Google Ads latest update: here’s what it means for your paid ads

Smart Bidding changes: more efficient or less opportunities for advertisers?

Read time: 4 minutes

From 17th August, Google’s AI will update how it decides when and where to spend your advertising budget using Target CPA and Target ROAS strategies. The goal? To help advertisers get more value from the same budget. Sounds positive, right? BUT it could also mean fewer enquiries, sales, or opportunities being captured.

TL; DR:

• Google is changing the way target strategies work when limited by budget
• Budget-limited campaigns may become more selective, potentially capturing fewer leads or sales opportunities
• Smaller advertisers relying heavily on automation should monitor performance closely after the update
• Target CPA and Target ROAS may not always be the best fit if growth and volume are the priority
• Advertisers should avoid sudden changes and make gradual adjustments based on performance data

What is changing?

Google’s latest update focuses on campaigns where your daily budget is already limiting how often your ads can appear. If you’ve seen the “Limited by budget” warning in Google Ads, there’s a good chance your campaigns fall into this category.

The change applies specifically to campaigns using:

• Target CPA (Cost Per Acquisition): You tell Google how much you’d ideally like to pay for a lead or sale, and its AI adjusts your bids to try and achieve that cost.
• Target ROAS (Return on Ad Spend): You tell Google the return you want from your advertising spend, and it adjusts your bidding to try and reach that target.

From 17th August, Google will become more selective about when it chooses to show your ads, and how aggressively it bids, with the aim of making better use of the budget available.

On paper, this sounds like a win. Google wants to help advertisers squeeze more value out of their existing spend – potentially generating more conversions or higher conversion value without increasing budgets.

But it’s more complicated than that!

For campaigns that are already restricted by budget, better efficiency doesn’t always mean better results. There are concerns that pushing harder towards efficiency targets could come at the expense of volume, meaning some advertisers may see fewer opportunities being captured.

For example:

Before: 20 leads at £60 each
After: 15 leads at £50 each

From Google’s perspective, this could look like an improvement because the cost per lead has decreased. But from a business perspective, losing five potential customers may not be a better outcome.
That’s why advertisers shouldn’t judge Smart Bidding performance on efficiency metrics alone. The real question is whether campaigns are driving the volume and value your business actually needs.

via GIPHY

Why budget-limited campaigns/ smaller advertisers could feel the impact most

When a campaign is already limited by budget, the issue is often not that Google can’t spend your money – it’s that your ads aren’t appearing for every potential customer searching for your products or services.

A budget-limited campaign using Target CPA may currently generate a steady number of leads because Google is balancing how often your ads appear with the cost per lead you’ve asked it to aim for. After this update, Google’s system may become more focused on maintaining that efficiency target, but the trade-off could be reduced volume.

For example, a campaign with a Target CPA of £50 may start becoming more selective about which auctions it enters to protect that target. The result? Fewer opportunities may be captured, even if the cost per conversion improves.

In other words, advertisers could see fewer opportunities being captured because the system becomes more selective in order to maintain efficiency.

The same applies to Target ROAS campaigns. A campaign achieving a ROAS of 4x against a target of 7x may struggle if Google prioritises hitting the target rather than maximising overall conversion volume.

The bigger concern is that this is going to hit smaller businesses the most. Larger advertisers often have bigger budgets, more conversion data, and dedicated PPC management teams to identify and respond to changes quickly. Smaller businesses, however, may rely more heavily on automated bidding without fully understanding how the system works.

A campaign can appear healthy because it is hitting its CPA or ROAS targets, while quietly limiting growth opportunities in the background. That’s why businesses should review their Smart Bidding setup before and after the update, and look beyond efficiency metrics to understand the real impact on leads, sales, and revenue.

What should advertisers do next?

via GIPHY

Advertisers should avoid reacting too quickly and making sudden, dramatic changes immediately after the update goes live. Google itself recommends avoiding knee-jerk changes.

Google’s Smart Bidding systems rely on machine learning, and large changes can disrupt performance.

Instead, advertisers should:

• Monitor spend levels closely: has your campaign started spending differently? Are budgets being fully utilised, or is Google becoming more selective?
• Track changes in conversions and conversion value: don’t just focus on CPA or ROAS. Look at the bigger picture. Are you generating fewer leads? Fewer sales? Less revenue overall?
• Make gradual changes: don’t just drop your CPA or ROAS targets in one fell swoop, give Google’s system time to adapt and look for consistent trends.

Consider alternative bidding strategies

If your campaign is no longer able to achieve its current Target CPA or Target ROAS, the first step is to review whether your target is still realistic. For example, if your Target CPA is set at £10 but your campaign is consistently achieving £30, gradually increasing the target towards actual performance can give Google more flexibility to find additional conversions.

If adjusting your target isn’t enough, or your goal is to prioritise volume while performance stabilises, it may also be worth switching bidding strategies:

• Target CPA → Maximise Conversions
• Target ROAS → Maximise Conversion Value

This allows Google to focus on driving as many conversions or as much conversion value as possible without being constrained by a target that’s no longer achievable. Once performance has recovered, you can reintroduce stricter Target CPA or Target ROAS goals gradually.

Final thoughts

Google’s update is designed to make Smart Bidding more efficient, but advertisers should remember that efficiency and growth are not always the same thing. A campaign can achieve an excellent CPA or ROAS while still missing valuable opportunities because Google is being too selective.

The key next steps after August 17 will be observation. Don’t make sudden changes based on short-term fluctuations. Instead, monitor whether your campaigns are still delivering what your business actually needs: enquiries, sales, and revenue.

Automated systems can be powerful, but they still need the right strategy, targets and oversight for the best results.