Maximizing Performance with Google Shopping and Performance Max Campaigns in 2023

Google Shopping Campaigns vs. Performance Max Campaigns in 2023

• In 2023, Google shopping campaigns are no longer the go-to must-use strategy for e-commerce brands in Google ads.

• The shift is due to the decline in results, revenue, and profitability of Google shopping campaigns, primarily because they have been replaced by performance Max campaigns.

• Many e-commerce brands that previously performed well with Google shopping campaigns have experienced a noticeable drop in their results post the introduction of performance Max campaigns.

• The introduction of performance Max campaigns in the wake of the COVID-19 trend has significantly impacted the performance of Google shopping campaigns, leading to the necessity for e-commerce brands to adapt their advertising strategies.

• The comparison of results pre and post the switch to performance Max campaigns reveals a significant improvement in performance, including higher conversion rates and sales at a lower cost.

• To succeed with performance Max campaigns in 2023, it is crucial to ensure correct setup, and a detailed process for setting up these campaigns is available for reference.

• Understanding the evolving relationship between Google shopping campaigns and performance Max campaigns is essential for e-commerce brands to navigate the changing landscape of digital advertising effectively.

Google Shopping Campaigns vs. Performance Max Campaigns in 2023

Comparison between Smart Shopping Campaigns and Performance Max Campaigns

• Smart shopping campaigns were phased out by Google midway through 2022, making Performance Max the dominant campaign for e-commerce brands.

• Smart shopping campaigns focused on showing ads in the shopping feed and then remarketing to users who interacted with the ad. They bid more aggressively for users who had already seen the ad.

• Performance Max campaigns show ads across search, display, shopping, Gmail, and video networks. They start showing ads to users even before they complete a targeted search, and bid more aggressively when the user performs a specific search.

• Initially, when Performance Max campaigns were introduced, smart shopping campaigns were still providing better results. This was because smart shopping campaigns had better conversion data and were competing mostly against other shopping campaigns.

• The landscape changed after Google removed smart shopping campaigns around August last year.

• This shift forced everyone to use Performance Max campaigns, leading to a change in the competitive dynamics.

Comparison between Smart Shopping Campaigns and Performance Max Campaigns

Understanding the Impact of Performance Max Campaigns on Ad Auctions

• There have been speculations about Performance Max campaigns receiving extra benefits or priority in live ad auctions.

• The core functionality of the Performance Max campaign is crucial to understanding the increased significance of these campaigns.

• Google's approach to showing ads even before user interest and aggressive bidding based on user history within specific audiences is a key factor in the success of Performance Max campaigns.

• Performance Max campaigns may bid more aggressively and win higher positions in ad auctions when targeting users who have already interacted with the campaign or belong to specific high-converting audience sets.

• The improved performance over time in Performance Max campaigns can be attributed to Google's aggressive bidding based on user interaction and audience conversion data.

• An example of a Performance Max campaign running for 45 days shows initial spikes in conversions, followed by a period of improvement in performance.

• In the example, the conversion value cost over the 45 days is analyzed, indicating a significant improvement compared to previous performance metrics of the account.

Understanding the Impact of Performance Max Campaigns on Ad Auctions

Performance Max Campaigns vs Shopping Campaigns in 2023

• In 2023, Performance Max campaigns have become the core campaign for e-commerce brands due to their impressive performance.

• Over the last 14 days, the performance of Performance Max campaigns has seen a significant increase, with the ROAS going up to 290.

• Further analysis of the last seven days shows that the ROAS has now surpassed 400, indicating a remarkable upward trend.

• It is important to note that the acquisition windows for Performance Max campaigns can be up to two or three weeks, meaning the data is likely to improve even further.

• As a result, it is highly probable that the ROAS will exceed 500 when revisiting the data in another seven days.

• Patience is crucial with Performance Max campaigns, especially in the first four weeks, as the data improves over time and may not accurately reflect the actual performance for up to three weeks.

• The gradual increase in data will eventually lead to a substantial improvement in the results of Performance Max campaigns, with some campaigns achieving an ROI of over 10 times.

• Despite the dominance of Performance Max campaigns, there are still specific scenarios where using shopping campaigns is essential.

• One such circumstance is in highly regulated industries, such as the health supplement or vitamin industry, where ad content and visibility are strictly governed.

• In these industries, the precise control over ad copy and search terms provided by shopping campaigns makes them a more suitable choice.

• Another use case for shopping campaigns in 2023 is when targeting a niche audience or specialized product category that requires customized ad messaging and placement.

• Lastly, for businesses with a limited product catalog and a well-defined target audience, standard shopping campaigns remain an effective choice for driving traffic and conversions.

Performance Max Campaigns vs Shopping Campaigns in 2023

Transitioning from Shopping Campaigns to Performance Max Campaigns

• When transitioning from shopping campaigns to Performance Max campaigns, it's not recommended to turn off shopping campaigns and turn on Performance Max straight away, unless the shopping campaigns are losing money.

• During the transition period, which can last from two weeks to three months, both shopping and Performance Max campaigns should be running concurrently.

• As the transition progresses, the performance of shopping campaigns will diminish, while the performance of Performance Max campaigns will increase.

• Once satisfied with the performance of Performance Max campaigns, the shopping campaigns can be paused.

• This approach is aimed at ensuring safer results for clients and minimizing the impact of a lull in sales during the transition period.

• In some cases, businesses cannot afford to turn off all their shopping campaigns in order to wait for Performance Max to start performing.

• Additionally, if Performance Max starts to focus more on the search network, resulting in reduced spending on the shopping network, a secondary shopping campaign with high priority and targeted at remarketing or specific audiences may be set up.

• Using shopping campaigns in 2023 may still be relevant if Performance Max starts to shift focus towards the search network, leading to decreased spending on the shopping network.

Transitioning from Shopping Campaigns to Performance Max Campaigns

Conclusion:

The shift from Google Shopping campaigns to Performance Max campaigns in 2023 has reshaped the e-commerce advertising landscape. Understanding the strengths and limitations of each campaign type is essential for e-commerce brands to maximize their advertising performance in the evolving digital marketplace.

Q & A