What is Target ROAS in advertising?

Target ROAS (tROAS): what it means in advertising

Definition

Target ROAS is an automated bid strategy where you specify the return on ad spend you want and the platform bids more for users it predicts will spend more. It optimises for conversion value rather than conversion count, so it depends on accurate revenue values being passed back with every conversion. If those values are wrong, the strategy is efficiently buying the wrong customers.

What to know

The target has to sit above your break-even ROAS, which is 1 divided by gross margin. Setting it below that instructs the platform to buy unprofitable revenue as cheaply as it can.

A volume trade-off is built in. Raising the target usually cuts spend and raises efficiency, lowering it does the reverse, and the profit-maximising point is rarely the efficiency-maximising one.

Related terms

Bid strategyA bid strategy is the rule that decides what you pay for each auction. Manual strategies set a cost you contro...Target CPATarget CPA is an automated bid strategy where you state the average cost per conversion you want and the platf...ROASROAS (return on ad spend) is the revenue generated by advertising divided by the amount spent on it. A campaig...Break-even ROASBreak-even ROAS is the return on ad spend at which a campaign covers its costs exactly, calculated as 1 divide...

Track this across every platform at once

Muze reads Target ROAS and everything around it straight from your Meta, Google, Amazon and Shopify accounts, inside ChatGPT or Claude. Free to start.

See how Muze works