Google is clarifying its Smart Bidding update after advertisers asked how budget-restricted campaigns will behave starting August 17.
The original announcement about the Smart Bidding changes was on June 22. The update primarily changes how Target CPA and Target ROAS campaigns behave when budgeted.
Today, many budget-constrained campaigns exceed their bidding goals. Smart Bidding typically only enters auctions that are likely to convert well, generating a higher-than-expected CPA or ROAS.
Google says that was not the intended behavior.
Instead, Smart Bidding will optimize more closely with the Target CPA or Target ROAS advertisers have set. Campaigns that are currently exceeding their target may be closer to it after a review.
The announcement immediately raised questions throughout the PPC industry. Advertisers wanted to know why Google would reduce the effectiveness of campaigns that were already exceeding expectations.
Google’s follow-up comments answer many of those questions. They also explain why the company believes the change will make campaign measurement more predictable.
What’s Changing on August 17?
The update affects campaigns that use Target CPA or Target ROAS that are limited by budget.
Historically, those campaigns often exceeded their bidding goals. A campaign with a $50 Target CPA, for example, may consistently generate conversions at $35.
Starting August 17th, Google will optimize those campaigns more closely to advertisers’ settings for Target CPA or Target ROAS. The company says this should create noticeable performance when advertisers adjust campaign budgets.
Google also clarified a few points after announcing the update:
- Budgets will not grow automatically
- Google will not automatically change your Target CPA or Target ROAS settings
- Advertisers who want to maintain current performance may need to lower their bid targets prior to rollout
- Google is issuing account alerts and the Bid Target Adjustment Tool to identify affected campaigns
Those explanations met with initial confusion. They also sparked a broader discussion about how the update could affect campaign performance in practice.
Biggest Concern: Will Google Be Slower?
One question came up repeatedly as advertisers discussed the update: Is Google making Smart Bidding less effective?
Kirk Williams summarizes those concerns in a LinkedIn post.
He wrote:
…How will the system stop and why is it trying to be as efficient as possible… Does that mean smart bidding when the budget is limited will no longer try to get better auctions?… So does that mean they are building a system to choose to be dupes when they are limited on a budget?
Williams questioned why Google would move campaigns closer to their target if Smart Bidding was already delivering strong performance.
Mike Ryan provided one of the more detailed explanations in the comments.
Ryan argued that Google doesn’t make Smart Bidding any less smart. Instead, he believes the system has become more useful for campaigns with limited budgets.
According to Ryan, Smart Bidding is more exploitative than experimental. Rather than going into more auctions that satisfy the advertiser’s goal, the system focuses on the safest opportunities. That produced a stronger-than-expected performance. And it meant that campaigns didn’t consistently progress to the Target CPA or Target ROAS that advertisers had set.
Ryan believes the revised plan will follow those bidding goals more closely. That may reduce the overperformance many advertisers have seen in budget-constrained campaigns, but it’s also consistent with Google’s stated goal of making bid targets behave more predictably.
Predictive vs. High Performance
Aaron Levy focuses on a different aspect of the review: campaign measurement.
You defined a campaign with an $8 CPA and a targeted CPA of $12. If an advertiser doubles the budget today, the CPA may unexpectedly increase to $16 instead of staying close to target.
Levy believes that reviews should make that behavior predictable. Rather than introducing drastic changes in efficiency, Smart Bid should continue to adjust toward an advertiser’s target CPA as budgets change.
Kirk Williams questioned whether that trade-off benefits advertisers. If Smart Bidding is already exceeding targets, he said, some advertisers may prefer that additional success to predictable budget increases.
Google is always making an update framework about predictability. They say that campaigns should reach the targets that advertisers have set for them, making budget changes easier to manage and predict.
Whether advertisers agree to this trade-off will depend on how their campaigns perform after launch.
Google Clears Up Several Misconceptions
Google Ads Link Ginny Marvin responded directly to several ads raised by advertisers after the announcement.
One of the biggest misconceptions is that Google was encouraging advertisers to spend more.
In response to Barry Schwartz, Marvin wrote:
To be clear, this I won’t the effect of changing campaign budgets… Our guidance for those with budget-strapped campaigns who are currently over-performing on their targets is to ensure that your targets are aligned with your goals.
He also emphasized that advertisers will only spend more if they choose to increase their campaign budgets. The update itself does not change campaign budgets or automatically adjust bidding targets.
Jack Carr raised similar concerns, saying that budget constraints have historically served as an efficiency factor and that Google’s recommendation effectively removes that advantage.
Marvin responded with a lengthy explanation:
Our advice is ‘don’t let the program overspend’… this change will not result in a change in the cost of an already budgeted campaign.
He also explained why Google is making the change.
Operations often fluctuate unpredictably… especially with budget changes. That hasn’t been great for marketers and has made it challenging to measure campaigns with confidence.
According to Google, the backend update will enable Smart Bidding to consistently increase Target CPA or Target ROAS advertisers have set, even if campaigns are limited by budget.
Kristen Kelleher asked if this change would just drive campaigns to lower quality traffic.
Marvin also recoiled from that thought.
The system sets bids to get as many conversions as possible to the ROAS/CPA target you set… With this update, advertisers can also expect this same behavior in campaigns with limited budgets and targets.
He added that advertisers who want to maintain today’s stronger-than-target performance should consider revising their Target CPA or ROAS target before release.
Google’s position remained constant throughout the discussion. The company says the update changes that Smart Bidding more closely tracks bidding targets. It does not change campaign budgets or automatically change campaign settings.
What This Means for Marketers
Not all advertisers will need to make changes before August 17.
Campaigns already achieving Target CPA or Target ROAS may continue to perform as they do today. The biggest impact will likely fall on budget-constrained campaigns that consistently exceed their bidding goals.
For example, if a campaign averaged a CPA of $20 compared to a target CPA of $35, Google says advertisers should consider whether $20 is now a more appropriate target. Leaving the actual target unchanged would allow performance to approach $35 after the revision.
Before release, review any budget-constrained campaigns that consistently exceed target CPA or target ROAS. Compare current performance against your established goals and determine if those goals still reflect your business goals.
The update also changes the way advertisers should think about bidding controls. Many advertisers treat limited budgets as an effective tool because campaigns often perform better than they intended. Google has made it clear that budgets and bid targets serve different purposes. Budgets control spending. Target CPA and Target ROAS for efficiency control.
If Google’s interpretation plays out as expected, advertisers who keep bid goals in line with actual performance should see few surprises when adjusting campaign budgets after August 17.
What Happens Next
Google has defined how Smart Bidding should behave after August 17. The remaining question is whether those expectations are more similar to real-world campaign performance.
Advertisers with limited CPA budgets or Target ROAS campaigns will likely watch those accounts closely after launch. Campaigns that have consistently hit their bidding targets can provide a clear indication of how much an update changes day-to-day performance.
Google also encouraged advertisers to review bidding terms prior to rollout if current performance already aligns with their business goals. As more accounts transition to updated bidding behavior, marketers must better understand how the change affects campaign effectiveness and budget management in practice.
Featured image: Roman Samborskii / Shutterstock
