Google Addresses Smart Bidding Update After Advertiser Backlash

Google is addressing concerns over its upcoming Smart Bidding update after advertisers raised sharp questions about how budget-limited campaigns will function starting August 17.

The original announcement on June 22 outlined a shift in how Target CPA and Target ROAS campaigns behave when constrained by budget. Currently, many of these campaigns outperform their bidding targets. Smart Bidding tends to enter only the most efficient auctions, leading to better-than-expected CPA or ROAS.

Google now says that was never the intended outcome.

Moving forward, Smart Bidding will optimize more closely toward the actual Target CPA or Target ROAS set by advertisers. Campaigns that currently exceed those targets may see performance drift closer to them after the update.

The news sparked immediate debate across the PPC community. Advertisers questioned why Google would reduce efficiency in campaigns already exceeding expectations. Google’s follow-up comments aim to clarify the reasoning and explain how this change will make campaign scaling more predictable.

What Changes on August 17?

The update targets campaigns using Target CPA or Target ROAS that are budget-limited. Historically, these campaigns often outperformed their targets. A $50 Target CPA might consistently generate conversions at $35, for example.

After August 17, Google will optimize those campaigns more closely to the stated target. The company says this should create more predictable performance when advertisers adjust budgets.

Key clarifications from Google include:

• Budgets will not automatically increaseThese points addressed initial confusion but also sparked broader discussion about how the update will affect campaign performance.

The Core Concern: Is Google Making Smart Bidding Less Efficient?

One question dominated advertiser discussions: Is Google making Smart Bidding less intelligent?

Kirk Williams captured this in a LinkedIn post: “How and why will the system stop trying to be as efficient as possible… Does that mean smart bidding when limited by budget will no longer be trying to find better auctions?… So does that mean they’re building the system to literally choose to be dumber when limited by budget?”

Mike Ryan offered a detailed counterpoint. He argued the system has become too conservative in budget-limited campaigns, favoring exploitation over exploration. Instead of entering more auctions that still meet the target, Smart Bidding focused on the safest opportunities. That produced stronger efficiency but didn’t consistently optimize toward the actual Target CPA or Target ROAS.

Ryan believes the updated system will follow those bidding targets more closely. That may reduce overperformance, but it aligns with Google’s goal of making bidding targets behave more predictably.

Predictable Scaling vs. Peak Efficiency

Aaron Levy focused on campaign scaling. He described a campaign with an $8 CPA and a $12 Target CPA. Doubling the budget today might push the CPA to $16 instead of staying near the target.

Levy believes the update should make that behavior more predictable. Smart Bidding should continue optimizing toward the advertiser’s Target CPA as budgets change, rather than introducing large efficiency swings.

Kirk Williams questioned whether that tradeoff benefits advertisers. If Smart Bidding can already outperform a target, some advertisers may prefer that extra efficiency over predictable budget increases.

Google has consistently framed the update around predictability. They say campaigns should optimize toward the targets advertisers actually set, making budget changes easier to manage and forecast.

Google Clarifies Misconceptions

Google Ads Liaison Ginny Marvin responded directly to several concerns. One major misconception was that Google was encouraging advertisers to simply spend more.

Responding to Barry Schwartz, Marvin wrote: “To be clear, this won’t result in campaign spend changes… Our guidance for those with budget-constrained campaigns currently over-performing on their target is to ensure the targets are in line with your goals.”

She emphasized that advertisers will only spend more if they raise their campaign budgets. The update itself does not change budgets or automatically adjust bidding targets.

Jack Carr argued that budget constraints have historically acted as an efficiency lever. Marvin responded: “Our advice is not to ‘let the system spend more money’… this change won’t result in spend changes on a campaign already budget constrained.”

She explained why Google is making the change: “Performance has often fluctuated unexpectedly… especially with budget changes. That’s not been a great experience for advertisers & made it challenging to scale campaigns with confidence.”

According to Google, the backend update will make Smart Bidding optimize more consistently toward the Target CPA or Target ROAS advertisers actually set, even when campaigns are budget-limited.

Kristen Kelleher questioned whether the change would push campaigns into lower-quality traffic. Marvin pushed back: “The system sets bids to find as many conversions as possible at the ROAS/CPA target you set… With this update, advertisers can also expect this same behavior in budget-constrained campaigns with targets.”

She added that advertisers wanting to maintain today’s stronger-than-target performance should consider updating their Target CPA or Target ROAS before the rollout.

What This Means for Advertisers

Not every advertiser will need to make changes before August 17. Campaigns already hitting their intended Target CPA or Target ROAS may continue operating much as they do today. The biggest impact will likely fall on budget-limited campaigns that have consistently outperformed their bidding targets.

For example, if a campaign averages a $20 CPA against a $35 Target CPA, Google says advertisers should consider whether $20 is now the more appropriate target. Leaving the original target unchanged could allow performance to move closer to $35 after the update.

Before the rollout, review any budget-limited campaigns that consistently outperform their Target CPA or Target ROAS. Compare current performance against your configured targets and decide whether those targets still reflect your business goals.

The update also changes how advertisers should think about bidding controls. Many advertisers have treated limited budgets as an efficiency lever because campaigns often outperformed their targets. Google has made it clear that budgets and bidding targets serve different purposes. Budgets control spend. Target CPA and Target ROAS control efficiency.

If Google’s explanation plays out as expected, advertisers who keep bidding targets aligned with actual performance should see fewer surprises when adjusting campaign budgets after August 17.

What Happens Next

Google has explained how Smart Bidding should behave after August 17. The remaining question is how closely those expectations match real-world campaign performance.

Advertisers with budget-limited Target CPA or Target ROAS campaigns will likely be watching those accounts closely after the rollout. Campaigns that have consistently outperformed their bidding targets may provide the clearest indication of how much the update changes day-to-day performance.

Google has also encouraged advertisers to review bidding targets before the rollout if current performance already aligns with their business goals. As more accounts transition to the updated bidding behavior, advertisers should gain a clearer picture of how the change affects campaign efficiency and budget management in practice.