Lost in the Sturm und Drang of Q4 (Q for quarantine) 2020, Google introduced a beta program called Performance Max, its first ad product spanning all Google-owned media.
A year later, Performance Max exited beta. And fast-forward another year to today, and Performance Max has quietly become the fastest growing and potentially most controversial product in the Google portfolio.
For Google, Performance Max is a compass that always points true north, or toward ROAS. But from the marketer perspective, PMax, as the product is unfortunately nicknamed, gives Google more control over campaigns with less oversight than advertisers have ever had before. PMax will also serve ads across more Google-owned media types than marketers would advertise in by self-selection. Sometimes, ads show up in places even against their wishes.
Performance Max could be a lightning rod for antitrust action, especially as it becomes the default way many advertisers spend with Google.
PMax is only halfway through its first holiday season as a publicly available product. Still, the conclusion is unanimous in conversations with more than a dozen ecommerce and retail brands and agency ad buyers. By next year, PMax may be a larger line item than standalone YouTube or Search.
This thing is a monster.
What’s holding back the potential controversy, then? Primarily, it’s an army of ad buyers who seem to share the same response: “It works.”
Advertisers like the performance part of Performance Max. But it’s tough to give up so much control.
How PMax works
Google plugs in to an advertiser’s servers to collect sales and CRM data. The advertiser then uploads all the campaign creative assets, a daily budget cap, their price per conversion and the type of conversions they want to see (online sales, video views, new customers, on-site engagements, etc.).
The platform serves campaigns in a black box and reports back aggregate results.
Instead of being able to choose where to spend – like turning up the spend on YouTube or turning off Google search “just to see what happens” – PMax treats all Google media as one indistinguishable channel. An advertiser doesn’t set up campaigns for YouTube, Google Search, Maps, shopping, etc. PMax automatically serves ads across the Google fleet: Search, YouTube, Gmail, Maps, Discover and the Google publisher network.
PMax analytics are also in the blackest black box advertisers have known.
There is no breakdown by price, by ad format, media channel or even what creative elements were used. The only window into performance is web publishers on the Google Display Network, which can still use the standard ad verification and brand safety tools.
The PMax advertiser doesn’t know what percent of their budget went to Google media or the open web (monetized through Google’s exchange), or whether they appeared at all in Maps, Gmail, YouTube or the Discover feed. They also don’t know what kind of ad copy and creative were used.
A back-to-school YouTube campaign for a shoe company, say, uses different creative to target moms or teenage boys. Even when those ads appear in a walled garden that blocks user-level tracking, the brand might still see that ads targeting moms performed best and focus more on marketing to parents.
With PMax, creative info disappears into the black box.
Manual YouTube campaigns also put advertisers in control of how much they spend on YouTube (spoiler: it’s the total). The same goes for any channel-specific campaign. But with PMax, there’s only a lump sum. And even then, the advertiser knows the total amount it spent, but only that some undisclosed portion went to publishers in the display network and the rest went to Google-owned media.
Advertisers can choose not to use PMax at all. But for retail and ecommerce brands, it’s not that simple. Local campaigns (which is to say, advertising within Google Maps) are being folded into PMax. Smart Shopping Campaigns, Google’s sponsored product listings, are becoming PMax campaigns as well.
The writing is on the wall that for retail advertisers, who need Google Maps and sponsored product ads, PMax must be part of the mix.
Speculation and conspiracy
Because of its inscrutability, PMax is a breeding ground for tinfoil hat theories.
PMax represents a massive, non-auditable pool of demand and content at Google’s disposal.
Two agency buyers said they suspect PMax overindexes on YouTube TV, partly because YouTube TV is undersold. With no visibility, ad buyers simply have to accept Google’s position that it’s pursuing the conversion goals.
A retailer marketer is concerned PMax retargets customers on cheap Google Display Network inventory to create high ROAS. When running campaigns manually, the brand avoids that inventory and that type of retargeting, because PMax is scooping up customers who visited product pages or started a cart and could convert organically.
Another brand marketer said the company wouldn’t advertise in YouTube Shorts, the TikTok-like short video format. But PMax forces them into Shorts.
In September, Google introduced a neat little video ad tool that converts horizontal and long-form videos into vertical Shorts. Even if an advertiser explicitly prefers not to run Shorts video ads and doesn’t upload the correct creative, Google will also use the tool itself to auto-generate creative for PMax in the Shorts format.
The branded search quagmire
The most common concern about PMax rests on branded search.
Someone Googling “denim” or “jeans” is a different sort of up-for-grabs customer than someone searching for “Rag & Bones straight fit jeans.”
Some brands don’t advertise on their own keywords. The idea is that the marketing team did the tough branding work to get a search for their name, and they are confident they can close the sale despite conquesting campaigns.
PMax forces advertisers to pay for conversions they believe were already coming their way by bidding heavily on branded search. And since PMax targets a cost per conversion metric, those cheap conversions on branded terms could distort the overall performance results.
By retargeting users on relatively cheap display network inventory and by buying branded search spots, Google is “cannibalizing” organic sales, said Francesco Pittarello, head of growth marketing at the online wholesale retailer Faire.
