Liz MooreheadThis one goes out to all of my high-growth brand homies out there, because I’ve got some big news you should have already heard about from your agency of record. (And if you haven’t… well… that’s a conversation for another day.)
Anyway, Google has started rolling out a bidding change for Google Ads that, admittedly, sounds like a bit of a snore at first glance. Google is always announcing changes, right? Why would this jargon word salad “changes to target based bid strategies” update be any different?
While I often feel that way about Google updates, this one, I need you to slow down for. Because if you’re like most of the high-growth brands we work with on paid campaigns, you’ve likely got budgetary restrictions in place.
So, this update definitely impacts you.
What is do the Google changes to target based bid strategies include?
A long time a go, in a paid media galaxy far, far away… like earlier on this week on August 17, Google Ads started changing how budget-constrained campaigns using target-based bidding strategies like Target CPA and Target ROAS behave.
Going forward, Google says those campaigns will optimize more consistently toward the target you actually entered, even when you adjust the budget. The goal is to make performance more predictable when you scale.
Yes, that sounds like a very good thing.
When it comes to our budgets, we like predictability.
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For example, if you tell Google your Target CPA is $50, the system should behave more consistently around $50. If you tell it your Target ROAS is 500%, it should work toward that return without suddenly having the Big Tech equivalent of a mental breakdown because you, gasp, had the audacity to increase the daily budget.
Of course, there’s one teeny, tiny problem.
A lot of brands have campaigns where the target sitting inside Google Ads no longer reflects the number the business actually cares about. This happens for a lot of reasons:
- Maybe that target was set six months ago.
- Maybe the campaign has been outperforming it for so long that everyone started to mistake this outperformance for your real target.
- Maybe it was entered as a placeholder and never revisited because, until now, the account was behaving well enough that nobody had a compelling reason to poke it with a stick.
This kind of entropy in a Google Ads account is totally normal, so don’t panic if any of that sounds familiar.
But still, that makes things a little complicated with this update.
Under the new behavior, Google is going to take that target more seriously. So if you oversee paid media for a high-growth brand, this is a very good time to look at every campaign that is Limited by budget and using Target CPA or Target ROAS.
Because if the number is wrong, Google is about to start doing a great job at more effectively optimizing toward that wrong number.
Let’s dig into more detail about this update, so you know how to move forward with your campaigns.
What is actually changing with Target CPA and Target ROAS?
Historically, some budget-constrained campaigns using target-based bidding could significantly outperform the target an advertiser entered.
Let’s say you set a Target CPA of $100, but the campaign consistently generated conversions at $60. Who wouldn’t feel great about that? En esta economia, we love to see our dollars go further than expected — it happens so rarely, nowadays.
Over time, though, $60 can start becoming the number everyone expects, which creates some insidious consequences when:
- You start building forecasts around it
- Your finance team (whom we love to keep happy) gets used to it
- Your growth plans assume that over-performance to succeed
And then your marketing team starts high-fiving themselves about their new “$60 CPA campaign,” even though Google Ads is still sitting there with a very different instruction: $100 is acceptable.
That wasn’t a big deal before this week. Now, it’s more of a big deal.
Google says that after this update, campaigns limited by budget will perform more consistently toward their stated target. Its own example uses a campaign with a $10 Target CPA that has historically achieved a $5 CPA. After the change, Google says the campaign may begin delivering closer to that $10 target unless the advertiser updates it.
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So if your campaign has been dramatically outperforming the target you entered, the worst thing you can do now is assume that level of over-performance will continue in perpetuity just because “that’s the way it’s always been.”
I swear, Google isn’t randomly making your campaigns less efficient for sport.
Google is simply trying to follow your instructions more closely.
Why Google is making this change
The petty only child in me wants to scream, “Because Google hates us and doesn’t want us to be happy.” (Although, to be fair, some of Google’s previous updates do feel like personal attacks… I say side-eyeing its new AI-first SERP UX.)
In reality, however, this update is responding to a very real advertiser problem.
Until now, a budget-constrained campaign could outperform its Target CPA or Target ROAS, which, yes, feels like a big ol’ win. Then you would increase the budget because, naturally, you would like more of this delightful performance.
But the, sometimes, the economics would start sliding sideways in the form of rising CPAs and free-falling ROAS. You know, the kind of stuff that makes you dread facing the higher-ups, because your hard-won bet is starting to backfire. How do you explain performance dips that feel disproportionate to what seemed like a relatively simple budget increase to someone who doesn’t care about your answer? They just want to be back on top.
Google says the old behavior created confusion and made scaling less predictable. The new system is designed to keep campaigns closer to the stated target regardless of the budget limit, which should give advertisers more consistent control as budgets change.
For high-growth brands like you, this is where things get genuinely interesting.
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If a campaign is profitable and there’s more demand available, increasing the budget should become a more predictable decision. You should have a better idea of the CPA or ROAS the campaign is likely to operate around instead of crossing your fingers every time you give it more money.
Of course, predictable scaling is only helpful if the target you are scaling around is actually a good one.
Which Google Ads campaigns should you look at?
Well, let’s start with the good news, for my fellow paid media anxiety gerbils out there. You don’t need to tear apart your entire Google Ads account because of this.
The change specifically affects campaigns that are Limited by budget and using a target-based bid strategy. For most brands, the major strategies to look for are Target CPA and Target ROAS. Demand Gen campaigns using Target CPC are also included.
Google says the update applies across Search, Shopping, Performance Max (PMax), Demand Gen, and Travel campaigns. Display and Hotel campaigns already use the newer behavior, while App campaigns, Video reach campaigns, and Video view campaigns continue to use the previous bidding behavior.
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If a Target CPA or Target ROAS campaign is not budget constrained, I have more great news — Google says there will be no changes to targeting behavior.
