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How We BEAT PMax.

Gain back visibility and control over your search sales funnel.

PMax campaign adoption in ecommerce brands over the past two years may be a steeper curve than Google’s stock chart.  They’ve hired an army of Account Executives (ok, salespeople) to strongarm persuade brands and agencies into the channel.

It’s great for Google! They can get you to invest in a historically incremental channel behind the veil of “AI” and get you to invest in bottom of funnel while also sneaking your ads into display placements that you otherwise wouldn’t invest in because they don’t perform.

Is this good for ecommerce brands?

As Google pushes brands into this campaign type as a “test” against your traditional shopping campaigns, they fail to acknowledge this is an apples to oranges comparison, usually to the brand’s detriment. Pmax campaigns include shopping ads, but then also throw in brand text ads, and retargeting, and then they measure retargeting and display ads using view through conversions!  Then they hide the data so you can’t see what’s driving your spend and sales.

We use different campaign types, ad types, and targeting to reach customers at various levels of the funnel and analyze the performance of these campaigns to give ourselves the next steps for driving growth. With PMax, this is impossible and leads to massive amounts of lost incrementality.

Here are some of the reasons:

  • Brand ads are far less incremental than non-brand ads. When they add brand text ads into the mix, they increase claimed sales using an ad type that often drives much less incremental sales than what the ad platform (or Google Analytics) claim.
  • Retargeting ads with view-through conversions are way overstated in value. Google could just throw a retargeting ad in front of someone who is currently on your site (so obviously they may be getting ready to buy) and take credit for driving the sale!

These measurement tricks that are rebranded as “you get further reach with Pmax” are how Google can claim to drive more sales.  But much of this is done by stealing credit from other channels, an attribution game.  When more sales are claimed, ROAS goes up, so brands spend more.  It’s imperative to look at the total impact of sales to understand if there is a gain to incremental sales and profit.

But if the sales weren’t incremental but rather just took credit from other channels, this tanks advertiser profit.

You can trust Google right?

 

Lets take a look at a real example of a brand who was running PMax.

This brand launched PMax campaigns for the first time in early 2022 after sales growth had slowed post-COVID. While the brand saw an initial bump in sales reported by the campaign, Google Ads as a whole wasn’t growing because sales in other Google Ads channels decreased. Spend was increasing and ROAS was still in decline. And any questions the brand asked their agency or Google on how to turn it around, they were left with something to the effect of “the algorithm needs time to learn”.

Shouldn’t your agency be able to actually do something about your ad performance? Isn’t that what they’re paid to do?

The brand, with their hands tied, were left with no real plan to fix it since they don’t know how much of the traffic is brand, non-brand, display, or retargeting. At which point they reached out to us at Conversion Path to help find a solution.

We launched our GS+ keyword bidding for this brand to give them back control over their keywords, targeting, and visibility. With this info, we were able to evolve their Google strategy over time, growing revenue and ROAS at relatively similar spend levels.

We were able to do this because those data points, the ones Google is hiding in PMax, are our most impactful indicators for how likely a customer is to buy from you. These should be used to inform bidding decisions, budget allocations, and tactical strategies to drive growth for your business. By refocusing their targeting to the terms that drive the largest impact, and not overinvesting in brand or remarketing that is not incremental, we’re able to drive huge long-term gains.

One year after moving this brand off of PMax and working with them through our Strategy Evolution Cycle, we were able to create massive growth.

The new Shopping specific campaigns we built after year one were up 32% (+776K), at a 22% higher ROAS thanks to the improved incrementality only raising spend by 8%. We also were able to decrease CPCs in cutting out inefficient high-cost terms. And the Shopping campaigns weren’t the only ones to see the benefit.

While the growth in Shopping was strong, we also were able to drive significant growth through search, display, and video ads much more effectively with the cannibalization effect from PMax gone, and true control/understanding of how our campaigns, funnel targeting strategies, and results.

With improved intelligence about how campaigns perform, and an actual ability to impact the results they drive we were able to test, optimize, and grow each of these campaigns, and the account as a whole.

Search and Display campaign types grew by 213% over the course of the year, taking the total growth of Google Ads from $3.2M to $5.6M (+74%) spending only $25K more than the prior year.

Over the course of one year, actively working to grow their campaigns, we increased revenue by $2.3M and profit before other G&A expenses by $1.05M per month on their $776k/month investment.

This growth wouldn’t have been achieved by waiting for the PMax algorithm to find the customers for them, it won’t. It leaves you in the same place as everyone else, susceptible to the shifts in the market and without your hands on the wheel able to change direction.

So why after 23 years of having visibility into the keywords that drive traffic and sales, are brands okay with that being taken away with Pmax?  Is that something a company you trust would do?  If your financial planner said “I’m no longer showing you all the investments in your portfolio, just the total result,” would you trust them more or less?

With data visibility present, we can separate a standard shopping campaign into brand and non-brand to ensure you aren’t spending above your profitability threshold (a 4.0 in this example case).

Without visibility into keywords, we can’t separate brand and non-brand.  We would only see the total ROAS of 6.07 above.  Thus, we would spend more until ROAS got down to a 4.0.  Increased spend would go to non-brand (you’ve usually already maxed brand) with a diminishing return.

When we increase spend to get ROAS down to a 4, it would look something like this:

Spend increased $50k to drive $50k more sales.  No ecommerce brand should spend $50k to drive $50k in sales, that’s a loss.

This is what happens when visibility is taken away.  Profit transfers from the advertiser to the ad network.

Pmax not only conceals visibility into brand and non-brand (and search terms), but also goes a sizeable step further by adding all the other advertising inventory they’ve added to campaigns as well, much of which is questionable in its ability to drive incremental sales.  But you can’t see how much of your sales come from which type of ad, so you’ll never know.

Smarter Ecommerce shared a script https://lnkd.in/dEmyZUQ6 that helps you figure out how much of Pmax sales are coming from brand vs. non-brand, and in their example brand terms were driving 60% of conversions!  Wow – 60% of sales from the ad type that normally drive a lot less incremental sales than the platform claims.  Not good.

Knowing that different ad types drive different incrementality levels, advertisers are in a much better position to protect the profit they generate from advertising.  Pmax is an aggressive move away from advertiser visibility and results in advertisers paying for inventory they shouldn’t.

As Pmax gains a critical adoption level, Google will then be able to sunset standard campaigns for good.  There will be no going back to advertiser control and visibility.  Google will be able to make any changes it wants to how ad inventory is served in order to maximize its own profits.  If the math we’ve provided about the problems with Pmax inserting non-incremental advertising into the auctions doesn’t scare you, the relinquishment of visibility and control should.

I do wish to declare our position on Google.  They built an amazing ad network that benefits many.  That does not mean that investor interests won’t trump the good of advertisers.  New advertiser growth is tapering off, future growth requires them to take more of advertiser margins – don’t you think any company that builds a non-transparent system that clearly forces increased investment into low-incremental inventory is clearly demonstrating their intent to do this?

 

Set it and forget it

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Pmax Implications

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