People enjoyed my last post about PMAX (Nerds!) so I have composed an update to reflect the latest status as to how we are integrating this tactic into our biddable mix without losing control of performance.
As we dive deeper into Google’s Performance Max (PMAX) campaigns, we find ourselves navigating a landscape filled with both potential and pitfalls. Recently, we presented a comprehensive deck to both our internal team and our client, highlighting several concerns that emerged during our initial PMAX tests. These concerns are critical to address to ensure the effectiveness and efficiency of our campaigns. Here’s a rundown of the key issues we’ve identified:
Key Concerns with PMAX
Limited Adherence to Vendor Guidelines for Proof-Of-Execution: PMAX’s current structure restricts our ability to adhere to co-op advertising proof-of-execution guidelines, causing concerns about partner reimbursement.
Reduced Control Over Targeting and Messaging: The automation within PMAX limits our ability to finely tune targeting parameters and messaging strategies particularly regarding Core brand keywords. We work on behalf of a strong brand and want to ensure that we deliver the message that aligns with the persona of our customers and value propositions of our products.
Lack of Transparency in Placement Visibility: PMAX does not provide clear insights into where ads are being placed, making it challenging to optimize and ensure brand safety.
Cannibalization of Existing Tactics: The PMAX algorithm tends to cannibalize traffic from our established campaigns, reducing the effectiveness of our traditional search and shopping efforts while simultaneously boosting the effectiveness of PMAX.
Upon expressing these concerns to our Google support team, we were met with a swift response. However, the call was saturated with sales representatives eager to defend PMAX. This type of response is typically an indication that a tactic is tied to incentive packages. The discussion becomes complicated when your support team thinks that you might literally take money from their pockets.
A Loss of Efficiency and Control
At the time of our analysis, we have observed a loss in efficiency and control. Key metrics indicate:
Inefficient Reach: A 22% increase in CPM.
Decreased ROAS: A 16% reduction in return on ad spend.
PMAX prioritizes its algorithm over our carefully crafted shopping and text campaigns, leading to a significant shift in traffic. Our core brand keywords were being funneled into the PMAX experience, despite our efforts to implement exact match negatives. Close variants continued to be drawn into PMAX, undermining the efficiency of our campaigns.
Cannibalization and Misallocation
The PMAX system has a tendency to cannibalize traffic from existing search text campaigns, leading to inflated performance metrics. We observed a 116% period-over-period increase in revenue attributed to Shopping campaigns, while our text campaigns saw a 56% decrease. This shift, driven by PMAX’s auction priority and the broad match keyword list, resulted in higher ROAS and CPC for PMAX campaigns when compared to the prior PLA instance.
Moreover, PMAX appears to redistribute investment to new placements once the KPI goals are achieved. For example, if your ROAS target is $10 and you make a sale with $100 ROAS, PMAX will dilute this profit by spreading impressions across placements that are unlikely to convert a sale. This arbitrage, aimed at normalizing new placements and conditioning transactional user behavior, is not acceptable when it impacts our budget efficiency.
Strategic Adjustments Moving Forward
Our goal is not to abandon PMAX but to refine its implementation to better align with our advertising objectives. To that end, I have directed my team to take the following steps:
- Increase Control: We are manually adding close variants against top revenue-driving keywords to regain some control over targeting.
- Control Brand Message: We are utilizing campaign-level negative lists to exclude brand terms and top revenue-driving terms from PMAX campaigns.
- Increase Scale: PMAX will be incorporated as an extension of our traditional search and shopping activities to ensure a more holistic approach.
Stay tuned as we continue to refine our strategies and share our learnings from the ever-evolving landscape of PMAX campaigns.
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