Google is making a big change to how Smart Bidding works in Google Ads, and it goes into effect August 16, 2026. It applies to a specific group: campaigns running with a target (target CPA or target ROAS) that are also consistently limited by budget. Some people are talking about it, but I still think it’s going to sneak up on a lot of accounts.
How budget-limited campaigns behave today
For a long time, a budget-limited campaign with a target has worked like this: the algorithm finds the easy wins first, then runs out of budget before the day is over.
Say your target CPA is $50 and you’re limited by budget. Google looks at the day and figures it can probably get you one conversion under $50, but it can’t guarantee anything past that. So it stops spending. It grabs the easy wins and calls it quits for the day rather than throwing a wider net.
The side effect is that your actual numbers often come in well ahead of the target. That $50 target has been running for months, maybe years, while the actual CPA averages $35 or $40. You’re happy with it and haven’t touched the target in a long, long time. Some of us have come to almost rely on that overdelivery. Plenty of people have forgotten their targets are there at all.
Google’s reps have been running into this for years. Yours comes along and says you need to raise your budget, you’re being too restrictive. You raise it, and you get what Google calls “perceived performance decline”: with room to keep running through the day, the algorithm finishes the easy wins and starts chasing the conversions that are harder to get. Your conversion rate drops and your CPA climbs. In reality, the campaign is landing close to the target you set.
What changes on August 16
If this plays out the way Google’s communication describes, the algorithm stops being conservative when budget is limited. It gets more aggressive and works toward the target you actually set, instead of averaging comfortably under it.
So if the target still says $50 and your actuals have been $35 or $40, your CPA is heading to $50. The campaign will be doing exactly what you told it to do. The problem is most people probably told it forever ago and forgot.
If you aren’t paying attention, you’ll wake up a week after the change wondering what’s going on with your CPAs and your return on ad spend.
Check your campaigns now
Step one, today: if you’re using targets and you have a history of limited-budget warnings, compare your actual CPA or ROAS against the target you have set.
If the actual is close to the target, this won’t be a big deal for you. There isn’t going to be much of a change.
If it’s drastically different, you’re going to see a big swing in performance, and you don’t want to close that gap in one move. Give yourself time to step it down:
- a 20% adjustment this week
- another 20% in about seven days
- one more before August 16, depending on when you’re reading this
Say your target ROAS is set at 200%, but the campaign is actually returning 250% or 300%. If 300% is where you want to be, start moving the target up toward it now. Do nothing, and after the change your return comes down to that 200%.
Who can skip this
It won’t affect everybody. If you’re using targets but your campaigns are well funded and you aren’t seeing the limited-budget warnings Google loves to throw at everybody, you’re fine. Same if you aren’t using targets at all.
Ecommerce runs on target ROAS, so ecom accounts will feel this one. And Google has started putting a banner at the top of affected accounts, so that’s one more way to know whether you’re in the group.