← The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
New Bidding Change Explained (Episode 522)
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Foreign. Welcome to the Paid Search Podcast. My name is Joey Buidtner and today I am your guest host. So today I'm going to be talking about something rather uncomfortable and it's related to a new Google Ads update to our bidding system that has the whole community up in arms. And I know that whenever Google makes a change, we typically don't like it because, let's be honest, nobody really likes change and it never really feels good. But this one particularly feels different. This is a change that fundamentally will affect how we manage our bidding and it's rooted its cause in something that really shouldn't matter and more or less pulls back the curtain on Google's real intention and what they want you to do and how it benefits them and how their goals are more profit centric. Now, I usually like to take a more positive approach to a lot of these changes that Google puts forward. You'll know that I'm all for testing and trying new things and I think it's important as ads managers to recognize that we are in Google's sandbox and we have to be willing to adapt and change. But this one still feels a little egregious and I'm having a hard time swallowing it. But anyways, before I get into my gripes about it, I will still cover what it means. I'm going to be covering how I'm preparing for this bidding change and how we should think about moving past it and what to monitor. Now, before we get into the meat of the episode, I do want to mention our episode sponsor, that's Optio. So Optio is now more than just a ads management platform that makes you aware of things that you might want to have your eyes on. For me, it's become more or less my AI portal into my account. Its ability to directly integrate to my account so I can have in depth conversations about the things that I may be not seeing on the surface. And there is an amazing suite of tools built to help guide you along this route to again, pull out the things that you didn't even realize you needed to to be made aware of, but have a big impact on your account. And simply as a diagnostics tool, I am absolutely loving its capabilities. So Visit Opto, that's O-P-T-E-O.com and get a free 28 day trial when you mention in the chat window that you heard about this through the paid search podcast. So that's okay. So now getting into the big change on our horizon. So Google announced a little while ago that there is going to be this bidding change starting Aug. 17 and it applies to bidding strategies using targets. So that's TCPA and troas and it's specifically applying to campaigns that are limited by budget. And this is really gonna be the linchpin in my side that I'm gonna be revisiting a little bit later that I find really strange that limited by budget is becoming a key point of tension that is forcing us to adapt and forcing this change on us. But before we get there, I wanna just talk to you about what the change is. And I'm gonna start by just reading Google's documentation on it. So documentation is kind of long, I more or less cut it down. But I am reading word for word from Google, but this is just like the three line version. So starting August 17, 2026, Google is updating its bidding system to deliver more predictable campaign performance. Campaigns that are limited by budget, that use a target based bid strategy will more consistently perform towards your target, including when make a budget adjustment. Example, if your campaign's Target CPA is $10, but your actual CPA performance is $5, your campaign will deliver closely to $10. So just to unpack what that means, okay, they are saying that if your campaign is limited by budget and you previously had a CPA that was loose, right? A very high cpa, a CPA that allows the algorithm to explore a little bit. And if that campaign was efficient, more efficient than your target, and overperforming, getting you better performance than your target, that campaign will now deliver intentionally to the target that you set, meaning you will lose the efficiency that you had previously gained unless you lower your TCPA or in the context of TROAs, same thing. If you had a low target ROAS and it was overperforming, giving you a better return on ad spend, as of August 17th, the performance is going to start trending down to whatever you set. And this is basically saying that Google wants you to to start setting your targets to what you actually want to get. Now I have a few problems with this because if you've listened to me in the past, I am all for not really forcing aggressive targets. I like a high TCPA or really low target roas. And that's because when you have these aggressive targets, it's basically telling the algorithm, okay, I only want you to go for the stuff that you know works and I'm holding you accountable to this ROAS or this cpa. And what often happens in the long term is as soon as it starts to hit a bump in the road. And maybe a certain target isn't working because you set those handcuffs on it. It's not going to get exploratory and maybe find a new path. It's just going to maybe limit spend. So I always like having, you know, really loose targets for that ability to adjust. And then it gives you the option to lift the target