The "hidden" flaw in Google Ads: how value inflation quietly eats your budget

Smart Bidding in Google Ads — the AI-driven system that manages bids automatically — optimizes based on whatever value data it's fed. The trouble, according to Search Engine Journal editor Sara Stemen, is that in many ad accounts this value data — the numbers behind conversions, meaning goal actions such as purchases or form submissions — turns out to be wrong.

On the surface, nothing looks wrong with the account: campaigns are running, keywords match user intent, and the reports look solid. But underneath, a distorted value signal may be quietly feeding Smart Bidding bad data. When a marketer notices the discrepancy, the first instinct is often to accuse the ad platform of "over-counting" — when in reality it isn't the platform's fault, but the faulty instructions it was given.

If an account runs on tCPA or tROAS — target cost-per-acquisition or target return on ad spend, the metrics Smart Bidding uses to steer itself automatically — on autopilot, with conversion tracking never audited, the system ends up optimizing toward an imaginary number instead of real revenue. Over time the account drifts into what amounts to an inflated state, where a wide gap opens up between what the ads report and what the business is actually seeing day to day. Experts call this "value inflation": it means the dollar figure Smart Bidding is chasing no longer reflects the revenue the company is actually earning.

Importantly, this isn't fraud or a deception by the platform — almost without exception, it's a tracking problem that businesses create for themselves. And the issue matters more today than it did five years ago, because Smart Bidding never double-checks its own homework: tCPA and tROAS simply take whatever value they're handed as fact. If those numbers are inflated, the algorithm chases even more phantom conversions, bids up the cost per click to win those auctions, and pushes toward even more inflated outcomes — all while the account looks, from the outside, like it's performing beautifully.

According to the author, value inflation is rarely a single, obvious mistake — it's usually the result of three or four smaller distortions stacking on top of one another. Taken separately, each one might look negligible, like a rounding error. Together, though, they can inflate an account's real value by 20 to 40 percent without triggering a single warning sign.