Google Adwords

Understanding The Latest Google Ads’ Smart Bidding Changes

The changes to Smart Bidding strategies have been organized in such a way that it should be much easier for you to choose the right strategy for your particular enterprise. When you create a new bid strategy for a search campaign, you will now immediately see two options you can choose from. One will be Maximize Conversions with an optional target CPA, and the other will be Maximize Conversion Value with an optional target ROAS. The formerly Target CPA or Target ROAS options for bid strategies for standard campaigns are no longer available.

You’ll now be able to use these new bid strategies and set optional targets. You should know, however, that this update only affects strategies at the campaign level, and that portfolio bid strategies are still being updated. What this means is that there should be no impact whatsoever on bidding strategies because of the update. If you use Maximize conversions with a target CPA, it will have the same effect as if you selected Target CPA, and if you selected Maximize conversion value with a target ROAS, it will be just as if you selected Target ROAS.

Achieving your Performance Goals 

If your goal is to maximize conversions while staying within a set budget, your former bid strategy would probably have been to Maximize Conversions. Now it would be Maximize Conversions with no Target CPA specified. If your goal was to Maximize Conversions to a Target CPA, your former bid strategy would probably have been to Target CPA, whereas now it would be Maximize Conversions using a target CPA.

In a situation where your performance goal was to Maximize Conversion value within a fixed budget, you might have selected a bid strategy to Maximize Conversion Value. The updated bidding strategies, you would now probably want to choose Maximize Conversion Value with no target ROAS specified. In the same way, a performance goal centered on Maximizing Conversion Value to a target ROAS will switch to the newer strategy of Maximizing Conversion Value using a target ROAS. By observing the column labeled ‘Bid Strategy Type’, you’ll immediately see whether or not you established a Target CPA or a Target ROAS.

All pre-existing campaigns which made use of Target CPA or Target ROAS will run in the same fashion that they always have in the past. Advance notice will be given before there is any automatic switching over from older bid strategies to the newer format. When that does happen, there will be no impact at all on bidding behaviors.

Smart Bidding Changes’ Impact on Advertisers 

In practical terms, very little will change in terms of how the management of Google Ads will work under the covers. The only difference is that you might have to use a somewhat different setting than in the past, but it will accomplish the same thing. Smart Bidding for search will begin to look a lot more like Smart Bidding for Shopping because those advertisers who have shopping campaigns in place, coupled with a target ROAS, are actually already using Maximize Conversion Value strategy with a tROAS.

Budget constraints 

The way bidding strategies work will always depend on the associated budget. With automated bidding, some of the most common forms of budget constraints are the target, which will either be tCPA or tROAS, and the budget amount itself. There are other constraints as well, those being any geo targets, various keywords, and some other constraints as well.

Google strongly recommends that advertisers remove as many constraints as possible, so the automated bidding is free to operate with a single focused goal. This goal should be supported by clear conversion data.

Targeting constraints are actually necessary so you can be sure that your ads are reaching an audience you have already classified as bringing higher value to the table. However, this still leaves you to decide how to respond to setting a target CPA or ROAS, as well as the budget, when both still act as constraints.

Formerly, Google would recommend that advertisers make use of the old tCPA strategy and a constrained budget, increase the budget so as to remove the constraint, or begin using the old strategy of Maximize Conversions. Obviously, this strategy can no longer happen because tCPA and Maximize Conversions have become part of the same bidding strategy. Now that the change has occurred, all advertisers who are using Maximize Conversions with a tCPA setting and who also have a constrained budget will have to either remove the CPA setting or increase their budgets.

Why Maximize Conversions should not have a constrained budget plus Target CPA 

When advertisers run their bidding strategies with these dual constraints, it will actually create some conflicting goals, as you might expect. On its own, Maximize Conversions has a fairly clear objective – which is to buy as many conversions as possible. With no budget constraints, you can pay for all available conversions, although this could be a risky strategy because it could dramatically increase your cost per conversion.

When there is a budget constraint in place, the Smart Bidding system will automatically keep buying the next available cheapest conversion, until you consume the entire budget. By adding in a Target CPA constraint, conflicting goals enter the picture because the system will have the option of buying more conversions at a lower price, or fewer conversions that are closer to your Target CPA.

Depending on what your real goal is here, you may fall drastically short of one or the other. By introducing conflicting goals, you sacrifice some of the control you originally had over the process, and leave more up to the system to make decisions. It’s entirely possible that one day it will consider more conversions the higher priority, and the next day the focus could be on Target CPA.

Related Articles

Related Articles

With 57% of people starting their online shopping journey on Google, it is important for

If you have one or more account(s) currently using Target CPA or Target ROAS on

Let us help you achieve your digital goals with our strategy.