So no, this isn’t your cue to open Google Ads and start aggressively changing every target in sight. Please, please don’t do that. Instead, start with the affected campaigns, compare the target against actual performance and your current business economics, and decide whether you need to tweak those target budget numbers.
Your real risk isn’t the update, it’s outdated targets
Now, if your current Target CPA or Target ROAS accurately reflects what the business wants, you may not need to do anything at all. Hallelujah! We love a best-case scenario.
But what if you have a Google Ads campaign has been materially outperforming a target that no longer reflects the the financial realities of your business?
Going back to our earlier example, imagine your Target CPA is $100, but you have consistently been acquiring customers at $60. If the business really needs a $60 CPA to hit its margin and growth targets, leaving $100 in the account is now a much more consequential choice.
You need it to be $60 CPA, but Google is now going to be more obsessed with the fact that you’re telling it that a $100 CPA is still gravy.
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And, whether you call it “being more helpful by actually listening to what you want” or “malicious compliance,” Google is telling you that it now plans to pay more attention to. what you say you want.
Of course, the opposite problem can happen too. A Target CPA that is too aggressive or a Target ROAS that is unrealistically high can restrict delivery. Google becomes more selective about which auctions it enters, which can reduce volume and leave budget unused.
So, you can’t think about this simply like: “lower targets are good” or “higher ROAS targets are good.”
You have 3 choices for each affected Google Ads campaign
Once you identify a budget-constrained campaign using Target CPA or Target ROAS, the decision is relatively straightforward.
If the target is right, leave it alone
If the current target reflects your actual business goal, Google says no target change is required.
This is also where the update may create a real opportunity.
If the campaign is limited by budget and consistently hitting a profitable target, the new behavior is designed to let advertisers raise budgets and capture more conversions or conversion value while staying more closely aligned with that target.
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That doesn’t mean you can scale forever at exactly the same economics – – there’s only so much demand in any market, and the auction remains the auction. But it should make budget increases less unpredictable than they have sometimes been in the past.
So, we’ve got that going for us. Which is nice. (Caddyshack, anyone? No?)
If the target is wrong, update it
If the number in Google Ads doesn’t reflect what would actually work for your budget, duh… change it.
Google has introduced a Bid Target Adjustment Tool that lets advertisers review affected campaigns and update their targets based on recent performance. You can also enter a custom target based on your own business goals.
The important part here is to not blindly copy whatever your recent CPA or ROAS happened to be. Your target should represent the real outcome you want Google to optimize toward.
If a campaign has a Target CPA of $100 but has recently achieved $60, maybe $60 is the right number. Or maybe your margins support a $70 CPA and you would happily accept that tradeoff in exchange for more volume.
If you don’t want a fixed target, change the bidding strategy
Of course, you can also move away from target-based bidding altogether.
Google recommends Maximize Conversions or Maximize Conversion Value for advertisers who want the system to generate as much conversion volume or value as possible within the available budget without holding to a specific CPA or ROAS target.
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That gives the system more freedom, but the tradeoff is equally clear: your actual CPA or ROAS will fluctuate more with auction conditions and budget changes.
For some of you, that’s totally fine — you love to take a walk on the wild side.
If your priority is maximizing total conversion volume within a fixed budget, rather than protecting a specific efficiency target, one of those strategies may make more sense.
What absolutely doesn’t make sense is using Target CPA or Target ROAS while privately crossing your fingers that Google will continue to ignore the target whenever ignoring it produces nicer results.
The time for treating loopholes as your budgetary life preserver is over.
What happens if you do nothing?
C’mon now. You know the answer to this is, “It depends.” I know. you hate it. I do, too. But what do you want me to do, lie?
So yes, for some of you, possibly very little. I want to say that plainly because every Google Ads update eventually gets turned into a thumbnail featuring a terrified face and the words GOOGLE ADS IS DEAD?!
If your targets already reflect your goals, I’ve already told you that doing nothing may be the right move for you.
But if a campaign has historically over-performed a loose target, you may begin to see performance trend toward the number you actually entered. That could mean CPA rises or ROAS falls closer to the stated target. Google also notes that multi-channel campaigns like Performance Max and Demand Gen may see changes in how spend is distributed across channels.
On the other side, overly aggressive targets can continue restricting scale.
For a high-growth brand, your practical risk is that a campaign suddenly behaves differently from what your planning models, acquisition forecasts, or internal expectations assume.
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The good news: this could make scaling more predictable
There’s a very easy way to frame any Google Ads change as another thing marketers now have to worry about. And yes, you do need to review your targets.
But the upside here is nothing to scoff at.
One of the frustrating parts of scaling target-based campaigns has been the possibility that a budget increase changes the efficiency profile more dramatically than expected. Google is specifically trying to reduce that unpredictability.
For brands that know their numbers (realistically!) and have accurate targets in place, this should make it easier to make informed budget decisions.
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If you know a campaign is profitable at a $60 CPA, and there is more demand available at approximately that target, you have a much clearer conversation about whether to invest another $10,000, $50,000, or $100,000.
That is a much better growth question than, “What happens if we increase the budget and Google gets weird?”
The catch is that Google needs the right instruction first.
So if you are running budget-constrained Target CPA or Target ROAS campaigns, this is the moment to check whether the target in the account still represents the business you are trying to grow.
Because Google is going to start treating that number less like a suggestion.
Maybe it’s time that you should, too. ¯\_(ツ)_/¯
And if you’re looking at your account right now thinking, “I am still in a full on panic about this Google Ads update,” we’ve. got your back.
The Solutions 8 team can help you review your Google Ads account, find the leaks, and identify the changes most likely to improve performance. Connect with us if you want a second set of eyes before you spend another dollar.
