In any Microsoft ad campaign, several elements are necessary for a campaign to perform well. On the most basic level, good keywords, headlines, descriptions and/or images are essential components for a successful campaign. But just as important is the bid strategy you use. In Microsoft, there are several bid strategies. Some are simple, like enhanced cost-per-click (which still exists in Microsoft, though it has been sunset in Google) or maximize clicks. But what about for advertisers focusing on revenue?
Two more complex (yet still beneficial) bid strategies are Target Return on Ad Spend (tROAS) and Maximize Conversion Value with a tROAS goal attached. Sounds confusing, right, like they do the same thing? There are actually some key distinguishing features between these campaigns that can make the difference between a successful campaign and wasted ad spend.
As explained in this article from Microsoft, the maximize conversion value strategy will use your budget to adjust bid levels and optimize towards high-value conversions.
You can also place a target ROAS (return on ad spend) to help the campaign reach a return-on-investment (ROI) goal.
Meanwhile, the Target ROAS bid strategy will adjust bids to reach the target you put in place. You choose the exact ROAS you want the campaign to achieve.
Again, sounds similar. Why choose one over the other? To help me understand the difference, I asked Microsoft’s AI support feature, Co-Pilot, in the Microsoft Ads Interface to delve deeper into these two bid strategies. When I asked Co-Pilot, the main difference that I received was how strictly the campaign worked to meet the ROAS goal. The Target ROAS goal “is stricter about meeting the specified target…even if it means reducing spending or conversion volume.”
Meanwhile, with the maximize conversion value with tROAS strategy bid strategy, the “primary focus is on maximizing the total conversion value within your budget, which may result in not always meeting the exact target ROAS”.
This means that if you cannot go below the ROAS goal or your campaign becomes deeply unprofitable, Target ROAS would be the better choice for you, even if conversion volume and value shrink. If you’re more concerned with the sales volume, maximize conversion value would be the better choice, and you can implement a tROAS to help guide the campaign. Your campaign will keep profitability in mind, but if it sees the chance for a high-value conversion, it will take it.
For advertisers, you must determine your priorities and select the best bid strategy for your goals—is it hitting your ROAS target or getting conversion volume? Other priorities may also need to be considered. For example, advertisers who want to acquire new customers may want to consider using the maximize conversion value strategy.
According to Co-Pilot, Target ROAS would be a bad choice for this priority because “this strict focus can limit the campaign’s ability to explore and attract new customer segments, as it prioritizes meeting the ROAS target over expanding reach or acquiring new audiences.” In other words, because going after new customers is less likely to get conversions, Target ROAS will prioritize existing customers and limit outreach to new ones instead.
Another factor to consider is average order value (AOV). For advertisers with a high AOV and a ROAS goal, Co-Pilot recommends the Target ROAS bid strategy. Co-Pilot claims that Target ROAS will help with scaling to larger budgets: “Target ROAS helps scale campaigns by focusing on the most valuable opportunities.”Since high revenue is guaranteed due to the high AOV, Target ROAS will adjust bids to target users most likely to convert. Over time, this will help you increase your budget while still maintaining your ROAS.
On the other hand, for advertisers with a low AOV, Co-Pilot recommends starting with a maximize conversion value strategy, and eventually implementing a tROAS. It recommends this bid strategy over Target ROAS because it “allows advertisers to set a target ROAS as a guide without being overly restrictive.” Essentially, setting a ROAS goal that the campaign heavily prioritizes could result in reduced spend and conversion volume. However, maximize conversion value, even with a tROAS, will still target potentially high-value purchases even if they are riskier.
While these two bid strategies initially seem similar, there are key differences. Co-Pilot succinctly says, “Target ROAS is solely focused on the return on ad spend, whereas Maximize Conversion Value with target ROAS balances maximizing conversion value and achieving the ROAS target.”
Which bid strategy you should choose will depend on your priorities. Do you want to focus on getting as many high-value orders as possible, or are you fine sacrificing conversion value to stay above a ROAS goal? Other factors, like focusing on acquiring new customers or your average value order, could also play a role.
Consider all these factors when making your decision, and if one bid strategy isn’t working, consider testing the other. A well-built campaign is only as successful as the bid strategy lets it be.