roas if you start seeing performance going down and to make that adjustment when you need it to. But now they're saying that if you have that low target, they're going to scrape off your efficiency. And what does that look like? It's basically saying they're going to intentionally serve you to what they deem to be lower, converting traffic. Or they're going to serve your ads with a higher cpc. They're going to get you a higher cpc. Those are the only two routes that lead to their example where it says you were over performing. Unless you bring your targets to that performance, we will pull your performance back. And again, the part that I find really strange about all of this is that it's rooted to limited by budget. I don't even really know why that should matter. You know, limited by budget is not a KPI. It's not a thing you optimize towards that little limited by budget option. Limited by budget red icon is simply Google saying, you know, you could be spending more. There is more volume for you to capture. Yes, Google, I know there's always more volume, but that's not the goal of every, of every account. You know, their whole reasoning for this is that we want to make scaling more predictable because it is true when you scale, typically your return on ad spend is going to drop. Right, because you're, you're going after more expensive cold traffic. Or again, for tcpa, your cost per conversion is going to go up when you, when you start scaling more. But the idea is that you know, you're getting more conversions. You can't expect for conversions to go up and cost per conversion to go down. We can't get the best of both worlds. And the idea is that we as marketers understand our floor and ceiling of profitability. And if we have wiggle room for our profitability to slide a little bit, it is worth more conversions. But now Google is saying, no, you're just going to set your targets to what you want and let us do the rest. And when you crank up that budget, you're going to see consistency on the other end and we're going to hold that roas for you. I'm going to believe it. When I see it. But I am very worried about the the after effects of setting these aggressive targets. Again, not only potential spend issues down the line long term, but also the low T ROAS or high TCPA has always been a bit of a lever for me on making sure the algorithm still considers new traffic. Right. It's not going to remarket too much because if you have that high target again it, its thinking is that it's got to hold that so it's going to go after the short term low hanging fruit. So it brings us back to this dilemma where in platform Google Ads roas or cost per conversion can be misleading because in the end we as you know, marketing managers for the business that we manage, our job is still to think of the best interest of their business first, which is not the on paper return on ad spend. But it's often a pipeline of new customers. We always want a new customer pipeline above a really high roas. I'd rather have a slightly lower ROAS if it means more new customers because that's longevity, that's business growth. So that's one of the things I think I'm, I'm most concerned with is the implications of what kind of traffic it's going to lean into when we are forced to really raise our targets. So there are a couple of new tools that are hilariously timed at the same timing as when they announced this new change that might, you know, help the medicine go down so to speak. But in my opinion is a little bit of a unnecessary over complicated workaround for a number of reasons. But the first one I want to mention, and this new addition just applies to Standard Shopping. But they have announced that Maximize Conversion Value is now an option in Standard Shopping before Maximize Conversion Value is actually only an option in Standard. In pmax and for Standard Search you know, you had Maximize Conversions also Maximize Conversions in shopping campaigns. But in terms of maximized conversion value that was never an option. And that might be a little bit of a workaround to going to the less aggressive bidding approach similar to how we would use Maximize Conversions in lead generation. If we don't want to use Target cpa we could go to Maximize conversions or in Standard Shopping we can now go to Maximize conversion value. And this might be a little bit of a escape rope for me at least that I'm certainly going to be testing again if I find that raising my target ROAS results in these issues that I'm seeing that it might. I'm looking forward to testing Maximize Conversion value again and you know, maybe this is the comeback of maximized conversion value in a way or of the non goal oriented bidding strategies. Because in the past they were always a little bit of a starting point in our smart bidding, but then we'd graduate to the target based, you know, tcpat roas. But I am definitely foreseeing a bit of a comeback in those quote unquote, you know, less aggressive strategies. The other thing that they have added on to this mix is another little tool called smart bidding exploration. And smart bidding exploration is a bolt on tool to your bidding strategy that will allow your smart bidding wiggle room to explore. So the whole thing was if you want it to have, if you want your algorithm to have wiggle room to explore, you no longer