Google Ads Smart Bidding Update: What the August 17 Changes Mean for Your Business

Google is rolling out an important Smart Bidding update on 17 August 2026, and while it won't affect every Google Ads account, it could significantly change how some campaigns perform.

If your campaigns use Target ROAS (Return on Ad Spend) or Target CPA (Cost Per Acquisition), it's worth understanding what is changing before making any decisions.

The good news? This isn't a reason to panic or immediately change your campaigns. Instead, it's an opportunity to review whether your current bidding targets still reflect your business goals.

In this guide, we'll explain the update in plain English, who is likely to be affected, and what we recommend reviewing before the rollout.

What is changing?

Google has announced that from 17 August, Smart Bidding will begin following your Target ROAS and Target CPA settings more closely in certain situations.

Historically, campaigns that were limited by budget could still outperform their bidding targets.

For example, a campaign with:

• Target ROAS: 300%

• Actual ROAS: 500%

might continue delivering a 500% return despite only aiming for 300%.

After the update, Google will work harder to achieve the actual target you've entered.

In practical terms, this means Google may spend more of your available budget on additional traffic in an effort to move performance closer to your chosen target.

For some advertisers this could mean:

• Higher advertising spend

• Higher Cost Per Acquisition

• Lower overall Return on Ad Spend

This isn't necessarily a bad outcome. It simply means Google will align campaign performance more closely with the targets you've asked it to achieve.

Not sure if your account will be affected?

Book a Free 15-Minute Discovery Call and we'll help you understand whether your Google Ads account is likely to be impacted by the August Smart Bidding update.

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What is Target ROAS?

Target ROAS stands for Target Return on Ad Spend.

It tells Google how much revenue you'd like to generate for every dollar spent on advertising.

For example:

• Spend: $1,000

• Revenue: $5,000

• ROAS: 500%

If you set a Target ROAS of 500%, Google will aim to generate approximately $5 in revenue for every $1 spent.

Businesses commonly use Target ROAS when they have reliable ecommerce conversion tracking and know the value of each sale.

What is Target CPA?

Target CPA stands for Target Cost Per Acquisition.

Instead of focusing on revenue, Google attempts to generate conversions at your desired average cost.

For example:

• Target CPA: $50

• Google aims to generate enquiries, purchases or leads at around $50 each.

This strategy is commonly used by service-based businesses that want to control lead costs.

Examples include:

• Dentists

• Physiotherapists

• Lawyers

• Trades

• Accountants

• Financial advisers

Which campaigns are affected?

Not every Google Ads campaign will be impacted.

The update mainly affects campaigns that:

• Use Target ROAS

• Use Target CPA

• Are limited by budget

• Are currently outperforming their bidding target

If your campaigns don't meet these conditions, you may notice little or no change.

Real-world example

Imagine an online furniture retailer.

Current settings:

• Daily Budget: $100

• Target ROAS: 300%

Current performance:

• Actual ROAS: 500%

Before the update, Google might continue delivering a 500% ROAS because the campaign was restricted by budget.

After the update, Google may begin spending more of the available budget on additional traffic in an effort to move performance closer to the 300% target.

The business could see:

• More clicks

• More sales

• Higher overall spend

• Lower average ROAS

The campaign may still be profitable, but the performance profile could look different.

Should you change your budget?

Not automatically.

One of the biggest mistakes advertisers make is reacting too quickly whenever Google announces an update.

Before increasing your budget, ask yourself:

• Is my campaign actually limited by budget?

• Am I consistently outperforming my Target ROAS or Target CPA?

• Am I happy with my current lead volume?

• Do I actually want more conversions?

Increasing budget isn't always the right answer.

Likewise, reducing budget simply because you've heard about this update could unnecessarily restrict campaign growth.

Should you change your bidding strategy?

Again, not automatically.

This update doesn't mean Target ROAS or Target CPA have become poor bidding strategies.

For many advertisers they remain among the best automated bidding strategies available.

Instead, review whether your targets are still realistic.

Ask yourself:

• Is my Target ROAS set too low?

• Is my Target CPA higher than necessary?

• Have my business goals changed?

• Are my conversion values accurate?

Small adjustments based on data are usually far more effective than making large changes based on speculation.

What should you review before August 17?

If you're managing your own Google Ads account, we'd recommend reviewing the following:

1. Check your bidding strategy

Confirm whether your campaigns use:

• Target ROAS

• Target CPA

• Maximise Conversions

• Maximise Conversion Value

2. Check whether your campaign is budget limited

If Google indicates that your campaign is limited by budget, this update is more likely to be relevant.

3. Review recent performance

Look at:

• ROAS

• CPA

• Conversion rate

• Impression Share

• Search Lost IS (Budget)

These metrics provide valuable context before making any adjustments.

4. Review your conversion tracking

Poor conversion tracking leads to poor Smart Bidding decisions.

Ensure your account is accurately measuring:

• Purchases

• Lead forms

• Phone calls

• Qualified enquiries

5. Wait for data

After the rollout begins, avoid making multiple changes at once.

Allow your campaigns time to stabilise before deciding whether any optimisation is required.

Air Digital's recommendation

At Air Digital, we don't recommend making sweeping changes simply because Google has announced an update.

Instead, we recommend reviewing each account individually.

Every business has different goals, budgets and bidding strategies.

For some advertisers, this update may have little or no impact.

For others, it could be worth reviewing bidding targets to ensure they still align with current business objectives.

The best decisions are made using your own campaign data—not assumptions.

Need a second opinion on your Google Ads account?

Every Google Ads account is different. Rather than making unnecessary changes, let's review your account together.

Book your Free 15-Minute Discovery Call and we'll explain exactly what this update means for your business.

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Frequently Asked Questions

• What is Target ROAS?

  Target ROAS (Return on Ad Spend) is a Smart Bidding strategy that tells Google how much revenue you want to generate for every advertising dollar spent. It works best for ecommerce businesses with accurate purchase tracking and conversion values. Google then automatically adjusts bids to try and achieve your chosen return over time.

• What is Target CPA?

  Target CPA (Cost Per Acquisition) is a bidding strategy where Google aims to generate conversions at your desired average cost. It's commonly used by lead generation businesses such as dentists, accountants, builders and professional service providers that focus on enquiry volume rather than ecommerce revenue.

• Which Google Ads campaigns are affected by the August 17 Smart Bidding update?

  The update is primarily relevant to campaigns using Target ROAS or Target CPA that are limited by budget and currently outperforming their bidding targets. If your campaigns don't meet those conditions, you may notice very little change.

• Should I change my Google Ads budget?

  Not necessarily. Budget changes should always be based on campaign performance and business goals rather than reacting to announcements. Review your campaign first before deciding whether increasing or reducing spend is appropriate.

• Should I change my bidding strategy?

  For most advertisers, no. Target ROAS and Target CPA remain excellent automated bidding strategies. Instead of changing strategy completely, review whether your targets are still realistic and aligned with your current objectives.

• How do I know if my campaign is limited by budget?

  Google Ads will often indicate this directly within the campaign recommendations or campaign status. You can also review metrics such as Search Lost Impression Share (Budget) to understand whether budget constraints are limiting visibility.

• What should I review before the update?

  Focus on your bidding strategy, campaign budgets, conversion tracking, historical performance and business objectives. Having clean conversion data is one of the most important factors in helping Smart Bidding perform effectively.

• Can Air Digital review my Google Ads account?

  Absolutely. We offer a Free 15-Minute Discovery Call where we'll explain whether this update is likely to affect your account, answer any questions you have, and recommend practical next steps based on your business goals.