Google Ads Bidding Strategy Update

Starting on the 17th of August 2026, Google Ads changed the way their target-based bidding strategies work, and if you are using these bidding strategies in your campaigns, you may already be seeing an impact.

This change means that affected campaigns will more consistently perform towards your set target, rather than automatically outperforming your current target. This will have had the biggest effect on campaigns that are limited by budget, rather than campaigns operating with ‘uncapped budgets’.

• A campaign is considered “limited by budget” when Google estimates that its current budget is restricting the amount of traffic and conversions it could otherwise capture
• A campaign is considered operating with “uncapped budgets” when the daily spend is consistently lower than the daily budget

If your campaign has been achieving better results than its target, this is a good time to review your settings. Below, we explain what changed and share the initial results we observed across selected Talking Stick Digital campaigns.

What Has Changed for Target CPA and Target ROAS? 

This change affects target-based bidding, including Target CPA and Target ROAS:

• Target CPA, or cost per acquisition, tells Google Ads the average amount you would like to pay for a conversion, such as a purchase or enquiry.
• Target ROAS, or return on ad spend, tells Google Ads the revenue you aim to generate relative to your advertising spend. A target of 500% means £5 in revenue for every £1 spent on ads.

These are average performance targets, rather than a promise about the cost or return of each individual conversion.

You may have seen something in your Google accounts that looked a little bit like this in the last few weeks:

This was Google’s heads-up that this change was coming and a notice for us to start reviewing our campaigns to ensure that the CPA/ROAS targets align with the actual CPA/ROAS figures that you are seeing in the last 30 days.

For example, your campaign may have a TROAS of 5, but its actual figure sits at 7. After this update, if you don’t align your TROAS to be around 7, your performance will start delivering closer to your target of 5.

Previously, Target CPA and Target ROAS campaigns limited by budget could consistently outperform their set targets. The update makes delivery more closely aligned with those targets, including when budgets change.

Why Did Google Make This Target Bidding Strategy Change?

According to Google, the aim is to make performance more predictable when advertisers adjust budgets.

Before this update, increasing the budget on a limited-by-budget campaign that was outperforming its target could lead to fluctuations or reduced efficiency. The new behaviour is intended to make scaling more consistent with the target entered. Google Ads Help

For businesses, this puts greater emphasis on choosing a target that makes commercial sense. A cost per enquiry that looks acceptable in Google Ads may still be too high if few of those enquiries become customers.

The Initial Effects of This Change 

Across some of our limited-by-budget campaigns, we observed slight drops in conversion volumes and revenue following the update.

However, we also saw stronger results in selected campaigns during the initial comparison period.

US E-commerce Search Campaign Using AI Max

In the seven days before the bidding strategy update, we were operating at a ROAS of 2.28. In the seven days after the change, ROAS increased to 2.94, an uplift of approximately 29%. Revenue saw a 37% uplift, and sales saw an uplift of 14%.

UK Lead Generation Search Campaign Using AI Max

In the seven days before the bidding strategy update, we had a CPA of £90. In the seven days after the change, CPA fell to £75, a reduction of approximately 17%. We also saw an uplift of 25% in conversions.

These initial results show us that this bidding strategy change can be positive for campaigns that weren’t quite meeting their targets before the change, as the change seemed to have pushed them to meet their targets.

*These results are based on the initial seven-day period following the update, so we’ll continue monitoring performance over a longer period before drawing definitive conclusions.

What Should You Do Now?

Review Your Targets Against Recent Performance

The priority after this change is to review limited-by-budget campaigns and check whether their targets reflect your business objectives.

For example, if your Target CPA is £40, but over the last 30 days your campaign has been operating at £35, consider whether you want to preserve that lower acquisition cost or retain the £40 target to pursue more volume. Matching recent performance is one option, rather than an automatic requirement.

Use a representative period for your review. A short promotion or unusually strong week may give you a misleading basis for a longer-term target.

Compare Performance Before and After the Update

Monitor the effect on your target-based bidding campaigns. Compare the period before the change with the period after it and analyse whether you have seen a positive or negative effect. Keep this in mind for any reporting you do.

Look beyond CPA and ROAS alone. For lead generation, check whether enquiries are becoming qualified opportunities. For e-commerce, consider whether the sales generated are delivering enough margin to justify the spend.

Record other significant campaign changes so that you can interpret the comparison more accurately.

Allow Time to Assess Target Changes

Going forward, ensure your target figures remain aligned with the results your business needs.

There is no fixed 20% threshold in Google’s current guidance for this update. Google says Smart Bidding responds to both large and small target adjustments, and recommends waiting one to two conversion cycles before evaluating performance. A conversion cycle includes the time between an ad interaction and the conversion being reported.

Avoid judging an adjustment before those conversions have had time to come through. Otherwise, recent results may appear weaker than they ultimately are.

What This Means for Your PPC Strategy

Overall, this change makes the relationship between your entered target and actual performance more important to review, especially on campaigns limited by budget.

It does not mean every campaign needs a tighter target. The right decision depends on whether your priority is maintaining efficiency or generating more business at an acceptable cost.

We would recommend reviewing that trade-off before testing budget increases. A lower CPA target or higher ROAS target may improve efficiency, but could also restrict delivery.

At Talking Stick Digital, we connect PPC campaign management with the commercial outcomes your business needs. If you would like help reviewing your bidding targets, book a free digital audit with our team.