Google’s Smart Bidding Update: 3 Actions to Protect Performance

Here's the Headline:

As of yesterday, Google stopped treating Target CPA or Target ROAS as a soft guideline and started treating it as a literal instruction.

Until now, a tight daily budget quietly protected campaigns. With budgetary restrictions, Google’s algorithm essentially cherry-picked the cheapest, easiest conversions available, often beating your set target without you having to do anything. 

For example, for tCPA campaigns, a £40 target CPA campaign might actually have run at a £20 CPA, purely because the budget forced the algorithm to be selective.That protection is now gone and Google will work to the £40 bid.

For tROAS campaigns Google will now bid up to your set target to chase volume, budget cap or not. Your daily budget cap still holds. This doesn't cost you more money. It just means your targets need to match reality now that the algorithm is acting on them literally.

This applies to Search, Shopping, Performance Max, and Demand Gen campaigns using tCPA, tROAS, or tCPC

Why This Could Hit Your Numbers:

If your targets were set loosely, CPA may already be climbing or ROAS dropping, not because demand dropped or performance slipped, but because Google is finally doing what you told it to. 

There's a secondary effect worth watching too: if advertisers across your sector are all recalibrating at once, expect some CPC inflation in competitive auctions as everyone bids closer to their real ceiling.

The Upside:

The initial reaction: ‘Google is making our lives harder again’. However, in the long run, once targets are calibrated, this will actually feel a lot smoother. You will finally get predictable results and can use the target box as an actual steering wheel. Type in a £30 target cost per lead, get £30 leads. 

It should make planning costs and forecasting budget for next quarter genuinely easier. We can say goodbye to guessing what the algorithm will quietly do the moment budget gets tight, or adapting tact based on what last month’s spend happened to be. 

With Google’s own forecasting tools developing and beginning to model outcomes off the real target, we can expect more accurate forecasts across the board.

Complete These 3 Actions Now:

1. Audit: Compare actual CPA and ROAS over the last 30 to 60 days against the set target; flag any where this actual figure has been beating target, as that gap will soon close. 

2. Begin adjusting bids incrementally: Move targets toward real performance over one to two week cycles. Jumping straight to the new number could trigger a fresh learning period. We suggest increasing campaign budgets by 15% in the first instance to test results.

3. Utilise Google Tool’s: Google's Bid Target Adjustment tool has been live since early July. Begin using this to automatically align targets across Search, Shopping, and PMax in one go.

Things to Watch out for:

1. Watch PMax channel level splits closely. As Google rebalances spend across Search, Shopping, YouTube, and Display, the channel mix may shift, not just the headline number.

2. Google has advised that planning tools like Performance Planner will experience a short transition window from August 17th to August 31st as models adapt to the new math, so don't panic if projections look slightly erratic during those two weeks.

Bottom Line:

Have a conversation with your team or clients and align targets now. Get stuck into the calibration work now. Eventually you will have an advertising system that behaves as it should always have, transparently and predictably.