When it comes to ROAS, it’s no surprise that it’s one of the most important metrics for businesses looking to measure the effectiveness of their advertising efforts. More specifically, within the Google Ads ecosystem, understanding and improving ROAS can dramatically boost a brand’s online visibility and financial performance. But it’s important to note that the ROAS landscape within Google Ads isn’t homogenous; it differs significantly when we look at Google Shopping Ads specifically.

How to Calculate Your ROAS from Google Shopping Ads

Calculating your ROAS for Google Shopping is straightforward but critical for understanding the profitability of your ads. The formula remains:

ROAS = (Total Ad Revenue / Total Ad Spend) * 100

This calculation provides a percentage indicating the return you’re getting for every dollar spent. For Google Shopping, where product listings are directly linked to sales, this metric is invaluable. Understanding how to see Google Shopping ROAS within your Google Ads dashboard is essential. It involves tracking your ad spend against the revenue generated from those ads, which can be detailed in the “Conversions” section of your Google Ads account.

What’s the Average ROAS for Google Shopping?

While the average ROAS across all Google Ads might hover around 200%, the average ROAS for Google Shopping can vary significantly based on product type, industry, and competitive landscape. However, aiming for a ROAS of 400% (or 4:1) is a good benchmark for Google Shopping campaigns. This means for every $1 spent, you’re earning $4 back in revenue.

Recent changes to Google Shopping ROAS strategies, including enhanced machine learning and automation capabilities, suggest that businesses can achieve even higher returns by optimizing their campaigns for specific outcomes.

What Is a Good ROAS for Google Ads, Specifically for Google Shopping?

Google Ads ROAS, and Google Shopping, in particular, is one of the most important metrics that e-commerce companies use to measure the success of their advertising campaigns. However, ROAS for Google Shopping becomes even more complex when we take into account the unique features and recent changes that have been made to Google Shopping’s ROAS. Unlike Google Ads, Google Shopping focuses on ROAS using more granular metrics that reflect the “intent to buy” that these ads frequently capture.

Why ROAS for Google Shopping is Unique

Regular Google Ads vs. Google Shopping Ads

Regular Ads (Search Ads)

• Focus: Keywords—you choose specific keywords to trigger their ads.
• Target Audience: Users in the research phase who are searching for information or browsing broadly. They might be considering different products or services.
• Benefits:
  • Reaches a wider audience.
  • More control over targeting with keywords.

Shopping Ads

• Focus: Product information, meaning shopping ads use product images, titles, prices, and store names.
• Target Audience: Users ready to buy, meaning the users that are more likely to be interested in specific products and comparing options.
• Benefits:
  • More visually appealing with product images.
  • Can lead to higher click-through rates and conversions (sales).

In a nutshell, regular ads cast a wider net to capture users who might be interested, while shopping ads target users who are closer to making a purchase.

Impact on ROAS

• Since Shopping Ads target users closer to buying, a higher click-through rate (CTR) and potentially a higher conversion rate are expected compared to regular search ads.
• This can lead to a different “good” ROAS range for Shopping Ads compared to regular Google Ads.

Beyond the Basics

Analyze ROAS at the product level instead of just the campaign level. This helps identify:

• High-performing products: Generate a good return on ad spend.
• Low-performing products: Might need ad or product listing optimization.

In short, ROAS for Google Shopping goes beyond a simple return on investment metric. Google Shopping Ads are different from regular search ads because they show pictures, descriptions, and prices of products right in the search results. This special format can affect how many people click on the ad and actually buy something. To make the most out of Google Shopping Ads, advertisers need to understand ROAS really well.

How to Increase ROAS on Google Shopping

To increase your ROAS on Google Shopping, consider these strategies.

1. Optimize Product Listings

• Compelling visuals:
  • Use high-resolution, professional product photos from multiple angles.
  • Include lifestyle images showcasing the product in use.
  • Consider 360-degree views for a more immersive experience.
• Detailed & Data-Driven Descriptions:
  • Include all relevant product details (material, size, features).
  • Use keywords potential customers might search for.
  • Highlight benefits that address customer pain points.
• Competitive Pricing:
  • Monitor competitor pricing and adjust yours to stay attractive.
  • Consider offering promotions or discounts to incentivize purchases.
  • Ensure your pricing accurately reflects product value and profit margins.

2. Leverage Target ROAS Bidding

• Set SMART Goals:
  • Define a realistic and achievable target ROAS based on historical data and industry benchmarks.
  • Consider factors like product margins and overall business goals.
• Google’s Algorithm in Action:
  • Target ROAS allows Google Ads to automatically adjust bids for each auction.
  • The goal is to maximize conversions while staying within your target ROAS.
  • Monitor performance and make adjustments to your target ROAS if needed.

3. Refine Audience Targeting

• Go Beyond Demographics:
  • While demographics can be a starting point, leverage Google’s targeting options for a more precise approach.
  • Target by interests, in-market audiences, or similar customer lists.
• Customer Journey Stages:
  • Tailor your campaigns to different stages of the buying funnel.
  • Target high-intent keywords for users closer to purchase.
  • Use broader keywords for brand awareness at the top of the funnel.
• Negative Keywords:
  • Prevent ads from showing for irrelevant searches by adding negative keywords.
  • This ensures your budget goes towards users with a higher purchase intent.

4. Additional Tips

• Regular Performance Monitoring:
  • Track key metrics like impressions, clicks, conversion rates, and ROAS.
  • Identify areas for improvement and adjust your strategies accordingly.
• Experiment and Test:
  • Try different campaign structures, bids, and ad copy variations.
  • Use Google Ads experiments to identify the most effective combinations.
• Feed Management:
  • Ensure your product data feed is accurate, complete, and up-to-date.
  • Include relevant product attributes like brand, color, and size.

For more detailed tips on Google Shopping optimization and Google Ads in general, read these blog posts:

• The 3 Basics of How to Rank on Google Shopping
• 6 Essential Google Shopping Optimization Tips
• What Are Google Shopping Feed Types and How to Use Them?
• Top Google Shopping Issues and How to Fix Them
• What Are Google Shopping Ads? Best Practices Guide (2024)
• 10 Tips for Optimizing Google Performance Max Shopping Campaigns
• How to Advertise Your Amazon Products Directly on Google Shopping
• 4 Ways to Compare Google Shopping Prices of Competitors
• How to Fix Google Shopping Feed Errors
• 8 Google Shopping Ads Extensions
• Google Shopping CSS: Why and How to Use It

Navigating Changes to Google Shopping ROAS

Google’s algorithm and advertising platforms are constantly evolving, and to stay on top of these changes to maintain and improve your return on average (ROAS). The recent updates have focused on automation and intelligent bidding strategies, such as setting ROAS target values for Google Shopping that can dramatically improve campaign performance by driving high-intent conversions.

Achieving a high return on average in Google Shopping still requires careful attention and constant optimization, but it’s an integral part of your e-commerce strategy. By knowing how to measure, track, and improve your Google Shopping return on average, as well as staying up to date on the latest algorithm and feature updates, you’ll be able to maximize the impact of your advertising spending and drive meaningful online store revenue growth.

If you’re looking to refine your existing campaigns or revamp your Google Shopping marketing strategy, focus on your target return on average, leverage automation and AI, and optimize product listings are all essential steps to success.