In September 2022, all remaining Smart Shopping campaigns were replaced and upgraded to a new Performance Max campaign. Originally announced in November 2021, Google ushered in a new type of PPC campaign: Performance Max, also commonly referred to as PMax.
At DNRG, we’re seeing the effectiveness Performance Max has on our PPC campaigns compared to Smart Shopping, and there are plenty of benefits to highlight. So what are the changes, and what makes Performance Max different to Smart Shopping?
What’s the difference between Performance Max and Smart Shopping?
Before we get into the results, it’s worth understanding the difference between the two types of campaign. One of the main differences between PMax and Smart Shopping is where ads can be found. Performance Max opens up a range of new possibilities including search ads and video ads using assets on the account, as well as the addition of the Discovery Network and Google Maps.
From an operational point of view, Performance Max is much more automated than Smart Shopping was. The bidding is automated in terms of specific keywords targeted and the amount the campaign will spend, which is why it’s important to have your campaign implemented properly to work within your parameters. Use of negative keywords is more important than ever to reduce wastage when it comes to PPC spend.
Another aspect of PMax to consider is that automation also comes into play regarding the placement of your ads. You can’t specify a medium such as search ads, display ads or YouTube video ads; Google will pick the ones it thinks are most appropriate.
Performance Max Results
From August 2022 to June 2023, we’ve seen a 35% increase in conversion value across our ecommerce clients with Performance Max, compared to Smart Shopping for a similar period the previous year (September 2021 to July 2022).
Conversion rates have held steady, whilst we’re also seeing an increase in impressions and clicks. Impressions are up by 15.75%, whilst clicks are up by 37.75%. The CTR (click through rate), has also slightly increased.
When we look at specific clients, such as Appliance World Online and Kendal Mint, we’re seeing the benefits that Performance Max brings. In terms of gross conversion value, Appliance World Online has seen an increase by 488%, whilst Kendal Mint has had an increase by 226%. Whilst this should be tempered by the fact that both campaigns have put more spend into PMax vs Smart Shopping, it shows the effectiveness of the campaign in terms of generating revenue from the channel. They’re willing to put more money in because they’re seeing a strong return.
One downside that could be noted on Performance Max vs Smart Shopping is a drop in ROAS (return on ad spend). This has been seen in Appliance World Online, where ROAS has dropped from 1169% in Smart Shopping to 998% in Performance Max. The increased opportunity for spend does however mean that PMax campaigns can be more lucrative in generating income than Smart Shopping was.
However, a drop in ROAS isn’t a universal trend, with Kendal Mint increasing theirs from 372% to 436%.
More Changes to Come?
The Performance Max campaign is constantly evolving, with Google indicating changes will be coming in October to the bidding process. Alarms were raised when a ‘Limited by bid strategy’ status started to appear on enhanced CPC bid campaigns.
Google Ads Product Liaison Officer Ginny Marvin stated: “This is a relatively new indicator that may appear when the system determines the campaign can get more [conversion] value at a similar ROAS or [conversions] at the target CPA with a value-based bidding strategy. You can review the recommendation, but no action is required.”
She also hinted at more changes to come in October: “Separately, last month, we notified advertisers using eCPC for Shopping campaigns that those campaigns will begin behaving as if they’re using Manual CPC bidding starting in early October.”
Performance Max at DNRG
At DNRG, we can set up and implement Performance Max campaigns for your ecommerce business. As seen with clients like Appliance World Online and Kendal Mint, we can deliver results that will increase your impressions and clicks, whilst also giving you a strong return on ad spend and increasing your overall conversions. Contact DNRG to start your PPC campaign with our paid media experts.
