What is Google Performance Max and How Automated Advertising Works — All-Inclusive for Business

Meet it: Google Performance Max, or simply Google PMax or Performance in everyday vocabulary.

It’s a relatively new type of campaign from Google that promises marketers automation, efficiency, and maximum results with minimum settings. Sounds like a dream, right? But is everything so rosy?

This topic is especially relevant nowadays, when competition is growing and the cost per click is like the price of housing in the center. Businesses are looking for ways to get the most out of every dollar. And this is where Performance Max comes in. Who will be interested in reading this overview:

marketers who are tired of micromanaging campaigns;
business owners who want results, not explanations;
eCommerce projects looking for scaling;
those who want to understand what this tool is before clicking the Publish button.

Let’s take a look at what Performance Max is, it’s pros and cons, how it works, and whether you should run to set it up today.

What is Google Performance Max?

Performance Max (PMax) is a type of campaign in Google Ads that allows you to run ads on all major Google channels at once with a single campaign. All the tools that used to be launched separately now work as part of a single campaign from the Google Ads account. This tool also replaced the automated Google Smart Shopping campaigns.

How does Performance work?

It’s simple (well, almost). You upload images in different sizes for the display network, create texts, links, and set goals (for example, purchases or inquiries). Then Google comes into play with its artificial intelligence: Google Performance Max automatically determines where, when, and to whom your ads should be shown to achieve the desired results.

In practice, launching such an advertising campaign requires more preparation. Banners in accordance with the requirements of the search engine, in the right sizes and formats. Videos – links to published materials on YouTube. And for this, you need a YouTube account for your company to make it look organic and in line with the rules. Don’t forget about keywords, titles, and descriptions for the “search” part of Performance Max.

What channels does Performance Max include?

A feature of Performance Max in Google Ads is the ability to use all available channels in the search engine to maximize the reach and engagement of your target audience. The tool allows you to work simultaneously with the following channels:

Search – search PPC advertising that appears at the top above and below organic search results.
Google Images – display of graphic ads.
YouTube – video ads.
Gmail – short text ads built into the interface of the email service.
Display Network – placement of graphic ads on Google’s partner websites.
Google Maps – display at the top of search results on Google Maps. It works best for businesses that have properly filled out and optimized Google Business.
Google Discover – personalized recommendations in the Google News Feed, where publications are selected according to the interests of the smartphone owner.

And all this is within one campaign. The advantage is that Google chooses the best combination of audiences, creatives, and channels to achieve your goals. You can use absolutely all the channels available in Performance, as well as some of them. For example, if you only need display and video advertising, or if you only need to advertise a location.

Key benefits of Performance Max

As a new product from Google, Performance Max provides benefits for businesses that want to reach their target audience across all possible channels. It also makes optimization easier, as ads are automatically optimized by the algorithm. However, this does not mean that you cannot influence this process – in any case, it is worth tracking the profitability and cost of advertising. But we’ll talk about the difficulties later, and now let’s talk about the main advantages of this advertising solution:

Automation to the max – Google Performance Max searches for audiences, tests creatives, and optimizes bids. You only need to invest time in training this advertising automation and watch how the algorithm works to find your potential customers.
All channels are in one campaign – no need to set up search, video, and display separately. This makes it easier to manage advertising channels, such as bid management.
Maximum reach – you deliver your offer to audiences that were previously difficult to reach. All channels at once is a great opportunity to tell about a business launch, a promotional offer, or a new product.
Optimization for conversions – the campaign focuses on your goals: purchases, requests, etc. You can also choose to target app advertising, brand awareness, and physical store visits.
Intelligent signals – you can add your own data (audiences, remarketing, geo), and it works like a turbo mode. The more collected information is available to Performance, the better and faster it can optimize for your target audience.

It looks like a state-of-the-art electric car on full autopilot, doesn’t it? In fact, it’s a pretty close comparison, but just like with an electric car, you can’t do without a driver for long-term and stable results. Both the launch and optimization of Google Performance Max should be handled by a specialist with experience in Google advertising, and we’ll discuss why below.

Disadvantages and limitations

Full automation has a number of disadvantages, which is why it may not be suitable for all advertisers and businesses. Entrusting an advertising campaign to an algorithm is both convenient and rather inflexible. So what are the disadvantages of this tool?

Low transparency – Performance Max reports are rather generalized. You won’t see exactly how much Search brought in, and how much YouTube brought in. The report can only track the overall effectiveness of the combined campaign, so you won’t be able to choose the most effective channel.
Minimal control – want to exclude keywords or restrict a specific channel? Not with Performance Max. Advertising is automated, so you can manage keyword categories and channels as such, not individual words or the budget for each channel.
High expectations – sometimes the results do not live up to the automated promises. And if you see in your ad account “Increase your budget and get +300% conversions,” this is not always the case.
You need good creatives – without quality materials, Performance simply won’t be able to reach its potential. It is desirable that banners and videos are assembled by a designer, with a clear offer and in the color style of the company.

You also need to keep a close eye on your advertising budget. The specifics of the tool are as follows: you set an advertising budget per day, for example, $50. Today Google spends $30, and tomorrow it spends $90, which is already beyond the limits.

