For years, one of the greatest ironies of Google’s Smart Bidding has been that campaigns could perform better than the target you set. But that could all be about to change, argues The Media Store’s Emma Davis.
In the past, if you set a cost per acquisition (CPA) target of $10, and if the algorithm was finding conversions at $5, most advertisers weren’t exactly rushing to correct it.
But Google’s latest Smart Bidding update, which rolled out globally from 17 August, has changed the equation, forcing advertisers to rethink what their targets actually mean. For budget-limited campaigns using Target CPA or Target return on ad spend (ROAS), campaigns will now optimise more closely towards the target set by advertisers, rather than quietly outperforming it.
On the surface, it sounds like a technical tweak. Even Google has positioned the change as an improvement – campaign performance will be easier to predict, forecasting will become more reliable, and scaling accounts will become easier, as CPA and ROAS become more aligned with set targets.
But will the update actually deliver results?
The August Smart Bidding update is particularly significant for campaigns limited by budget, something seen more often run in the accounts of SMEs and businesses with tighter marketing spend. These advertisers are likely to struggle with the shift, with less room to absorb inefficiencies, increase spend or dedicate additional resources to ongoing optimisation.
The new Smart Bidding offering is going to require more time management than ever before, and importantly, more active oversight. Search specialists will no longer be able to simply set a target and leave a campaign to outperform it indefinitely; they’ll need to review performance and targets far more frequently, and then quickly adjust before efficiencies are lost.
At a time when marketers are constantly being asked to do more with less, this creates a real tension. Many businesses have benefitted from the efficiencies of the previous bidding strategy. This new approach reduces that upside, while simultaneously creating more work for the marketers and agencies managing the campaigns.
Budget conscious businesses are likely to feel this shift most acutely. These are the advertisers that have historically had the most to gain from Google finding efficiencies beyond the target, particularly when every dollar of media spend needs to work harder.
Now, maintaining performance may require closer monitoring, more frequent forecasting and more active optimisation. For agencies, that means additional workloads. For clients, it means more conversations around targets, budgets and expected performance, particularly when spend needs to change.
There’s also a broader question around what this means for the growing divide between large and small advertisers. Larger brands have the budgets, resources and specialist expertise to absorb fluctuations, monitor performance more closely and continually optimise campaigns. Smaller businesses simply don’t have that luxury. If achieving the same level of efficiency requires more frequent intervention, then the businesses with the fewest resources to dedicate to optimisation will be disproportionately affected.
Google’s version of predictability appears to prioritise adherence to platform inputs over opportunistic efficiency. Sure, it might make campaign behaviour easier to model, but it doesn’t necessarily make accounts easier – or more effective – to manage.
And perhaps that’s the biggest shift of all.
As automation becomes more sophisticated, the role of the search specialist isn’t disappearing; it’s just becoming more demanding. The machine may be doing more of the bidding, but marketers and agencies need to spend more time deciding what the machine should be bidding towards, and whether that target still makes commercial sense.
The irony is that an update designed to make Smart Bidding more predictable and easier to manage could ultimately require everyone to be more hands-on, not less.
Emma Davis is the search director at The Media Store.
