Performance Max is Here to Stay. What Does this Mean for Marketers?
Google has officially announced the transition of Smart Shopping and Local Campaigns to Performance Max, with accounts automatically transitioning between July and September 2022. According to Google industry results, advertisers who added Performance Max Beta to existing campaigns drove an average +13% rise in conversions.1 Read on for additional implications of this transition and Ovative’s POV on testing, rollout, and performance.
What is Performance Max?
Performance Max is a new way to buy Google Ads across the entire inventory of products, with expanded coverage across YouTube, Display, Search, Discover, Gmail and Maps from a single campaign. This will complement keyword-based Search campaigns to help grow performance across Google’s full range of advertising channels and inventory.2 Previously in Beta and available for use in combination with Smart Shopping and Local campaigns, Performance Max For Retail and Performance Max Offline will now replace those campaign types by the end of September.
Implications For Marketers
One of the core benefits of Performance Max is the access to more networks from a single campaign in order to drive the most conversions. Plus, machine learning will automatically optimize for the most valuable customers across channels. Performance Max will also integrate with Google’s Insights Page, which should reduce the need to mine reports and can help you understand how users interact with automation.
While coverage is increasing, control is decreasing. Despite added visibility into audiences and placements, there is less visibility into where and what ad types are being served and an inability to set exact bids per product.
How Can You Take Action?
Testing & Rollout
While the Performance Max transition rolls out over the next several months, it will be key for marketers to define a testing approach to measure performance impact. Though we highly recommend geo-testing if possible, there are two testing options available to marketers:
- Define a Geo-Testing Approach
- Launch Performance Max in select Test DMAs while Smart Shopping remains live in Control DMAs
- Leverage GeoX Methodology, a time-based regression model designed for reading Geo tests with optimal precision
- Measure the difference between Test and Control markets to define the performance lift from Performance Max
- Move forward with a pre/post-test read (if unable to do Geo Split testing)
- Pause Smart Shopping/Local and launch Performance Max
- Allow time for Performance Max to gather data to perform peak optimizations (14 days) – time period should be excluded from test results
- Use next 30 days to read test results (keep same performance target during this time)
- Use next 30 days to gather any latent conversions that are attributed back to the test period – time period not included in test read)
- Compare test period vs pre-test and compare KPIs
*Note: The drawback of this approach is that we are comparing two different time ranges, so the test read will not be as clean as the geo split approach
Unlike other campaign types, Performance Max does not offer the ability to only target specific audiences such as CRM or Remarketing. This can make it difficult to measure your campaign’s impact on the Future Customer Value portion of Enterprise Marketing Return. The best way to combat this is to adopt value-based bidding and structure your optimizations toward EMR. For example, to optimize to specific audiences, utilize Google’s Conversion Value Rules to add value to orders from specific audiences to inform higher bids (such as adding a conversion value to non-CRM audiences to drive customer acquisition). We recommend requesting access to the “New Customer Acquisition Goal” beta in order to optimize to new customers.
As marketers move from Smart Shopping to Performance Max, they will also need to account for category spend differently. Smart Shopping was effective at managing an even return across all categories. With Performance Max, marketers will need to manually ensure spend is being allocated to the right categories and monitor category level reporting. This provides the opportunity for marketers to prioritize more spend against categories that drive stronger Enterprise Marketing Return. For example, for an Ovative client under Smart Shopping, the mattress category would have been managed to the same ROAS as other categories. Using Performance Max, we can increase the investment on the mattress category because of the strong lifetime value those customers have that is not reflected in the generic ROAS metric. This approach will allow for more control over high value products.
So far, Performance Max has shown tremendous results in driving conversion increases and allowing marketers to increase spend while maintaining a stable CPA. One Ovative client who gained access to the previous Beta drove 44% more revenue and over 2X higher conversion rate with Performance Max compared to a standard Smart Shopping campaign. A second Ovative client has driven a 51% revenue increase at a 27% higher ROAS, while also driving 1.5% more clicks when comparing pre/post performance to current Smart Shopping. Marketers should stay tuned for more updates from Google and start testing now to ensure a smooth rollout and maximum efficiency.
Ovative is a digital-first media and measurement firm seeking to transform the measure of marketing success. At Ovative, we help brands move the needle. We are curious. We value your brand. We want to see you succeed. Connect with us to learn more!