Changes to platform algorithms are nothing new, and Google's latest Smart Bidding update is another example of automation continuing to evolve. Beginning in mid-August, campaigns using automated bidding will behave differently in certain scenarios, making now the right time to evaluate bidding strategies rather than waiting until performance begins to shift.
Quick Answer: What Is Google's Smart Bidding Update?
Google's August 2026 Smart Bidding update changes how Target ROAS and Target CPA campaigns interpret advertiser-defined targets. Instead of treating bidding targets as flexible guidelines, Smart Bidding will optimize much more closely toward the specified target, particularly in budget-constrained campaigns. Advertisers should review campaigns that consistently outperform their targets before the rollout to avoid unexpected shifts in efficiency or spend.
What's Changing?
Today, it's common for campaigns using Target ROAS or Target CPA bidding to consistently outperform the targets that have been set, particularly seen when budgets are constrained.
With this update, Google is changing how Smart Bidding interprets those targets. Rather than treating Target ROAS or Target CPA as a flexible guideline, the system will optimize much more closely toward the actual target that's been defined, even in budget-constrained campaigns.
In practice, this means campaigns that have historically delivered results well above their bidding target may begin prioritizing additional volume over exceeding efficiency targets. For example, a campaign consistently delivering a 700% ROAS against a 500% Target ROAS may begin moving closer to the 500% goal while capturing additional conversions and spend.
This isn't a change to bidding strategies themselves; it's a change in how Google's automation interprets and executes the targets advertisers have already established.
Why This Matters for Brands
Overall, Code3 Search Strategists view this as a positive evolution. The change is designed to create more consistent bidding behavior over time, giving advertisers greater predictability as campaigns scale. However, as with any algorithm update, the impact won't be uniform across every account.
Where we see the greatest opportunity and the greatest consideration is within campaigns that have consistently exceeded their bidding targets while operating under budget constraints. As bidding behavior evolves, campaigns may begin aligning more closely with the targets that have been set rather than continuing to outperform them by a significant margin.
For advertisers, this means targets that may have worked well historically are worth reevaluating before the update takes effect. Waiting until after the rollout could result in unnecessary volatility, whereas making measured adjustments now allows campaigns to transition more naturally and provides time to understand how performance responds.
Code3's Recommendation
Over the next several weeks, our focus for Code3 clients will be on proactively reviewing automated bidding strategies across accounts by:
- Identifying campaigns consistently outperforming their current bidding targets.
- Prioritizing campaigns that are frequently constrained by budget, where changes are most likely to influence performance.
- Gradually adjusting bidding targets where appropriate instead of making reactive changes after the rollout.
- Closely monitoring performance following implementation and making incremental optimizations based on observed behavior.
Code3 Search Strategists don't expect this update to require widespread restructuring, nor do we expect every campaign to be affected equally. Instead, we see it as an opportunity to ensure bidding strategies accurately reflect current business goals rather than relying on historical performance patterns that may no longer behave the same way.
The accounts best positioned for this transition will be those that take a proactive approach. By reviewing bidding strategies ahead of the rollout, we can minimize disruption, maintain performance stability, and ensure campaigns continue to scale in line with business objectives as Google's bidding models evolve.
Frequently Asked Questions About Google's Smart Bidding Update
Does this update change Target ROAS or Target CPA bidding? No. Google is not introducing new bidding strategies. Instead, it is changing how existing automated bidding strategies interpret advertiser-defined targets.
When does Google's Smart Bidding update roll out? Google has announced the update will begin rolling out in mid-August 2026.
Which campaigns will be affected the most? Campaigns using Target ROAS or Target CPA that consistently outperform their targets while operating under budget constraints are expected to see the greatest change.
Should advertisers change their bidding targets? Not necessarily. Advertisers should first evaluate whether their current targets still align with business goals before making gradual adjustments.
Is this update good or bad? For most advertisers, this should improve bidding consistency and predictability. However, campaigns that have historically relied on Google's flexibility may require optimization.