14 July 2026

Google is changing Target CPA and Target ROAS bidding. Here’s what advertisers need to know

In summary

• Google is changing how Target CPA and Target ROAS campaigns behave when they are limited by budget.
• From 17 August 2026, budget-constrained campaigns will optimise more closely towards their actual bidding target rather than overperforming because of limited auction participation.
• The update affects Search, Shopping, Performance Max, Demand Gen and Travel campaigns.
• Advertisers should review budget-limited campaigns before the rollout to determine whether budgets or bidding targets should be adjusted.
• Google’s new Bid Target Adjustment Tool will help advertisers make more informed bidding decisions ahead of the change.

Google is changing how target-based bidding behaves

If you run campaigns using Target CPA or Target ROAS, you are about to notice a change in your Google Ads account, even if nothing has been modified by your team.

From 17 August 2026, Google is updating how Smart Bidding behaves when campaigns are limited by budget.

While the change sounds technical, it has important implications for how advertisers interpret campaign performance and decide when to adjust budgets or bidding targets.

The problem Google is trying to solve

Today, campaigns using Target CPA or Target ROAS that are marked Limited by budget can often appear to outperform their bidding target.

For example, a campaign with a Target CPA of $10 might consistently deliver conversions at $5. While that appears highly efficient, it is often a consequence of the campaign being constrained by budget rather than a reflection of true performance.

When budgets are limited, Smart Bidding cannot compete in every available auction. Instead, it prioritises auctions it predicts will deliver the strongest results within the available spend. This often means entering only the lowest-cost opportunities while missing a significant number of relevant auctions once the daily budget has been exhausted.

The result is performance that looks better than the target, but only because the campaign is competing in a narrower subset of available inventory.

The challenge comes when budgets increase. As the campaign begins participating in more auctions, average costs often rise, making performance appear less efficient despite the campaign simply accessing a broader share of available demand.

What changes from 17 August

From 17 August 2026, Google will optimise budget-limited campaigns more consistently towards the Target CPA or Target ROAS advertisers have actually set.

Using the same example, a campaign with a $10 Target CPA that has been delivering at $5 will gradually move closer towards the $10 target.

Budgets will not automatically increase, nor will advertisers spend more overall. Instead, Smart Bidding will distribute the existing budget across a broader range of relevant opportunities rather than concentrating only on the cheapest available auctions.

For multi-channel campaigns such as Performance Max and Demand Gen, advertisers may also notice changes in how spend is distributed across Google’s inventory, as the system is no longer prioritising whichever placements happen to produce the lowest costs.

Which campaign types are affected?

The update applies to:

• Search
• Shopping
• Performance Max
• Demand Gen
• Travel campaigns

It does not affect:

• App campaigns
• Video Reach campaigns
• Video View campaigns

Display and Hotel campaigns already operate using this behaviour today, so no changes will occur for those campaign types.

Why this isn’t necessarily bad news

At first glance, some advertisers may see this as losing efficiency. In reality, it provides a much more accurate view of campaign performance.

When a budget-limited campaign consistently exceeds its bidding target, it often indicates there is additional demand available that the campaign simply cannot access because the budget runs out.

Once campaigns begin optimising towards their actual targets, advertisers gain a clearer signal for decision making.

If campaigns are achieving their target and additional growth is the objective, increasing budget becomes an informed investment decision. If maintaining current spend is more important, lowering the bidding target may be the appropriate strategy instead.

Rather than relying on artificially low CPAs created by budget constraints, advertisers will be able to evaluate performance against the target that genuinely reflects their business objectives.

Key dates

6 July 2026

Google began rolling out the Bid Target Adjustment Tool inside Google Ads.

17 August 2026

The new Smart Bidding behaviour becomes active across supported campaign types.

Google has confirmed it will not automatically change campaign targets or budgets. Advertisers remain responsible for reviewing and adjusting their bidding strategies where appropriate.

Louder recommendations

Ahead of the rollout, we recommend reviewing every campaign currently running Target CPA or Target ROAS that is also marked Limited by budget.

Specifically, advertisers should:

• Audit campaigns to identify where budget limitations may be influencing bidding performance.
• Determine whether strong results are being driven by genuine efficiency or simply restricted auction participation.
• Decide whether increasing budgets, lowering bidding targets or maintaining the current strategy best aligns with business objectives.
• Use Google’s new Bid Target Adjustment Tool, available from 6 July 2026, to compare historical performance against current bidding targets before making changes.
• Allow Smart Bidding sufficient time to relearn after any adjustments before evaluating performance, typically at least one to two full conversion cycles.

Get in touch

If you’re running campaigns using Target CPA or Target ROAS, now is the time to review whether budget constraints are limiting growth opportunities.

Louder is already assessing affected campaigns and providing tailored recommendations ahead of the rollout.

Get in touch with the Louder team to discuss what this update means for your organisation.