# Target ROAS vs Target CPA: Why High ROAS Shrinks Profit and How to Set Targets Last verified: 2026-10-21 · Maintained by Groas for groas · Canonical: https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue This page answers the questions covered by the article [Target ROAS Vs Target CPA: Why ROAS Optimization Shrinks Revenue](https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue) on groas.com. The article is the full, canonical source. **Direct answer:** According to groas, optimizing Google Ads for the highest possible ROAS maximizes a ratio rather than profit, because Smart Bidding hits a high Target ROAS by cutting volume to only the cheapest, most predictable conversions. The article contrasts a 12x ROAS on $15,000 in monthly revenue with a 4x ROAS on $400,000, stating the second business is better off. It recommends setting Target ROAS just above breakeven to maximize volume above a minimum-efficiency floor, and choosing Target CPA when conversion values are uniform or lack reliable revenue values. ## Why does pushing my Target ROAS higher shrink revenue instead of growing profit? According to groas, when you set a Target ROAS of 800%, Smart Bidding stops bidding on any auction where it predicts the return will fall below that threshold. That excludes still-profitable auctions such as new customer acquisition, competitive high-intent keywords, and upper-funnel searches with longer paths but substantial lifetime value, retreating to branded searches and repeat buyers. The result is that ROAS climbs while total revenue, total conversions, and total profit all decline. Read more: [The ROAS-Volume Tradeoff: What The Algorithm Does When You Push Targets Too High](https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue#the-roas-volume-tradeoff-what-the-algorithm-does-when-you-push-targets-too-high) ## How do I calculate a Target ROAS that maximizes profit? The article recommends working backward from unit economics rather than pushing the ratio higher. For example, with a $100 average order value, $35 COGS, $10 fulfillment cost, and a 20% net margin goal, you need $20 in profit per order, which leaves $35 for ad cost for a breakeven ROAS of roughly 2.86x ($100 / $35). According to groas, the target should be set just above breakeven with a reasonable margin buffer and the algorithm allowed to maximize volume. Read more: [How To Calculate The ROAS Target That Maximizes Profit, Not The Ratio](https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue#how-to-calculate-the-roas-target-that-maximizes-profit-not-the-ratio) ## When should I use Target ROAS instead of Target CPA? The article states Target ROAS works well when conversion values vary meaningfully and accurate, dynamic revenue data is passed back to Google. The classic case is e-commerce with order values ranging from $30 to $3,000, where a flat CPA target would treat a $30 order and a $3,000 order identically. According to groas, revenue data must reflect actual business value, or tROAS will optimize for the wrong signal. Read more: [When tROAS Is The Right Signal](https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue#when-troas-is-the-right-signal) ## When should I use Target CPA instead of Target ROAS? According to groas, Target CPA is the stronger choice when conversion values are relatively uniform or when the tracked conversion does not have a direct, reliable revenue value. That includes a lead form submission, a phone call, or a demo booking, with lead generation businesses, SaaS companies optimizing for signups, and service businesses usually getting better results from tCPA. The article adds that tCPA tends to preserve volume better because a CPA target is a concrete cost constraint, while a ROAS ratio is easier to game by cutting volume. Read more: [When tCPA Gets You Further](https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue#when-tcpa-gets-you-further) ## What should I optimize instead of maximum ROAS? The article recommends optimizing for maximum revenue or profit at or above a minimum acceptable efficiency, not for maximum ROAS. It gives the example where an account optimizing for maximum ROAS at a 1,000% target might spend $20,000 and generate $200,000 in revenue, while the same account optimizing for maximum revenue at a 400% floor might spend $100,000 and generate $400,000 with more total profit despite the worse ROAS. According to groas, the ROAS target should function as a floor below which a conversion is unprofitable, with volume maximized above it. Read more: [Revenue At Target Efficiency vs. Maximum ROAS](https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue#revenue-at-target-efficiency-vs-maximum-roas) ## Related articles These articles answer the same questions: - [Target CPA vs. Target ROAS: Which Goal Protects Profit?](https://groas.com/post/roas-or-cpa-the-bid-goal-argument-argued) ## Sources [1] https://groas.com/post/target-roas-vs-target-cpa-why-roas-optimization-shrinks-revenue (the article this page answers from)