Google’s Target CPA and ROAS Change Brings Back Decade-Old Bidding Logic

Google Ads finished rolling out a change to Target CPA and Target ROAS on Aug. 27 that makes budget-limited campaigns aim for the target advertisers set, rather than beating it whenever they can. Two weeks of agency data suggest costs are moving around, though conversion rates explain more of it than bid prices do.

According to Google’s help page, the update began Aug. 17 and covers campaigns marked “Limited by budget” that use Target CPA, Target ROAS or, in Demand Gen only, Target CPC. It applies to Search, Shopping, Performance Max, Demand Gen and Travel campaigns in Google Ads and Search Ads 360. Campaigns that aren’t budget-constrained won’t change their behavior, and Google says it won’t automatically adjust anyone’s targets or budgets.

A return to how tCPA used to work

Reva Minkoff, founder and president of Digital4Startups Inc., told an SMX Now webinar that the industry has been here before, Search Engine Land reported on Wednesday. Under the old behavior, a campaign with a $10 Target CPA might consistently generate conversions for $5. Now Google will seek conversions around $10 rather than trying to beat it.

Around 2015 and 2016, Google described Target CPA as setting bids so the average cost per conversion would equal the advertiser’s target, with some conversions costing more and some less. Minkoff’s advice is to start targets close to actual performance and, when a budget-limited campaign keeps meeting its target, lower it by roughly 10% to 20% and wait one or two conversion cycles before judging the result. She cited a transportation client whose CPA fell 75% over two weeks as its target moved from $10 to $7.50 and then $5.

What the early numbers show

Amsive’s two-week analysis found actual CPA is not consistently moving closer to target yet. Across its broader tCPA Search cohort, CPA went from 4% below target in the final pre-change week to 14% above in week one and 62% above in week two. Amsive notes that figure is distance from the target, not a 62% rise in CPA.

Clicks didn’t get more expensive. In week two, tCPA CPCs were 9% below baseline and tROAS CPCs 14% lower, while conversion rates fell 8% and 29%. Amsive said the conversion-rate weakness is broader than the bidding change, which makes it harder to pin the whole decline on Google’s update.

Bigger campaigns look steadier. Among budget-constrained tCPA campaigns with 30 or more conversions a week, actual CPA moved from 27% above target in week one to 8% above in week two, while lower-volume campaigns haven’t shown the same pattern.

Minkoff’s checklist for when target bidding stalls starts with the basics: conversion tracking, landing pages and search queries. “Your bidding is only as good as your conversion data,” as Search Engine Land put it, and a cheap lead that turns out to be spam still trains the system to chase more of them.