And then there’s the flip side of branded search. Some marketers do aggressively defend their own keywords. And if an advertiser has a channel-specific strategy for Google Search, it should preempt a PMax campaign – not in a philosophical way, mind you, but by the guarantees built into the system. The advertiser’s manual search strategy should take precedence if both campaigns are running at once.
Mike Ryan, head of ecommerce insights at the software company Smarter Ecommerce, said one retailer client has a manual search campaign called “Brand Protection,” which puts a high cost on a competitor that tries conquesting. The same retailer has another always-on search campaign for in-category competition (anyone who bids on the name of its clothing types). Still, he said that 43% of that advertiser’s current PMax sales are attributable to branded search terms, a metric that can be calculated by summing the revenue contribution of branded keywords, which PMax recently added to its reporting, and dividing by the total campaign revenue.
In other words, even advertisers with explicit tactics for buying branded searches are seeing PMax win on branded search, which isn’t supposed to happen, he said.
Despite these clashes between brands’ search strategies and PMax’s AI approach, Google advises brands to use both. At least for now.
“Our current recommendation is that advertisers test Performance Max alongside search and other campaigns … to make sure advertisers are able to drive incremental conversions while maintaining strong results from their existing campaigns,” said Sagar Shah, product manager at Google who’s worked on Performance Max since it entered beta in 2020.
There are only a few ways around the PMax rules, and they require securing an exception from a Google account rep.
Saying that your customers are threatening to file GDPR complaints works. Two European brand marketers told AdExchanger their Google reps agreed to exclude Gmail from PMax after the companies received customer complaints about Gmail ads served via PMax. The customers believed the brand was emailing without consent or even after they had unsubscribed.
In fact, the customers mistook native GMail ad units (which the brands had never approved to begin with) for email marketing.
Pharmaceutical brands in some regions face laws about how and whether they can appear in email inboxes and in mapping interfaces. That means pharma brands can secure exclusions for Gmail and Maps under certain circumstances.
The analytics blackhole
It may be called Performance Max, but what spits out of the black box is more like “Analytics Min.”
“Frankly, Google may have pissed off more people by releasing the PMax reports than if they released nothing,” Ryan said.
In the past month, Google added a feature to PMax analytics that reports which search terms produced clicks within a campaign, said Milo McMahon, founder and CEO of Outdoor Ecommerce, a boutique growth marketing agency. But that extends only to a seven-day or 28-day look-back.
“It feels totally arbitrary,” he said. “It’s like they’re giving us glimpses behind the curtain, but choosing to so in ways that never tell us the full story.”
McMahon said some retailers and ecommerce agencies try to disentangle PMax campaigns by channel. One retailer creates multiple PMax campaigns for distinct product lines – like wholesale vs. higher-priced items. By comparing when campaigns served, which search terms contributed to conversions, how much the advertiser spent on those PMax campaigns, and then comparing that data to where and when sales showed up in the brand CRM, an advertiser might extrapolate which channels seem to work within PMax.
“But that’s a silly hack we shouldn’t have to do,” he said.
What’s next for PMax?
There are straightforward updates to PMax that marketers want and Google can make.
“One thing they can do in a blink of an eye is placement reporting to help understand the mix of YouTube, Gmail, Maps, Search, etc.,” Ryan said. “They absolutely could and should because people deserve the right to know what they’re buying.”
Will that happen?
After all, PMax is only the latest in a trend of decisions giving Google’s machine learning more license over campaigns, according to Pittarello. Last year, he said, Google changed its search targeting parameters to give itself wider discretion to target unrelated or adjacent keywords.
“That was telling about the direction they’re going,” he said.
Google is going in the opposite direction of splitting out PMax by channel or opening it up to analytics, Ryan said. “After all, there’s a trail of quotes from Google going back years setting the groundwork for this new philosophy that ‘old-fashioned’ marketing efforts are by channel and instead you should think in terms of an audience.”
Google’s PMax product improvements center on improving performance, not improving transparency.
“There’s a whole bunch of stuff behind the scenes,” Google’s Shah said, “where we have back-end engineers focused on improving these machine-learning models and improving how effective these models are at finding high-converting users for advertisers.”
PMax isn’t a privacy product. It wasn’t conceived as a solution for GDPR or Apple’s ATT, for instance. But it’s part of a future digital ad model without third-party tracking. Historically, third-party cookies and mobile advertising IDs gave advertisers the freedom to measure for themselves and closely attribute campaigns across the web and apps.
“But they aren’t getting more of those things,” Shah said.
Google is not going back to the former business-as-usual approach of targeting and attribution based on user-level conversions and channel-specific campaigns (YouTube drove X, Search drove Y, Gmail drove Z, etc.).
It does seem like Google is telling advertisers that its machine learning understands what drives value, even if marketers may not agree (not that they can see PMax’s decisions anyway). PMax will pursue conversions without regard for channel, even if marketers wouldn’t advertise there of their own volition, because performance is tied to the outcome rather than where an ad appears.
“Exactly,” Shah said. “And this is part of a mindset shift that’s really hard to do.”