The Google Ads Update Is Inflating Your CPCs
Yesterday, advertisers in the retail goods vertical reported experiencing massive, overnight cost per click spikes that completely broke their historical year-over-year trends. This sudden shift happened because Google is reportedly treating less valuable conversions with the exact same weight as high-value ones. This matters because if you do not adjust your targets to match your actual performance immediately, your profit margins will quickly disappear.
When you run an ecommerce store, you expect your bidding algorithms to optimize for the actions that actually put money in your bank account. When a platform suddenly shifts its bidding dynamics, it can disrupt your entire acquisition strategy overnight. I always advocate for looking closely at your daily performance data to spot these anomalies before they drain your budget.
Looking at yesterday’s results and… hoo boy. LARGE spikes up YoY that break trends we’ve been seeing. We spend a fair bit (retail goods vertical) and had already prepped for this change by adjusting targets to actual performance etc. etc.
What changed
- Equal conversion weighting: Google is reportedly treating less valuable conversions the same as high-value ones.
- Increased auction competition: This change is bringing more competitor accounts into the bidding auctions.
- Overnight CPC spikes: Advertisers are seeing massive overnight cost per click spikes that break year-over-year trends.
Why it matters for your numbers
When Google treats lower-value conversion actions with the same weight as your high-value purchases, it artificially inflates the perceived value of lower-quality traffic. This change forces the automated bidding system to value these lesser actions more highly, which inherently brings more competitor accounts into the exact same bidding auctions. With more accounts competing for the same space, cost per click rates spike overnight, breaking your historical trends.
If you rely purely on the ad platform's automated bidding without adjusting your targets, you are going to pay premium prices for traffic that does not convert into actual revenue. Your return on ad spend will drop because your cost to acquire a customer has suddenly increased, while the actual value of those conversions remains the same or decreases. You cannot afford to let automated bidding systems spend your budget on lower-value traffic under the guise of steady conversion volume.
What I would do
- Adjust your bidding targets: Immediately adjust your targets to match your actual real-world performance rather than relying on the platform's automated targets.
- Audit your conversion actions: Review your conversion settings in Google Ads to see if lower-value actions are being treated with the same weight as your primary purchase conversions.
- Monitor your daily CPCs: Keep a close eye on your daily cost per click metrics and compare them against your historical year-over-year trends to identify sudden spikes.
- Analyze your competitor auctions: Check your auction insights to see if new competitor accounts have suddenly entered your auctions and driven up bidding costs.
To keep your margins healthy, you need to track what actually drives orders. At TrueROAS, we provide independent, server-side tracking that shows you your real revenue, completely separate from the ad platform's own numbers.
Source: r/PPC
If your numbers look off after this week, grab 20 minutes with me and we will look at your attribution together: Book a call with Rasmus.
