How Does the Google Ads Algorithm Actually Work? (And Why You Should Stop Fighting It)

By: Jyll Saskin Gales, Google Ads Coach

"The algorithm needs time to learn." "The algorithm needs sufficient data." "The algorithm doesn't like bid limits."

If you manage Google Ads campaigns, you’ve heard these phrases a thousand times. It can feel like "the algorithm" is this mysterious, all-powerful entity that you have to appease, lest it tank your campaign performance. But here is the thing: an algorithm is just a set of instructions. It’s a process. And in Google Ads, understanding that process is the difference between stressing over every fluctuation and confidently scaling your accounts.

This matters because when you understand how the machine thinks, you can stop fighting against it and start giving it what it needs to succeed. Instead of panicking when you see a "learning" status or a weird search term, you’ll know exactly why it’s happening and whether you actually need to intervene.

In this post, we’re going to look at three of the most common questions about Google’s algorithms to clear up the confusion. Here is what we’ll cover:

• The truth about the "bid strategy learning" status and how to actually speed it up.

• Why striving for a "perfect" Search Terms Report might be hurting your Broad Match campaigns.

• The real difference between "signals" and "targeting" in Performance Max (and why it matters).

1. The "Bid Strategy Learning" Status is Misleading

One of the most common sources of anxiety for advertisers is seeing that dreaded "Bid Strategy Learning" status. You launch a new campaign, change a bid strategy, or swap out your creative, and suddenly—boom. You’re in learning mode.

Here is the secret: That status text means a lot less than you think.

When that status appears, it is programmed to stay there for five days. It doesn’t matter if you are spending $5 a day or $5 million a day. It’s going to say "learning" for five days. But the actual learning process depends entirely on data, not a countdown timer.

The "30 in 30" Rule You might have heard the rule of thumb that an algorithm needs "30 conversions in 30 days" to work effectively. This is generally true for smaller accounts (spending around $100/day or less). At that volume, the system needs about a month to gather enough data points—who the right user is, the right time of day, the right location—to make smart decisions.

However, if you are managing a massive account spending millions, your "learning" period might effectively be over in 24 hours because you’ve fed the machine hundreds of conversions in a single day. Conversely, if you only get five conversions a month, the algorithm might take three or four months to really figure things out.

How to Speed It Up If you want to get your bid strategy performing optimally faster, you don't need to wait for a timer to expire. You need to give it more data.

• Increase Budget: More budget usually equals more traffic and data.

• Use Micro-Conversions: If you can't get enough primary conversions (like Purchases), optimize for a step earlier in the funnel, like "Add to Cart" or "Begin Checkout." This gives the algorithm more "wins" to learn from.

Remember, your objective shouldn't just be to "get out of learning." The algorithm is always learning. It adapts to market changes, website updates, and consumer behavior every single day.

2. Broad Match isn't Supposed to be Perfect

There is a heated debate among PPC pros about Broad Match keywords. Some advertisers look at their Search Terms Report, see that 20% of the terms are irrelevant, and panic. They want a 100% clean report where every single search query matches their product perfectly.

But if you are using Broad Match, a 100% clean report is actually a red flag.

Broad Match is designed to cast a wide net. Its job is to find incremental traffic—new queries, long-tail searches, and variations you haven't thought of. To do that, it has to test. It has to take risks.

The Lightsaber Analogy Expecting Broad Match to be precise is like trying to cut an apple with a lightsaber. Sure, it might work, but it’s the wrong tool for the job. If you want total control and zero waste, you should be using Exact Match. Exact Match is your paring knife—precise and controlled.

If your Broad Match campaign has a 100% relevant Search Terms Report, it usually means you have added so many negative keywords that you have choked the life out of it. You aren't letting the algorithm do its job of discovery.

The "Testing Tax" When you use AI-driven tools like Broad Match or Performance Max, you have to accept a "testing tax." You are essentially paying for some bad clicks in the beginning so the system can learn what doesn't work.

• Day 1: The algorithm guesses. Results might look messy.

• Month 3: The algorithm has learned from those messy "tests" and is now honing in on the high-value traffic.

If you aren't prepared to weather a few months of testing (and potentially wasted spend) to train the system, sticking to manual strategies might be safer for your budget. But you can't have it both ways—you can't want the growth Broad Match offers without allowing it the freedom to make mistakes.

3. Signals vs. Targeting: The PMax Reality Check

Performance Max (PMax) confuses a lot of people because it asks for "Audience Signals" and "Search Themes." Naturally, you assume these are targeting settings. You tell PMax, "Target people interested in running shoes," and you expect it to listen.

But here is the hard truth: A signal is a signal. It is not true targeting.

PMax uses Smart Bidding, which is singularly focused on one thing: getting you conversions. It doesn't care about your opinions on who the customer should be. It only cares about who actually converts.

How It Works When you provide an Audience Signal, you are giving the algorithm a hint. You're saying, "Hey, start looking over here."

• PMax will look there first.

• If it finds conversions? Great. It keeps going.

• If it finds better conversions somewhere else? It will abandon your signal and go where the results are.

This is why micromanaging your signals is often a waste of time. Once the campaign has been running for a while, the algorithm has already moved past your initial hints and is making decisions based on its own data.

If you want to test different hypotheses in PMax, don't just tweak signals. Create different Asset Groups. This allows you to test different creative angles (images, videos, copy) which will naturally resonate with different types of people. Let the creative do the targeting, and let the algorithm handle the bidding.

Summary: How does the Google Ads algorithm work?

The common thread here is patience and volume. Just like you needed time to learn how to do your job, Google's algorithms need time, budget, and data to learn how to sell your product.

• Don't fear the "Learning" status; fear a lack of data.

• Don't demand perfection from Broad Match; demand growth.

• Don't treat Signals like Targeting; treat them like suggestions.

By understanding the rules of the road, you can stop feeling like the algorithm is working against you and start partnering with it to drive real results.