The Truth About Google's New Target Bidding "Update"

Google announced a change to how budget-limited campaigns on target-based bid strategies will work... is it time to freak out? Hardly! In episode 130 of the Inside Google Ads podcast, host Jyll Saskin Gales cuts through the hyperbole to tell you what's changing, what you need to know, and what it ACTUALLY means for your campaigns. While social media is filled with "hot takes," the reality of this update is much more straightforward than the rumors suggest.

Key Topics Discussed:
- What the August 17, 2026 smart bidding update actually changes for target CPA and target ROAS campaigns
- The difference between the red "limited by budget" warning and the yellow recommendation
- Why some advertisers see an anecdotal performance "overshoot" in budget-limited campaigns
- Practical solutions for accounts that are chronically limited by budget
- How to use maximize bid strategies as an alternative to target-based bidding

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Resources discussed in this episode:
- Brooke Osmundson's Search Engine Journal article: https://www.searchenginejournal.com/google-clarifies-smart-bidding-update-after-advertiser-concerns/581804/
- Google Ads documentation about this change: https://support.google.com/google-ads/answer/17061251?hl=en
- Inside Google Ads episode 7 - What should you do if your campaign is limited by budget? https://jyll.ca/insidegoogleads/7?utm_source=podcast&utm_medium=referral&utm_campaign=episode130
- Inside Google Ads episode 93 - What does limited by budget mean in Google Ads? https://jyll.ca/insidegoogleads/93?utm_source=podcast&utm_medium=referral&utm_campaign=episode130

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Transcript

Google Ads practitioners are all freaking out about this new update, but you don't have to.

There's a small change coming to smart bidding. And as someone who is currently writing the book all about bid strategies, I didn't even feel the need to comment on this at first because in my opinion, it is such an insignificant change.

Over the last few weeks, I have seen so many friends and colleagues and not friends commenting about this. So, I thought I would be doing you a disservice if I didn't share with you what's happening to target bid strategies that are limited by budget. 

In this episode, I'm going to cover what the change actually is and why you don't need to freak out about it and what you should do instead. 

I'm your host, Jyll Saskin Gales. I spent six years working with big brands at Google and now I work for you. 

This is Inside Google Ads, Episode 130: Target Bidding Change.

First thing’s first, what's happening here? 

This affects campaigns that are limited by budget. And by that I mean the actual red limited by budget warning, not the yellow limited by budget recommendation. And it only applies to campaigns that use Target CPA or Target ROAS bidding, which from here on out I'm just going to call “Target bid strategies.” 

And the big change is…. are you ready for it? 

For campaigns that are limited by budget, as of August 17, 2026, your Smart bidding strategy
will try to stay close to its target. 

Really, that's the change. 

So, let's say you have a Search campaign that is limited by budget and your Target CPA is
$10. Going forward, it's going to try harder to hit a target CPA of $10. 

So, why is everyone freaking out about this? 

Well, some things that people had noticed anecdotally were if you had a campaign that was limited by budget and you were using a target-based bid strategy that the Smart bidding may try
to overshoot and be more efficient than your target. 

In our example of a Search campaign with a Target CPA of $10, maybe if it was limited by budget, it was actually hitting a real CPA closer to $5. Again, this is not something that was guaranteed, not something documented, not even something that I would observe would always happen. Sometimes I see campaigns overshooting their target, meaning they have a more efficient performance, a lower CPA than the target, or a higher ROAS than the target. But just as often, in other scenarios for campaigns that are limited by budget, I see them struggling to hit their target, meaning the actual CPA is higher than the Target CPA or the actual ROAS is lower than the Target ROAS. 

Going forward, Google says that your target bid strategy will now try harder to stay closer to that target. So people are freaking out about this, as they like to do, because they like to get attention on social media. 

No, no, no. 

If I'm doing my most charitable interpretation, which I like to do of Google's actions, and
will also do other’s actions, people think that this is Google being greedy or selfish or making you unnecessarily get worse performance than you would have otherwise.

And personally, I just don't think that's the right way to look at this at all.

Remember, your bid strategy is how you tell Google Ads what you want it to do. So, if you're telling Google that you want a Target CPA of $10, it should be trying to get you $10. If your target is $10 and it's been achieving $5, then change your target to $5. 

What's the big issue here? 

And again, as part of that, target-based bid strategies are not designed to be limited by budget. I've spoken on this podcast before (episode 7, and more recently in episode 93) about how being limited by budget actually hinders performance. So, if you only have a set budget to spend and you can't increase it, you should either stick to a Maximize bid strategy, like Maximize Conversions or Maximize Conversion Value - that's what they are for - or if you're using Target CPA or Target ROAS, and you are now limited by budget, you should be setting a tighter target or increasing your budget or doing something like narrowing your targeting to a smaller area, fewer keywords, etc.

You do not want your campaigns to be chronically limited by budget because that hurts performance anyway. And if they are chronically limited by budget, then just set the target you actually want to achieve and Google will achieve it for you if it's possible to achieve that. 

So that's what's changing for campaigns that are limited by budget, only on Target CPA or Target ROAS. As of August 17, 2026, Google Ads will try to stick more closely to your target. If you don't want that, then you can change your targets, increase your budget, or choose a different bid strategy.

But as Ginny Marvin shouldn't have had to clarify, but has by commenting on social media posts, as well as providing comment to Brooke Osmundson in her excellent Search Engine Journal article about this, you're not automatically going to spend more. Google is not changing your bidding targets for you. You just need to continue doing what you've hopefully always been doing, which is to set your bid strategy according to what you want Google Ads to do. No more, no less. 

In the Google Ads interface, you're going to start to see warnings about this. There's a tool to help you decide whether to change your target or not. Again, if you're happy with performance, things are going well, no need to do anything. If you're limited by budget, address the root cause of that limited by budget problem. I'll put a link in the episode description to resources on how to do that. (episode 7, episode 93)

And if you don't want to change your budget or targeting or anything that's going to fix that, then go ahead and just set a stricter target, and Google will achieve it if it's possible to achieve it. 

I hope that, as always, this episode has allowed you to feel more confident in your Google Ads
management skills. 

If you want to go more in depth in the platform with me to learn how to manage your Google Ads confidently and effectively, no hype, you should check out my course, Inside Google Ads, at learn.jyll.ca. That's learn.jyll.ca. 

I'm Jyll Saskin Gales and I'll see you next time inside Google Ads.