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Google Ads has made an important change to its Smart Bidding system that could affect how budget-limited campaigns compete in ad auctions. The update began rolling out globally on August 17, 2026, and was completed on August 27, 2026. It affects campaigns using target-based bidding strategies when they are marked as Limited by budget.
Recent analysis suggests that the change may have ended a form of bid suppression that previously allowed some budget-limited campaigns to bid more conservatively. As a result, some advertisers are reporting higher CPCs, increased spending pressure, and changes in impression share.
What Is Google Ads Smart Bidding?
Smart Bidding is Google’s automated bidding system. It uses AI and machine learning to set bids for individual ad auctions based on signals such as device, location, time, language, operating system, and other auction-time information.
Instead of manually deciding how much to bid for every search, advertisers can give Google a goal. The system then adjusts bids based on the likelihood of getting a conversion or conversion value.
Common Smart Bidding strategies include Target CPA and Target ROAS, along with Maximize Conversions and Maximize Conversion Value.
What Changed in August 2026?
The August update focuses on campaigns that are Limited by budget and use target-based bidding.
Google says the updated system is designed to deliver more consistent and predictable performance against the target when advertisers change their budgets. The update applies to Target CPA and Target ROAS campaigns, as well as Target CPC for eligible Demand Gen campaigns.
The change covers several campaign types, including Search, Shopping, Performance Max, Demand Gen, and Travel campaigns.
Google also states that it will not automatically change an advertiser’s daily budget or bidding target.
What Does “Bid Suppression” Mean?
Before the update, some budget-limited campaigns could behave differently when their available budget was restricted.
According to recent analysis from Smarter Ecommerce, the previous behavior could result in more conservative bids. This sometimes allowed campaigns to spend their budgets more efficiently and perform above their stated CPA or ROAS targets.
The new behavior appears to focus more closely on the target selected by the advertiser. This could mean the system is less likely to deliberately lower bids simply because the campaign has a limited budget.
It is important to note that “bid suppression” is a term used in the recent analysis, not Google’s official name for the update.
Why Could CPCs Increase?
If Google bids more closely toward the selected target, some auctions may require higher bids to compete.
For advertisers, this could lead to changes in:
- Average CPC
- Impression share
- Daily spend
- Conversion volume
- Cost per conversion
- ROAS
- Traffic levels
The impact will not be the same for every campaign. Google specifically says that campaigns with unconstrained budgets are not affected by this change in the same way.
What Should Advertisers Check?
Advertisers should not immediately change every campaign setting. Instead, it is better to review performance after the new bidding behavior has been running.
Start by checking campaigns that are Limited by budget and use Target CPA or Target ROAS.
Compare recent performance with the period before the update. Look at CPC, conversions, conversion value, CPA, ROAS, impression share, and budget usage.
If a campaign previously performed significantly better than its target, pay particular attention to whether the new behavior has changed its costs or volume. Google specifically recommends reviewing limited-by-budget campaigns that historically performed better than their targets.
Should You Change Your Target CPA or ROAS?
Not automatically.
A sudden change in performance does not necessarily mean that the target itself is wrong. Changing targets too quickly can make it harder to understand what caused the performance change.
Instead, advertisers should first collect enough post-update data and compare it with previous results.
Google has also introduced a Bid Target Adjustment Tool to help advertisers review and adjust targets where needed.
What Does This Mean for Google Ads Management?
The update makes campaign monitoring more important, especially for businesses working with fixed budgets.
Advertisers may need to pay closer attention to the relationship between their budget, bidding target, traffic, and conversion performance.
For example, an ecommerce business using Target ROAS should monitor whether increased auction competition is changing its cost per click or reducing the amount of traffic it receives. A lead-generation business using Target CPA should check whether higher bids are producing additional qualified leads or simply increasing costs.
The goal should be to make decisions based on conversion data rather than CPC alone.
The Bigger Picture for Smart Bidding
Google continues to move toward AI-powered campaign management. Smart Bidding already uses auction-time signals to make individual bid decisions, while newer features such as Smart Bidding Exploration are designed to help advertisers discover additional conversion opportunities.
For advertisers, this means campaign strategy is becoming less about manually controlling every bid and more about providing accurate conversion data, realistic targets, appropriate budgets, and strong campaign inputs.
The August 2026 Smart Bidding update is another example of this shift. While early analysis suggests that previous bid suppression may have ended for some budget-limited campaigns, advertisers should judge the effect using their own campaign data.
Businesses should review their Google Ads accounts carefully, monitor performance after the update, and avoid making major changes based only on short-term fluctuations. A data-driven approach can help advertisers understand whether higher costs are producing better business results or simply reducing efficiency.
