Google Ads August Update: Target ROAS & CPA Is Changing - Your Campaigns Will Spend More If You Do Nothing

Google is changing how Target ROAS and Target CPA work in August, and if you do nothing, your campaigns will quietly spend more and perform worse. 

In this episode of the Google Ads Unleashed Podcast, host Jeremy  breaks down exactly what is changing on August 17th, why your bid targets are shifting from a floor to a magnet that pulls performance toward the number you set, and why accounts that have been comfortably overperforming their targets are the most exposed. 

Learn why the conservative targets many advertisers set and forgot are now an open instruction for Google to loosen bids, chase more volume, and close the gap between target and actual performance, at your expense.

Get your free 30 minute strategy session with Jeremy here: https://www.younganddigital.marketing/

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Transcript

Imagine this is your setup. You got a campaign running at let's say 200% return on ad spend target. It's limited by budget, but you don't really mind because that's what you've set it towards and that's the budget you want to spend, but the campaign's actually running at a 4x row. That's that's not bad, is it? You've set it to a certain target and you think you're winning. It's overperforming. Well, The big bosses of Google have found another way to rob you of your hard-earned cash. And that margin that's going in your pockets is quietly going to go into Google's pockets in August if you don't do things now. And this is what today is all about. Welcome back to Google Ads Unleash, guys. Hope everyone is doing fabulously this Monday. Well, another episode, another tip of s*** that you need to do pretty quickly if you're a Google Ads expert or have your own uh Google Ads account running or you have a team that's looking after it because Google is changing something in August um which is changing massively. It's been all over LinkedIn. It's been if in your ad account even there will be a notification by now Google is changing how target drawers and target CPA behave. So how it used to work is that the target used to become a flaw and then it became became uh a number that Google actively steered towards. So what do I mean by that? I've said it in the intro already. A lot of your campaigns will probably, you know, sit at, let's say, a pas of 1.2, so 120%. But the campaigns actually performing at a pas over a 30-day period of uh 1.8, so 180%. Well, you didn't really mind because setting the ROAS target or the CPA target for a long time didn't actually onetoone translate of this is exactly the rorowass or pass or whatever that I'm going to get. Right? So why that actually used to happen is pretty straightforward. So if a campaign is limited by budget and this is only applying to campaigns limited by budget, the system isn't actually pushing for more volume, it's taking basically the cream, right? It's shoving off the best performing search terms within the search term pools, the daily budgets available for. What do I mean by that? Let's say your daily budget is uh set to um to to capture 10 search terms of them. Uh two are very good um and uh eight are not so crap. So it didn't really matter what kind of rowass target you set especially if you have one which is a bit more aggressive or lower. Google with the available budget if it's limited by budget would fish for the um sort of lower let's say um uh two okay and active proactive go towards those. Now, or a better example, let's say there's 10 search terms. Your RS target is set to two and there's only two conversions which are really good and super profitable and the eight others are not so great and your budgets actually to set five here, right? So, to capture five search terms, Google would only focus on two and the best. Now, it'll just focus on five random ones to achieve the ROS target that you've set. So, it's kind of hard to wrap your head around this, but basically what has been happen is with a limited by budget, Google has just been focusing the budget that you set on that day on the best performing search terms, which then results on the campaign overperforming over its target. With target CPA, it's the same. Your target CPA is set quite high, but you're actually, let's say, at 100 pound CPA, and it's actually performing at a 70 pound CPA, so it's performing better. So, it's kind of the opposite way around. And a lot of practitioners have relied on this, including us, right? So, sometimes we set a certain target and um it's with a limited budget or lower budget. It's been overperforming. It's been a good safety margin. But what is actually happening from August onwards and this is from August 17th onwards. The target now flips from a floor what it used to be to a magnet. So that means it pulls performance to the number over a 30-day period and not just operate above it and then slowly uh uh erode away as you increase budget. So let's replay the 200% scenario I've just said. If to hit 200%, Google will now actually loosen bids and chase more volume and actually uh also spend and try and fall towards the target in this. So it also has um um yeah so and also with the budget, Google will actually use any available budget to close that gap between the target and your actual performance. So not only is your raw going to go down on your TVC PIA is going to go up, but it's also going to spend more to achieve that. So, your target's no longer a safety net. It's an instruction and Google will take you at your word. So, what will happen is most expo well and the most exposed accounts will be those that are deliberately running very conservative targets. So, anyone who set a target once and never revisited it and some may be actually performing better and um it's going to very likely increase spends uh to fill the gap between target and actual. And also it's going to try and um massively distort your bids uh to achieve the target that you have now set. And that actually begs a couple of sort of questions. Do you actually know the number that you need of the targets that you set? That just deliberate? Um does the target that you've set come from the right business economics or even your margins, your break even, your uh lifetime value, your CLT the CLB CAC ratio what have you actually been optimizing towards or is it just something that you've been set and forget and never really revisited. Do you actually even know what the right target is to set? Listen to other episodes that that I've done about this. So really really important to to look at that before uh it's happening. So what we're doing is the following. We are auditing all accounts and uh pulling all Tor and TCPA targets. actual versus uh uh versus performance. Let's say it's performing set to 200 and it's performing at a 300. We're actually going to raise the row targets, right? If that's what we want or um we're going to just rethink the targets completely. Um yeah, so we're going to pull those and flag all those. The second thing is then we're going to decide the actual true target not from uh habit but by actual margin or goal of the account and reset everything and watching those changes closely over the coming month and then closely whilst the change happens on the 17th and yeah it's why you need someone who is on top of this right because there's so many changes all the time Google I generally believe every single week there's someone in a boardroom with Google just thinking guys we need another way to pull money out of these people what else can we do and clearly there was someone in a in a boardroom said, "Listen, guys, we've got millions and millions of people who are setting their rowass targets somehow uh quite aggressively but with very limited budget. It's the their campaigns are massively overperforming. What do we do to get more money out of these people?" And boom, they thought of another thing, right? And if you're a little bit unsure of what you need to do, just get in touch. Jeremy.marketing is the email address. You know it, Jeremy. and Google Ads on LinkedIn. Come find me, send me a message. I'm always happy to help or simply book a call with me. Uh, head to the brand new website, young digital.marketing. Got a new positioning, new layout. Everything's brand new thanks to Sheree, our marketing manager, who's done fantastic work on this. And book a call via the Kenti link. We'd love to help brand owners. We also are going to launch a new service soon. We're going to help you with you build your own Google Ads and develop the skills that you need in order to run Google for yourself or your brand within an extensive program. Stay tuned and I'd love to talk to you and we're looking for brand owners who would be interested in this. So, hit me up. This has been Google Ads Unleashed. This has been your host Jeremy Young and I wish you a happy and productive week ahead.