It’s two months since Google changed how Smart Bidding works on campaigns that are limited by budget. If you run Google Ads for your business and your cost per lead has drifted up since the middle of August, this could well be the reason. The good news is it’s usually a quick fix, once you know where to look.
A quick recap
From 17th August, campaigns showing “Limited by budget” and using Target CPA or Target ROAS started bidding towards the target you’d actually set, instead of quietly beating it. So a £10 target CPA that had been bringing in leads at £5 would drift back towards £10. I covered the details in my original post on the change.
The rollout finished on 27th August, so every affected account has now had around six weeks on the new behaviour. (Source: TechWyse)
What Google has said
Google’s Ads Liaison, Ginny Marvin, answered a lot of questions about this on LinkedIn before it went live. Only budget limited campaigns with a target are affected, because campaigns with room in their budget already bid this way. Google says the change won’t push your spend up directly, and your daily and monthly budgets are still respected. If you want to keep the results you were getting, move your target to match what you were actually achieving. (Source: TechWyse)
The simplest way I can put it: your budget decides how much you spend, and your target decides how efficiently you spend it.
What advertisers are seeing
Smarter Ecommerce compared campaign data from either side of the update. Among budget limited Target ROAS campaigns, the median cost per click rose 15.8% after 17th August, while campaigns that were never budget limited saw theirs fall 13%. Median impression share for the budget limited group dropped from 40% to 31%. One explanation offered is that the cheaper auctions these campaigns used to pick up are now going to advertisers without a budget cap. (Source: TechWyse)
Treat that with some caution. It’s online shops on Target ROAS, not lead generation on Target CPA, and TechWyse says plainly these are reported effects, not guaranteed outcomes. My guess is lead generation accounts will follow a similar pattern, but I haven’t seen published figures to prove it.
I also saw a widely shared LinkedIn post about one online shop whose Target ROAS results slid after 17th August, then recovered within days of switching to Maximise Conversion Value. That makes sense to me. With no target, a Maximise strategy on a tight budget goes back to chasing the cheapest conversions, which is roughly what the old behaviour did. But it’s one account with nothing to compare it against, and the dip landed in late August when plenty of businesses go quiet anyway.
There’s a catch too. Maximise has no ceiling. If you raise the budget later, it will spend it, and your cost per lead can climb with it.
What I’d do now
- In Google Ads, go to Campaigns and look in the Status column for anything showing “Limited by budget” that uses Target CPA or Target ROAS.
- For each one, use the Compare option in the date picker to set the few weeks before 17th August against the weeks since 27th August. Look at cost per conversion and the number of conversions.
- If your cost per lead has gone up, change the target to the figure you actually want to pay. Then leave it alone for two to three weeks so the bidding can settle.
- If it’s still sliding after that, try Maximise Conversions (or Maximise Conversion Value if you sell online), and check it every week, especially if you increase the budget.
- If the campaign makes you money at your target, think about raising the budget instead, so it’s no longer limited.
- Leave campaigns that aren’t budget limited, or that use other bid strategies, exactly as they are.
Before you touch any of this, make sure your conversion tracking counts real enquiries. Automated bidding chases whatever you tell it is a conversion, and my 2 minute CMP check covers one common setup problem.
The short version
The number in your target box is an instruction to Google, not a note for your reports. If it’s been sitting there since the campaign was set up, it’s probably out of date. Automated bidding does a lot of the heavy lifting, but as I said about Google’s AI Max migration, someone still needs to keep an eye on it.
If you’d like a second pair of eyes on your account, try my free 60 second PPC audit or email me at will@sharpstonesmedia.co.uk.
