Target CPA vs Target ROAS: Google Ads Bidding Strategies

Target CPA bids for the most conversions it can get at an average cost per conversion you choose. Target ROAS bids for the most conversion value at a return on ad spend you choose. Use Target CPA when conversions are worth about the same, and Target ROAS when values differ and you record at least 15 conversions in 30 days.

The harder question is what number to type in. Google will suggest one based on what your account has achieved lately, which says nothing about what you can afford. This guide sets targets from your margin instead, the way we do for clients of our Google Ads agency. Google features and thresholds were checked against Google's help pages on 1 October 2026.

A note on names. From June 2026, Google labels "Maximise conversions with a target CPA" simply Target CPA, and "Maximise conversion value with a target ROAS" simply Target ROAS. Google says the bidding behaviour is unchanged, and some tools will show the old names for a while.

What does Target CPA mean?

Target CPA (cost per action) is a Smart Bidding strategy that sets a bid in each auction to get as many conversions as possible while keeping your average cost per conversion at the target. Some conversions will cost more and some less; Google aims for the average.

You can start Target CPA with no conversion history. If the campaign has history, Google recommends a target equal to your average CPA over the last 30 days, adjusted for conversion delay. Set the target too low and you give up clicks that would have converted, which can mean fewer conversions overall.

What is Target ROAS?

Target ROAS (return on ad spend) bids for the most conversion value at the average return you set. ROAS is conversion value divided by ad spend, and Google writes it as a percentage: $5 of sales for each $1 of spend is a Target ROAS of 500 percent.

It needs values. You must report conversion values, with at least two different values across your conversions, and Google requires at least 15 conversions in the past 30 days for Target ROAS on Search and Shopping campaigns. Set the target too high and the campaign enters fewer auctions, which can shrink total conversion value.

What is the difference between Maximise conversions and Target CPA?

Maximise conversions spends your whole daily budget to get as many conversions as it can, with no cost target. Target CPA aims for your average cost per conversion and won't chase volume beyond it. Use Maximise conversions when volume matters more than unit cost and the budget is the limit you care about; use Target CPA when each conversion has a cost you mustn't exceed.

The same split applies to value. Maximise conversion value spends the budget for the most value, and Target ROAS adds an efficiency target. Google notes that a Maximise conversion value strategy with a ROAS target behaves like Target ROAS. One reporting trap: Maximise strategies are limited by budget by design, so Google says the Lost IS (budget) column doesn't read correctly for them. Use the budget simulator instead.

Which bidding strategy should you use?

Source: Google Ads Help (About Target CPA bidding, About Target ROAS bidding, About Maximise conversions bidding, About Maximise conversion value bidding, About Smart Bidding), checked 1 October 2026.

If the account records too few conversions for any of this, bid on a stage that happens more often, such as a qualified lead rather than a signed contract, and keep the setup simple until volume builds. Smart Bidding can't learn from conversions it never sees.

How much conversion data does Smart Bidding need?

You will often read that Target CPA needs 30 conversions in 30 days. Google's current Target CPA page says you can start with no history, and recommends judging performance over the last 30 days with at least 30 conversions. So 30 in 30 is a sensible bar for judging results, not an entry requirement. Here is the full set of Google's numbers.

Source: Google Ads Help (About Target CPA bidding, About Target ROAS bidding, About value-based bidding for Search and Shopping, About conversion measurement, Changing conversion goals used for Smart Bidding, About Smart Bidding, Offline conversion imports FAQs), checked 1 October 2026.

What should I set my target CPA to?

Below your break-even cost per conversion, by the profit you want each sale to keep. Break-even CPA is the gross profit a conversion brings in. For a lead, that is the gross profit of an average sale multiplied by the share of leads that become sales.

A worked example for a services business. The average job is worth $2,400 excluding GST at a 40 percent gross margin, so each job brings in $960 of gross profit. One in four qualified leads books a job, so each qualified lead is worth $240. That is the break-even CPA for a qualified lead.

Now decide what each job must keep. If you want $400 of the $960 left after advertising, you can spend up to $560 to win a job, which is $140 per qualified lead. Set Target CPA at $140 on the qualified-lead conversion. If you can only bid on raw form fills and one in three forms is a qualified lead, the same maths gives about $47 per form.

Then compare your number with Google's suggestion. If Google recommends a target above your break-even, the account is buying conversions at a loss on paper, and the fix often starts with the conversion definition, not the target. Our CAC calculator checks the payback on whatever you settle on.