Why? This is one of the drawbacks of Google’s automated campaigns. The algorithm focuses on surges in demand and requests, or the activity of a potential audience on different platforms included in Performance Max. Within a month, the budget can be sustained, but in a day-to-day comparison, you will definitely see spikes.

That is why you should make sure that the entire advertising budget for the month is available in your account in advance – by prepayment or auto-payment. Otherwise, you can simply miss the day of the highest audience activity.

When to use Performance Max campaigns

Performance Max is a fairly versatile tool because it combines several channels at once. However, this diversity may be inappropriate and even unprofitable for some businesses. It’s important to assess this right away to avoid wasting time and money on a misplaced launch of Performance.

That’s why before starting to work with any type of advertising on Google, we always calculate a media plan – costs and predicted results. It’s not 100% accurate because it uses Google data, but it allows us to estimate the competition, the auction, and the budget for effective display. Thanks to the media plan, it is also easier to predict who is suitable for Performance Max and where it will be unprofitable.

Google Performance Max is suitable for:

Online stores (eCommerce) that want to scale or reduce the cost of purchase.
Businesses with clear goals: sales, requests, bookings.
Companies that already have a conversion history (for machine learning).
Advertisers who are more interested in optimizing for ROAS than for a specific advertising channel, such as search or video ads.

Not suitable if:

You have a narrow target audience and every click is worth its weight in gold.
You need full control over where, to whom, and what is shown.
You’ve just created an account and don’t have any data for optimization yet.
You don’t have any quality creatives.

It is better to work with a narrow target audience separately in search advertising, where you can control each keyword. High-quality creatives can always be ordered from a designer, but they show much better click-through rates if the technical task is set by a marketer who has already worked with Google Performance Max.

Our case study – Performance Max results for e-commerce

We use Performance Max with clients who work in the e-commerce niche and want to advertise on Google. It is in this case that the tool shows the greatest efficiency and allows you to increase the number of sales while reducing the cost of the conversion itself.

As an example, here is one of our cases for an online auto parts store that demonstrates how effective Performance Max is. Before starting active work with Performance Max advertising, the client received only 7 conversions in 5 months (screenshot 1).

Screenshot 1: Advertising results before working with Performance Max

After actively developing the advertising campaign, filling it with video and graphic content, keyword categories, and product feeds, the result increased to 330 conversions over the same period (screenshot 2).

Screenshot 2: Advertising results when working with PMax from Google

ROI for Performance Max for e-commerce was 226%, which made the advertising campaign more profitable, as separate search and shopping campaigns did not allow to reach a level of profitability above 120%.

Tips and best practice before launching Performance Max

An effective launch that will not disappoint is when you are ready for everything and have a detailed checklist of what you need to do to maximize the result. Here is how to prepare for the launch:

Set up analytics – Google Analytics 4 should be installed on the website, as well as e-commerce analytics so that you can track purchases from this channel.
Test events – use Google Tag Manager to install analytics and test all events on the site – filling out important forms, adding to cart, payment.
Prepare materials – headlines, texts, banners, videos. The more high-quality material you have, the better the campaign will work. Videos should be posted on YouTube, and banners and product feeds should meet Google’s Performance Max Campaign requirements.
Set clear goals – what exactly do you want: sales, calls, inquiries? Start small to let the campaign find its audience.
Use your audiences – upload remarketing data or customer lists.
Don’t launch blindly – first test on a small budget, see how the system learns.
Allow time for training – don’t expect miracles in the first 3-5 days. The Google Performance Max algorithm adapts gradually.
Keep an eye on the results – especially on “conversions by asset” (how individual ad elements work).

On average, it takes up to 2 months for a campaign to optimize and start delivering the most cost-effective results. During this time, the algorithm learns from the audience, collects conversions, and reduces their cost. If you use your own audiences, the process can go faster.

Tip: it is best to launch Performance not in a cold account. If you have an ad account that has previously run ads for your brand, the algorithm will learn faster and better. If this is your first time working with Google ads, it is better to start with a search campaign, additionally launching Performance on small budgets when you get the first 2-3 dozen conversions.

Optimizing Google Performance Max

Despite the fact that the tool is not very flexible, it is still possible to influence the optimization process. Here are a few tips on how to optimize your ad campaign when it has already collected a sufficient number of conversions or you want to get a better result:

Analyze the data and make adjustments if necessary – make sure that the cost per conversion is not increasing, that there are no too sharp drops in the budget, and that you are also focused on the geo from which traffic is coming and the number of impressions.
Update conversion data – use import tools to provide your ad account with fresh conversion data and train the system faster.
Test the visuals – upload several sets of images, use several video options.
Launch remarketing – this is your warm audience that is already familiar with the brand, so show them your company again to encourage them to visit the site again and convert.

And most importantly, make sure that your goals for the number of conversions, ROAS, and budget are realistic. Google can “embellish” the expected results, so experience with this tool is the main key to realistic profitability assessment.

Google Performance Max advertising is like a Tesla in the world of advertising campaigns: it drives itself, parks itself, and sometimes surprises you. But just like with Tesla, you need to know when and why to run it. It’s not a magic wand, but with the right approach and high-quality creatives, it can yield great results.

So if you are:

Ready to try a new approach;
Have something to offer your audience;
And want to get the most out of Google Ads

– then it’s time to test Performance Max. And if you need help with the setup, don’t hesitate to contact us, we know how to make the most of this tool.