needed to bring your return on ad spend down or put your target CPA higher. You could leave it where it is and initiate this tool and there's like a sliding scale and how aggressive you want it to get. It sounded kind of cool, but I just never really used it because I always kind of liked just having my hand on the lever for, on the bidding lever to do this instead. But now this makes a lot more sense to why they released this. In a world where they're saying don't Lower your T ROAs to get more exploratory or raise your TCPA to get more exploratory, use this instead. But I don't see this as really like a long term tool. You would bolt on. This is something the way that I always saw it was, okay, maybe we would use this before sale. Right before a sale, I want to get a bit more exploratory. I want to fill my pipeline with cold traffic, get in front of new eyeballs so then I can get them into my remarketing lists and at the time of sale, boom, blast them with remarketing. And that's a cool little pipeline that you turn this tool on temporarily. But they're saying that, okay, this is your answer if you want to get exploratory. But it's not a tool you'd keep on long term. And I just find it from a design standpoint, from a development standpoint, it's weird that they took one campaign that was beautiful. Sorry, not one campaign, one bidding strategy. Right. That was beautifully built. It had everything in it we would want. Smart bidding has been, I think in the last couple years kind of the jewel of Google Ads. It got so much better. And to refine it, they have split it up and fragmented it. I believe that is simply against the principles of like modern of just of smart design and development. It's don't make things more complicated by adding features. Isn't the idea of development and productivity to simplify things? Now they've made it more complicated. I think that this big change is going to make all of our jobs a little bit harder. And I'll say this too, if you've ever been worried about your job being made obsolete because of AI, here's an example of the opposite of that. I can't think of us being more critical to a business because it's going to take a lot to understand this and it's going to take a lot more monitoring because we're going to need to monitor the relationship more closely of our targets and our actual results. And we're going to have to do more granular lifting and dropping. It's going to be much harder to find that sweet spot of where it should be, where we're not too constrictive, but we're also not too loose. So the big question is what to do. Aug. 17, Google did say that this is not just going to be like a fall off the cliff moment where if you're, you know, T ROAS is 100 and you're getting 500, it's not like August 18th, it's going to go down to 100. They did say though that there will be a little bit of a, it's going to start trending towards whatever you said, which will make it also difficult to monitor. You know, my whole methodology in Google Ads is usually don't be proactive, be reactive. But this is where I'm still a little bit on the fence because it's not going to be just a light switch, it's going to be a slow drag out. And at the ad group level, if you got different targets, it's going to be a lot to monitor. So I'll be honest, I'm still not 100% sure what I'm going to do. But there are a couple tools that we have to use. Google has built a little tool that you can use that basically looks at your campaigns and says, you know, this is the return you're getting. This is the target you set. Think about setting it to this. Optio also has a tool, I actually just tested it yesterday that they're rolling out very soon. It's another one of their AI chat features where you can load this skill that does all of this calculation for you at the ad group level, which is pretty cool. Cause a lot of the times we are doing our troas TCPA bid adjustments at the ad group level. So they will analyze all of your ad groups and tell you what you should set it at based off of what you're getting and what you have it set at now, which I think is really cool. And if I'm not mistaken, you might even be able to push them from Optio, which is pretty cool as well. So I'm going to be looking forward to testing that. But I am leaning towards starting to make my bids more aggressive for this change. But again, I'm still not entirely decided on that that will wrap up this episode. I hope you found it useful. Feel free to reach out in the comment section on YouTube if you want to go back and forth about it. And don't forget to reach out to our sponsor. Opt to give their platform a try. Again, I am using it as my source of data when I need to dig into anything. You know, if I see there's a drop somewhere, I'll go to Optio and say, hey, do a correlation analysis and let me know what other metrics, what other campaigns, what other ad groups you're seeing a drop because I'm seeing an account drop in something, right? They can surf their that data for you through their AI integration. So it's, it's just a beautiful thing to be able to talk to your data that way and it streamlines the investigative process. So visit opteo.com and don't forget you've got a 28 day free trial when you mention you heard about it on the paid search podcast. All right, I will see you all next time. Bye for now.