Performance Max campaigns and Google Shopping Ads (Standard Shopping) can significantly benefit retailers in promoting online products and local inventory. They helped in driving traffic and attracting potential customers for better lead quality.

Over a year ago, Google Shopping Ads were often more effective and performed better than Performance Max campaigns. This was due to the lack of transparency with Performance Max campaigns. It acts as a “black box” where we could not know where the ads showed at, what the ad assets combinations were, and very limited data. However, we found that Performance Max campaigns are performing increasingly well and generated more conversions than Google Shopping Ads recently. Let us first take a look at the campaign performance for a client in November 2022 and November 2023.

Campaign Performance of Company XX, Nov 2022 vs Nov 2023

Reviewing the campaign performance, Google Shopping Ads outperformed Performance Max campaigns in delivering more conversions with a higher ROAS and a lower CPA. However, by November 2023, Performance Max campaigns proved to be the top-performing campaigns, leading in both conversions and ROAS. We also shifted our budget from  Google Shopping Ads to Performance Max campaigns recently.

In October 2023, Google had introduced new features within the Performance Max campaign to improve overall campaign performance, you may check this article for more details “Optimize Performance Max with search themes for improved traffic”.

How does Performance Max campaigns and Google Shopping Ads work?

The set up for Performance Max campaigns and Google Shopping Ads in E-Commerce are quite similar. You just need to get started by sharing the product data through Merchant Center and set up a campaign within Google Ads. Subsequently, Google will utilize the campaign and product data to create ads across Google platforms and various websites. Since they are very similar to each other, why is there an increasing gap in performance between the two?

Performance Max is an automated campaign based on the audience signals and it aims at achieving more conversions. By utilizing machine learning and automation, it maximizes campaign performance across various Google platforms, such as YouTube, Display, Search, Discover, Gmail, and Maps. Additionally, it analyzes various inputs like budget, product feed, audience data, creatives, and also visuals such as images and videos to display ads to the most conversion-worthy audience at the most opportune time.

On the other hand, Google Shopping Ads is a type of advertising campaign specifically designed for retailers to promote their products online by showing detailed information about the selling items before users click into the ad. Rather than relying on keywords to determine how and where your ads appear, this campaign was created based on the product data provided via Google Merchant Center. These ads showcase product information such as a title, price, store name, images, and other relevant attributes. The details submitted are crucial to ensure the ads are relevant when matched to user searches, and the visual representation also gives users a clearer understanding of the product.

Why are Performance Max campaigns more preferable than Google Shopping Ads?

In Google Ads, you can use either Google Shopping Ads (Standard Shopping) or Performance Max campaigns to boost your online sales, there is no sure-win answer. However, as Google Ads is getting smarter, we found that Performance Max campaigns truly outperformed Google Shopping Ads. Here are the advantages of Performance Max campaigns in several key aspects.

1. Broader Audience and Enhanced Visibility

Performance Max campaigns encompass all Google Ads placements. Beyond search engines, it includes YouTube, Gmail, the Google Display Network (GDN), and Discovery. It increases exposure to potential customers and breaks the limitations of Google Shopping Ads.  Performance Max campaigns further enhance the advertising versatility as it offers a wider variety of Google Ads formats, including display ads, text ads, and video ads.

Sources: Google Ads Help

2. Maximize Your Conversions

Performance max campaigns exhibit better efficiency and incorporate additional AI-driven features that are absent in Google Shopping Ads, such as audience signals, final URL expansion, and new customer acquisition goal. These campaigns can automatically optimize bids, audience targeting, ad creative combinations, and placements based on Google’s machine learning algorithms to maximize your conversions and achieve CPA/ROAS goals.

Besides, in Google Shopping Ads, advertisers pay on a cost-per-click (CPC) basis. If the CPC bid limit is lower than other competitors, it may have limitations of delivering the ads. However, Performance Max Campaigns optimize bidding through Smart Bidding to maximize conversions. It can automatically adjust bids and budgets across different placements, and generally obtain conversions at a lower CPA.

3. Creative Optimization

Performance Max campaigns automatically generate ads using additional creative assets (including headlines, descriptions, images, videos, additional information, URL, etc.), organizing them into different asset groups with product information in the Merchant Center. This enables more accurate predictions, such as understanding which ads, audiences, and creative combinations perform best. In contrast, Google Shopping Ads are only created based on the assets provided in the Merchant Center without additional creative assets, which may lead the ads to a monotonous way.

In Performance Max campaigns, we can set up different asset groups by providing various ads information. This allows us to review the performance of each asset group, helping us understand which groups are critical to overall campaign success. These metrics provide insights into which assets are more effective in engaging the target audience and driving more conversions.

Asset Groups of Company XX

In conclusion, Performance Max campaigns are more flexible than Google Shopping Ads. They allow advertisers to set broader campaign goals, reach multiple platforms, and leverage AI and machine learning for automated optimization. On the other hand, Google Shopping Ads are specific on product promotion and targeted product sales (Example: Discounted item promotion). Both campaigns have their unique features and advantages. Within the same Google Ads account, for the same products, Google Ads often prioritize Performance Max campaigns. Therefore, I would recommend creating Performance Max campaigns to maximize your conversions. At the same time, we also suggest allocating a small budget to Google Shopping Ads, specific for targeting certain products, such as discounted items.

The Performance Max campaign significantly helped in attracting leads, improving quality leads and boosting traffic for local or online stores. If you forget what the Performance Max campaign is, you may check this article:  “Performance Max Campaign: Boost Your Google Ads with Ease”.