Overrated? Examining Google Performance Max Ads

If you are advertising on Google Ads, you’ve probably come across or are already using Google’s “most promising” new ad format called Performance Max campaign.

Google defines it as a one-stop campaign to reach your audiences across all the advertising platforms that Google owns. So instead of creating one campaign for Search, Google shopping, Youtube, Google search partners and Gmail, now you can just create 1 campaign and that campaign will deliver across all platforms and be customized for all ad formats to maximize your ad’s effectiveness.

Similar to Facebook’s advantage plus shopping new ad format launch, Performance max campaign has the main objective of doing one thing first – Automation. Automate your entire campaign creation and management to help you spend more money easily on their platform faster.

It took Google a long time to recognize how clunky and user-unfriendly Google Ads was compared to Facebook Ads, and it took them too long to figure out that novice advertisers were getting lost on their platform. They made some changes to support a more user-friendly version of Google ads by offering a standard view for more beginner advertisers and kept the option to switch to expert mode to have full control and visibility for all features, but it still wasn’t it. How you create and manage ads, how you install tracking pixels, and how you optimize your campaigns, Google ads always seemed less accessible. They recognized this important issue and after a long wait, launched Performance max campaigns.

Prior to Performance max launch, advertisers had the option to create smart shopping campaigns which were campaigns that ran on Google shopping and offered also a high level of automation. Once Performance max campaigns launched, they gradually started transforming smart shopping campaigns into Performance max campaigns.

So fast forward to today, Performance Max campaigns let you relatively easily create one campaign that will run across all Google properties when you throw in a bunch of different images, videos, headlines, and text, and even connect your products from your website through a product feed using Google Merchant Center.

I don’t want to delve too deeply into selling you on the new format, as Google does a pretty good job of it. Instead, let’s briefly highlight the main features that Google claims the Performance Max format brings to the table.

Increased efficiency: Performance Max allows businesses to manage all their campaigns from one platform, saving time and resources.

Improved performance: The platform uses data-driven approaches to optimize campaigns for maximum results.

Greater reach: Performance Max provides access to a wider audience across multiple channels, allowing businesses to reach potential customers at every stage of the buying journey.

Simplified reporting: Performance Max offers a simplified reporting system that allows businesses to track key metrics easily.

Flexible budgeting: The platform enables businesses to set flexible budgets and adjust them based on campaign performance.

In four words, one campaign for everything. Instead of having to create a campaign for each different ad placement on Google, you can just create one campaign and be visible on all platforms. It might sound like the perfect solution for an ad platform that seemed to be a little behind in terms of interface and ease of use, but there can’t be good news without bad news, right? At least not at the topics I cover.

Here are the top disadvantages of using performance max:

Limited control over placements: Performance Max campaigns use Google’s machine learning algorithms to automatically select placements across its ad inventory. This means you have less control over where your ads are shown compared to traditional campaign types. This could mean that your ads appear in ad formats (for example: text-only or text-focused) that you might not want to serve, and you have no way to exclude them.

Lack of keyword targeting: Unlike Search campaigns, Performance Max does not allow advertisers to target specific keywords. This can result in your ads showing up for irrelevant search queries or placements, potentially wasting your ad budget.

Limited visibility on search queries: Keywords serve as the basis for advertisers’ targeting, while search terms are the actual terms customers use to find your business. Performance Max, like the old Smart Shopping format, does not display search queries in a meaningful way. Although there is an “insights” tab that shows some search queries leading to conversions or clicks, it barely scratches the surface in helping you understand who is being targeted and who clicks on your ads. The issue here is that Google intentionally hides this information from advertisers, making it more challenging for them to determine where the click comes from and if the conversion is from a returning or new visitor. The decision not to display this information likely stems from Google’s desire to keep advertisers focused on the report sections showing return on ad spend or the number of conversions, which isn’t as valuable if you’re unaware of where the conversions originate.

Minimum to zero transparency: There is very little visibility into how your ads are performing on individual channels (e.g., Search, Display, YouTube). This makes it more difficult to optimize your campaign based on specific channel performance.

Dependency on conversion tracking: Performance Max campaigns rely heavily on conversion data to optimize performance. If your conversion tracking is not set up correctly or if you don’t have a significant number of conversions, the campaign may not perform as expected.

Limited creative control: While you can provide multiple ad assets for Google’s algorithms to test, you have less control over the specific creative combinations and ad formats used. This can result in less tailored or less cohesive messaging across your ad placements.

Budget allocation: Performance Max campaigns require a combined budget across all Google ad networks. This can make it difficult to manage your ad spend if you prefer to allocate different budgets to different channels or if you have specific channel preferences.

Among the disadvantages discussed above, the most critical one is the lack of visibility, which should concern advertisers when spending their money on Performance Max campaigns. The return on ad spend (ROAS) or the number of conversions is subjective, as it is based on the attribution models that Google uses. A conversion might mean that Google merely interacted with a customer before they made a purchase. In your perspective, it could be a returning customer who would have purchased anyway. Therefore, the origin, search term, and conversion generation method should matter more to you.

Regarding targeting, Google allows you to create a “signal,” which helps direct the campaign to the right audience, functioning like an audience seed. This signal can be based on website visitors, customers, demographics, interests, or even search queries. The idea is to narrow down the campaign to your relevant audience and let it expand from there. Another targeting option, which Google will utilize regardless of whether you select an audience seed or not, involves using information and data from your existing site traffic as a base model. This method is the algorithm’s preferred approach, as it can easily ride on existing traffic and target users right before they convert, taking credit for those conversions and making you think your ads are performing well. It is essential to understand that many conversions from Performance Max campaigns will be warm (retargeted) traffic.

Performance Max does offer an option to bid more or exclusively for new customers only in your settings, but Google might still tag someone who visited your website and added an item to their cart as a potential new customer. If many reported conversions are for users already in the purchasing process due to your investment in driving them to your website from another ad platform, should Google claim those conversions under ROAS?

Interestingly, Google Performance Max works well for businesses with substantial existing sales and traffic, primarily for advertisers running ads on other platforms like Facebook. However, it does not perform as well for those just starting out and having no sales, as Performance Max is not as effective in driving sales for first-time visitors like Facebook or Instagram. When measuring value and return, you cannot rely solely on Google’s reports, especially since you have no visibility into where the click originated. Google may argue the same about Facebook or other social media platforms, but many companies have become empires exclusively through ads on social media platforms, while few have achieved the same exclusively through Performance Max campaigns.

In conclusion, while Performance Max campaigns offer some advantages, such as a simplified approach to advertising across multiple Google channels and automated optimization, the lack of visibility and control over placements, targeting, and creative combinations can be concerning for advertisers. Carefully consider these factors before investing heavily in Performance Max campaigns and always complement the data from Google’s reports with your own analytics to get a more accurate understanding of your campaign performance.