We tell Google we want that, we need that, and then it will start to get more consistent and aim for this target, right? At this level, it's also easier to deal with the issues of like Okay, if it doesn't hit the target, it will spend slightly less, right? That's fine. These are all things like all the pros and cons you can have with a target.

It's way easier to manage once you have more spend, right? And then you can control it easier. Now it works also more reliably and you will have less issues overall. So this is how it works. Very simple. Just think about those three stages. Don't overcomplicate it, right? Don't try to reinvent the wheel and do like your own stuff of like, ah, I saw this on Reddit or something. And I have a budget of 10 euros a day, but I can do some sort of serve scaling with that if I set a target. Doesn't make sense, right? Focus on the fundamental things first and just look at those three stages.

And then you will have less issues with the target as well. All right, in a nutshell, quick summary, what are the pros and cons? Maximize

conversion value versus target ROAS. Funny enough, I showed target here, but I will start with maximize conversion value on this side. Target ROAS on this side. All right, like we said, this is perfect for the beginning, right? Maximize conversion value, beginning. Beginning. I might have to write a little bit bigger. That's almost too small, but either way, you can listen as well. Perfect for the start to gather data, right? No restrictions, which can be a benefit in the beginning, right? It gives you a lot of freedom. If momentum is great, you can scale quickly. So no restrictions, which is also the main disadvantage, right? Because your only control lever, your only break is the budget because you don't have a target.

Of course, like we said, we can have campaign splits, different labels, do all of that, right? But purely in terms of campaign settings and bid strategy, you have very little control over what's happening, right? You tell Google I want maximize amount of conversion value, the amount of revenue I get, but you don't you have very little control, right? And that's also, if you're already talking about it, the main benefit here. Control, right? Protecting profit margin because of that control. When you have higher spend and more data, it's more predictable. But also a lot of disadvantages now since the update, where we said first of all, it cannot outperform your

target. If it's underperforming, it will throttle spend, right? So, a lot of beginners struggle with that because it's like, okay, how do I do it now? It's not spending, should I change it? And then you also run into the risk, and that's important. We didn't mention it in this video yet, but it's important to understand, if you use a target, don't go back and forth. Don't set it like this, don't set it like that, and bum bum bum bum bum, you're all over the place. Same with the budget, because then you send all these mixed signals to Google, and it's like impossible to see a clear line, right?

On like, what do you even want in the first place? So, you need a little bit of patience, a little bit of con- consistency as well in your management approach, how you do that. Otherwise, it you will it up massively, right? And then it results in a downward spiral, where it's just like gets worse worse and worse, cuz it under spends, then you're like, "Ah, it, under spends, I need to lower the target." Then you lower the target, you send the signal to Google, "I'm happy with less performance." And then Google gives you less less and less, right? So, can be a little bit tricky, can be a little bit dangerous, especially since the update.

That's why I don't like it. I think it's

it's again another money grab from from Google, right? They say it makes sense, and it does in theory, but it's a lot more difficult to manage for a lot of people, right? Because before it was a bit more flexible. You could outperform it. You could underperform And it was the same thing. It also limited your spend slightly, but it was a bit It had a bit more room for flexibility, right? Right now, if you set it incorrectly and it's not dialed in, you will feel the pain in the account like it will not perform well. So, yeah, that's pretty much it, right? Basically, good in the beginning, good to get a data quickly, good to scale quickly without restrictions, right?

Giving it freedom. And target basically gives you more control, consistency, can protect profit margin. Downside is you need a lot of data and it can be a little bit weird sometimes. And that's it in a nutshell for this video. Again, check out the Skool. Like I said, see you there. Best to answer all the questions here. The community helps you out as well. We have hours of course content like this. So, everything you need you will find there as well. And see you on the other side.