Google clarifies its Smart Bidding update after advertisers questioned the behavior of budget-constrained campaigns starting August 17.
The initial announcement regarding Smart Bidding changes was made on June 22. The update essentially changes the behavior of Target CPA and Target ROAS campaigns when constrained by budget.
Today, many limited-budget campaigns exceed their bidding goals. Smart bidding often only includes bids that are most likely to convert effectively, producing a higher CPA or ROAS than expected.
Google says this was not the intended behavior.
Instead, smart bidding will more closely optimize the target CPA or target ROAS actually set by advertisers. Campaigns that currently exceed these goals may get closer after the update.
The announcement immediately raised questions throughout the PPC industry. Advertisers wanted to know why Google would reduce the effectiveness of its campaigns that were already exceeding their expectations.
Google’s subsequent comments answer many of these questions. They also explain why the company believes the change will make campaign scaling more predictable.
What changes on August 17?
The update affects campaigns using Target CPA or Target ROAS who are limited by budget.
Historically, these campaigns often exceeded their bidding goals. A campaign with a target CPA of $50, for example, might consistently drive conversions at $35.
Starting August 17, Google will optimize these campaigns more closely based on overall advertisers at target CPA or target ROAS. The company says this should create more predictable performance as advertisers adjust campaign budgets.
Google also clarified several points after announcing the update:
- Budgets will not increase automatically
- Google will not automatically change Target CPA or Target ROAS settings
- Advertisers who want to maintain current performance may need to lower their bidding targets before deployment.
- Google deploys account notifications and a bid target adjustment tool to identify affected campaigns.
These clarifications helped clear up some of the initial confusion. They also sparked a broader discussion about how the update could affect campaign performance in practice.
Biggest Concern: Is Google Becoming Less Effective?
One question came up repeatedly when advertisers were discussing the update: Is Google making Smart Bidding less effective?
Kirk Williams summarized this concern in a LinkedIn Post.
He wrote:
…How and why will the system stop trying to be as efficient as possible… Does this mean that smart bidding, when limited by budget, will no longer try to find better bids?… So does this mean that they are building the system to literally choose to be dumber when limited by budget?
Williams wondered why Google would move its campaigns closer to their stated goals if smart bidding could already deliver better performance.
Mike Ryan offered one of the most detailed explanations in the comments.
Ryan argued that Google isn’t making smart bidding less smart. Instead, he believes the system has become too conservative in budget-constrained campaigns.
According to Ryan, smart bidding has favored exploitation over exploration. Rather than participating in more auctions while satisfying the advertiser’s target, the system focused on the safest opportunities. This produced stronger efficiency than expected. This also meant that campaigns were not consistently optimized based on the target CPA or target ROAS actually set by advertisers.
Ryan believes the updated system will more closely follow these bidding goals. This may reduce the outperformance many advertisers see in budget-constrained campaigns, but it also fits with Google’s stated goal of making bidding targets more predictable.
Predictable scalability and maximum efficiency
Aaron Levy focused on another part of the update: campaign scaling.
He described a campaign with a CPA of $8 and a target CPA of $12. If an advertiser doubled their budget today, the CPA could unexpectedly jump to $16 instead of staying close to the goal.
Levy believes the update should make this behavior more predictable. Rather than introducing large variations in effectiveness, smart bidding strategies should continue to optimize the advertiser’s target CPA as budgets evolve.
Kirk Williams questioned whether this compromise benefits advertisers. If smart bidding can already outperform a target, he argued, some advertisers might prefer that added efficiency to more predictable budget increases.
Google has systematically structured the update around predictability. They argue that campaigns should be optimized based on the targets actually set by advertisers, making it easier to manage and predict budget changes.
Whether advertisers are OK with this trade-off will likely depend on how their campaigns perform post-deployment.
Google clarifies several misconceptions
Google Ads Liaison Ginny Marvin directly addressed several concerns raised by advertisers following the announcement.
One of the biggest misconceptions was that Google encouraged advertisers to simply spend more money.
Reply to Barry SchwartzMarvin wrote:
To be clear, this won’t drive changes in campaign spending… Our advice for those whose budget-constrained campaigns are currently outperforming their goal is to ensure the goals are aligned with your goals.
She 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 goals.
Jack Carr raised a similar concern, arguing that budget constraints have historically acted as an efficiency lever and that Google’s recommendation effectively removes this advantage.
Marvin replied. with a longer explanation:
Our advice is to not “let the system spend more money”… this change will not result in spending changes on an already budget-constrained campaign.
She also explained why Google was making this change.
Performance often fluctuated in unexpected ways… especially with budget changes. This hasn’t been a great experience for advertisers and has made it difficult to scale campaigns with confidence.
According to Google, the backend update will allow Smart Bidding strategies to be more consistently optimized based on the target CPA or target ROAS actually set by advertisers, even when campaigns are constrained by budget.
Kristen Kelleher wondered if the change would simply push campaigns toward lower-quality traffic.
Marvin also rejected this hypothesis.
The system sets bids to find as many conversions as possible for the ROAS/CPA goal you set… With this update, advertisers can also expect this same behavior in budget-constrained campaigns with goals.
She added that advertisers who want to maintain performance above the current target should consider updating their target CPA or target ROAS before deployment.
Google’s position remained the same throughout the discussion. The company says the update changes the extent to which Smart Bidding tracks bidding goals. It does not change campaign budgets or automatically change campaign settings.
What this means for advertisers
Not all advertisers will need to make changes until August 17.
Campaigns that are already achieving their predicted target CPA or target ROAS can continue to operate as they do today. The biggest impact will likely be on low-budget campaigns that have consistently outperformed their bidding goals.
For example, if a campaign generated an average CPA of $20 versus a target CPA of $35, Google says advertisers should consider whether $20 is now the most appropriate goal. Leaving the original lens unchanged could allow performance to get closer to $35 after the update.
Before deployment, review all budget-constrained campaigns that consistently exceed their target CPA or target ROAS. Compare current performance with your configured goals and decide if these goals still reflect your business goals.
The update also changes how advertisers should view bid control. Many advertisers treated limited budgets as a lever for efficiency, as campaigns often exceeded their goals. Google has made it clear that budgets and bidding goals serve different purposes. Budgets control spending. Target CPA and target ROAS control effectiveness.
If Google’s explanation plays out as expected, advertisers who keep their bidding goals aligned with actual performance should see fewer surprises when adjusting campaign budgets after August 17.
What happens next
Google explained how Smart Bidding should behave after August 17. The remaining question is how well these expectations match actual campaign performance.
Advertisers with budget-constrained Target CPA or Target ROAS campaigns will likely monitor these accounts closely after deployment. Campaigns that have consistently exceeded their bidding goals can provide the clearest indication of how much the update changed daily performance.
Google also encouraged advertisers to review bidding goals before deployment if current performance already aligns with their business goals. As more accounts adopt the new bidding behavior, advertisers should better understand how the change affects campaign effectiveness and budget management in practice.
Featured image: Roman Samborskyi / Shutterstock
