Big Changes to Google Bidding: What Advertisers Need to Know

Google have announced changes to its bid strategies and how campaigns with set CPA and ROAS targets operate.

In this edition of The Specialist View, James Tremain, our Online Performance Director, shines a light on Google's latest bidding update and what it means for advertisers.

Google’s New Approach to CPA and ROAS Targets

Google have announced changes to their bid strategies, and how campaigns with a set target operate.

From August 17th, Google have "improved" bid strategies with a target to "deliver more consistent and predictable performance especially as you scale."

Google explained that as budgets scale upwards, ROI becomes inconsistent and often worsens. The solution to this, and to achieve a consistent ROI as you scale, is to set your desired ROI and completely uncap your budgets.

Sure: consistent return on ad spend at scale. Who wouldn't want this?

But to recommend uncapped budgets is to ignore the reality in which most businesses operate. It is not realistic to expect Company A, achieving a 5x ROI at £20,000 a month ad spend, to suddenly be able to spend 10 times that chasing demand, regardless of whether the ROI remains consistent or not.

The unfortunate side effect of this change is that for anyone who has been over-achieving their target ROI, those days are over. 

For Company A, achieving 5x ROI but only targeting 3x, since August 17 only 3x has been achieved. Essentially, over-achievers now have to spend more for the same return.

Given the reality of finance processes and the lack of a magic money tree, what does this mean for the majority of businesses?

For those over-achievers, the change is likely a simple one: change your targets to what you've been achieving. The impact should be minimal. Given Google's own stated commitment to consistency, it may also be a good opportunity to investigate whether there is room to immediately scale budgets and/or raise ROI targets even higher.

For campaigns that aren't hitting their targets, the impact is less obvious.

It may mean that a campaign hitting a CPA higher than its stated target now manages to hit that target more consistently, but at the expense of volume and therefore revenue.

For Entrepreneurial Brands in this situation who cannot simply find more money, our job as specialists has always been to strive for efficiency. It's not clear how this will be achieved moving forwards when the message seems to be:

"Find more money, or accept never achieving your targets."

If we change those targets to more immediately achievable levels, how do we then optimise them down?

Our Specialist View?

With such an unclear path now these changes have come into effect, it is time to take stock.

Ask yourself:

✅ What do you need your Google campaigns to deliver?

✅ Can more budget be allocated to take advantage of Google's promised stability?

✅ Are the CPA or ROAS targets you have set still correct?

✅ What would it mean for your business to accept missed targets as a fact of life?

At The Specialist Works, we are working with clients to ensure campaigns are set up to either take advantage of, or react to, these changes. We'll be closely monitoring performance and helping brands understand the real-world impact of Google's latest update as it unfolds. 💡