What's a good target CPA for Google Ads?

There isn't a universal one. A good target CPA is one below your break-even, and that depends on your margin, your close rate and how much a customer is worth over time. Two businesses in the same industry can have very different numbers. For what clicks themselves cost, see our guide to Google Ads costs in Australia.

How to set Target ROAS from your margin

Break-even ROAS is 1 divided by your contribution margin: revenue minus product cost, fulfilment and payment fees, as a share of revenue. Our ROAS calculator does the sum, and the contribution margin calculator helps you find the margin in the first place.

A worked example for an online homewares store. The average order is $165 including GST, or $150 excluding it. Stock costs $60, fulfilment $15 and payment fees $3, leaving $72 of contribution, a 48 percent margin. Break-even ROAS is 1 divided by 0.48, about 2.08, or 208 percent.

In Australia, check what your conversion values include. If the tag reports the $165 order including GST, Google's ROAS reads 10 percent higher than the GST-exclusive maths, so the break-even on Google's numbers is 2.08 times 1.1, about 2.29, or 229 percent.

Break-even is the floor, not the target. If you want 10 percent of GST-exclusive revenue left as profit after advertising, ad spend can take 38 percent of revenue (48 less 10), so the target is 1 divided by 0.38, about 2.63 (263 percent) on GST-exclusive values, or about 289 percent once GST is included. If Google recommends anything lower, keep your own number. For typical margins by industry, see our break-even ROAS by industry benchmarks.

Value-based bidding with margin

Target ROAS bids on the values you send, so the most effective change is often to the value, not the target. Four ways to bring margin into it:

• Send profit as the value. Google lets you define the conversion value as revenue or profit margin. Send gross profit per order and a Target ROAS of 100 percent means break-even on ad spend.
• Use conversion value rules. Rules multiply values for audiences, locations or devices, for example where some customer types carry a different margin. Google points out that Smart Bidding already uses those signals, so rules should reflect real differences in value, not hunches.
• Split products by margin. In Shopping and Performance Max, custom labels in your Merchant Center feed let you run margin bands as separate campaigns, each with its own target.
• Value your leads. For lead generation, Google accepts proxy values such as a lead score. Give qualified and converted leads different values and bid on one stage only.

Our Performance Max guide covers margin bands for online stores in more detail.

What changed in target bidding in August 2026?

On 17 August 2026, Google changed how Target CPA and Target ROAS behave when a campaign is limited by budget. Some of them used to beat their targets, then swing when budgets changed. Now they deliver closer to the target you set, across Search, Shopping, Performance Max, Demand Gen and Travel campaigns.

Google's own example: a campaign with a $10 target CPA that had been achieving $5 will now deliver closer to $10. Google won't adjust targets for you. For each budget-limited campaign that was beating its target, choose deliberately:

• keep the target, if it already reflects your break-even maths;
• move it to recent performance, to keep the efficiency you had;
• set a new number from your margin, which is our default; or
• raise the budget and let the campaign scale at the target.

Then wait one to two conversion cycles before judging the result, as Google recommends after budget increases.

Bidding mistakes that cost money

• Changing targets within a conversion cycle. Google recommends waiting one to two full cycles before comparing average target and actual results, and warns that frequent changes can slow the bidder down.
• Adding bid limits. Google doesn't recommend them for Target CPA or Target ROAS, and they only exist on portfolio strategies.
• Setting separate targets for every ad group. Google says this can restrict Smart Bidding.
• Leaving manual bid adjustments in place and expecting them to work. Smart Bidding ignores most of them; with Target CPA, a device adjustment changes the target rather than the bid.
• Using seasonality adjustments for long periods. Google says they suit events of one to seven days and may not work as well beyond 14.
• Skipping data exclusions after tracking breaks. They stop a broken tag from teaching the bidder that demand collapsed.
• Judging a strategy on a handful of conversions. Wait for at least 30, or 50 with Target ROAS.

Targets are only as good as the conversions behind them, so if you're not sure what the account is counting, start with our Google Ads conversion tracking guide and the Google Ads audit checklist.

If you would like targets set from your own numbers, our Google Ads management does this every week, with each change and its reasoning written down, or you can work with a named Google Ads consultant. Book a free 30-minute profit audit and bring your margins and a month of conversion data.