When tROAS is the right choice
Target CPA treats all conversions as equivalent. If your order values range from €20 to €2,000, that amounts to asking the algorithm to find volume without looking at value, and it will mostly find the small orders, the easier ones.
tROAS corrects this bias by weighting each conversion by its value. It is the right setting as soon as order amounts vary significantly, which is the case for most e-commerce businesses.
In return, it has one strict requirement: the value you send must be accurate. An algorithm fed wrong values will conscientiously optimize in the wrong direction.
Sending the right value
The default setup usually sends the order amount, including taxes and shipping. That is a revenue value: it ignores margin, and has the same blind spot as ROAS itself.
More advanced setups send an adjusted value: estimated margin rather than revenue, or a value weighted by the probability of product returns in the categories concerned. The algorithm then optimizes for what really matters.
For businesses with repeat purchases, sending only the value of the first order structurally undervalues customers with high lifetime value, and pushes the algorithm toward acquiring one-off customers.
Frequently asked questions
What is the difference between tROAS and tCPA?
tCPA optimizes the number of conversions at a given average cost. tROAS optimizes the value generated per euro spent. The latter is the right fit as soon as order values vary widely.
What tROAS should you start with?
The ROAS actually observed over a recent stable period, not the goal you are aiming for. Setting an overly ambitious target restricts delivery and makes volume fall.
Should you send revenue or margin?
Margin gives much better results, since it is what determines profitability. Sending revenue pushes the algorithm toward the products that sell, not the ones that make money.
Does tROAS work for lead generation?
Yes, provided you assign different values to different types of leads. Without that, all leads are worth the same and tROAS adds nothing over tCPA.