Target CPA and smart bidding

The Smart Bidding strategies compared

According to Google's Smart Bidding help, there are four:

Google groups them by goal: Target CPA and Maximize conversions focus on the number of conversions; Target ROAS and Maximize conversion value focus on their value.

Setting Target CPA and Target ROAS from your margin

Bid targets are only as good as the numbers behind them. Start from what an order is worth to you.

Break-even CPA = AOV × Gross margin Target CPA = Break-even CPA − Profit you want per order Target ROAS = 1 ÷ (Gross margin − Target net margin)

Worked example: setting both targetsExample numbers

Input	Value
Average order value	$75
Gross margin	50%
Profit wanted after ad cost	10% of revenue ($7.50 per order)

1. Break-even CPA = $75 × 50% = $37.50
2. Target CPA = $37.50 − $7.50 = $30
3. Target ROAS = 1 ÷ (0.50 − 0.10) = 2.5, entered in Google Ads as 250%

The two targets agree: $75 of revenue ÷ $30 of ad cost = a ROAS of 2.5.

Ad Profit Leak ScoreHow much of your Google Ads spend is actually profitable, banded 0–100.Open calculator

Why Target ROAS usually suits online stores better

Target CPA treats every conversion as equal. If one customer orders $30 and another $200, Target CPA pays the same for both. Target ROAS bids more for bigger orders, as long as you send accurate order values to Google Ads.

Set different targets for different margins

A store-wide target overbids on low-margin products and underbids on high-margin ones. Split products into campaigns or groups by margin, and give each its own target. The guide to ROAS has a worked example by product group.

New customers vs repeat customers

If customers come back, you can afford to pay more for a first order than it earns on its own. Work out how many orders a customer takes to pay back their acquisition cost:

Customer Acquisition Cost Payback CalculatorHow many orders it takes to pay back what you spent acquiring a customer.Open calculator

Then set a higher CPA, or a lower ROAS target, for campaigns that bring in genuinely new customers, as long as the payback period is acceptable.

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Tips for running Smart Bidding

• Get conversion tracking right first, including order values, and exclude test orders.
• Change targets gradually. Large jumps can cut volume sharply while the system adjusts.
• Give it time and data. Judge results over weeks, not days.
• Report profit, not just revenue, where you can, so the algorithm isn't rewarded for selling low-margin products.

For how match types interact with automated bidding, see Google Ads match types. For what clicks actually cost, see how much Google Ads cost.