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Lauren has over ~7 years experience across organic and paid search and social and has a wealth of experience working with international accounts from previous agencies. Lauren joins us in an Account Director role to work with our clients on their paid media strategies.
Since the Smart Shopping takeover in 2022, Performance Max has taken the world of paid media by storm. The goal-based campaign has been known to help advertisers drive 18% more conversions at a similar CPA, due to its AI technology in bidding, assets, and search query matching.
The advanced machine learning does an excellent job of optimising towards the campaign’s goals, but the technology behind it is still very much a ‘black box’. Some may not care about this lack of visibility (after all, ignorance is bliss if it’s working well for you), however, we have challenged the simplified setup of Performance Max and believe it can be pushed further to improve profitability.
In recent months, Google has rolled out new tools to support the management and optimisation of Performance Max, including but not limited to: account level negatives, campaign level brand exclusions and content suitability. Whilst these tools are a step forward in understanding the intricacies of how the campaign operates, we have identified one crucial element that Performance Max is missing; business data.
Business data is a collection of information that relates to a brand and its products. It can include a broad range of information, varying from source to content, and be qualitative or quantitative.
Some examples of business data that we have used at Vervaunt include:
Customer lifetime value
CRM and first party data
Margin and customer lifetime value are two sources of data that can be most beneficial in improving the profitability of your Performance Max campaigns, so we often recommend starting with these where possible.
If the margin across your products is similar or if you have limited visibility of your customer lifetime value, return rates and stock are other great options for providing Performance Max with more context.
Lastly, CRM data is a strong source for providing business context and it has been identified by leading marketers as being crucial for long-term growth due to providing a greater understanding of the customer and their behaviour.
The world of paid media is becoming increasingly automated. It was recently announced that Google’s DSAs will be eligible for an upgrade to Performance Max, which suggests a future of accounts that run solely off AI-lead campaigns.
As machine learning takes the lead, it's imperative that marketers collaborate with Performance Max to improve its effectiveness. Business data can provide additional context and information signals that the platform wouldn’t otherwise consider in its learning. For instance, we have experienced Performance Max pushing low margin but high sales volume products, causing high margin products to lack visibility. Incidences like this indicate the limitations of Performance Max and how it is heavily reliant on platform data - ignoring business data.
Whilst Google have introduced Conversion Value Rules to support this, it’s a simplified approach to applying business data to the campaign.
Alongside financial data, business data also includes customer insights and this can be beneficial in supporting the AI to generate relevant ads. In a soon-to-be cookieless world, first party data will be more valuable than ever. This data can be used to categorise new vs returning customers on the platform and support the campaign in optimising towards new customer acquisition.
If you’re not applying business data to your Performance Max campaigns, you run the risk of optimising towards platform goals as opposed to business goals.
Start with analysing your shopping listings and see where the missed opportunities are. How are the visibility of your highest margin products? Is Google pushing products that have a high sales volume but also a high return rate? Are your asset groups tailored to the relevant audience?
Once you have gathered your business data and identified what is most insightful for Google, you can incorporate it into your Performance Max campaigns.
Audience signals are the quickest and easiest way to incorporate first party data. Here you can upload customer lists of subscribers, active customers, lapsed customers and product category purchasers. Not only does this notify Google of who your existing customers are, it informs them of their behaviour.
A relatively new innovation from Google, this feature allows you to apply business data directly into your campaign settings and have it adjust the reported conversion value based upon the parameters you set. For example, if you know mobile users are 2x more likely to have a higher basket value, you can apply a multiplier of 2 to the conversion value of mobile users.
Outside of campaign settings, a great way to influence Performance Max is through custom labels and refining the structure of the campaign. For instance, tagging margin brackets to your feed through custom labels will set you up to create campaigns that contain only high, medium or low margin products. The benefit of this is that you can then push and pull budgets and targets based upon margin - allowing for a lower ROAS on high margin products for instance. Alternatively, if you wanted to push excess stock, low return rate products or even gateway products for example, custom labels are a great way to achieve this and support your business goals that extend beyond platform performance.
The USP of Performance Max is its ability to dynamically produce ads that resonate with the user at that moment in time, and the more information your campaign has, the better it is at predicting the right experience for each customer.
As mentioned above, one of the greatest benefits to utilising business data is pushing Performance Max to grow its profitability. Adjusting the structure of your campaign opens up the opportunity to push products that support business profitability and not just platform ROAS.
Incorporating first party data notifies Google of who your existing customers are, which allows the AI to optimise differently towards new vs existing customers. This is an excellent way to prioritise new customer acquisition and to provide Google with more context around who you want to reach.
Going beyond this, we can take it a step further by segmenting existing customers between active and lapsed. Separate audience signals could be used on asset groups to tailor the messaging that is delivered to users at different stages of their customer journey.
In both of these approaches, individualised targeting is at the forefront. Despite platforms pushing for broad targeting, understanding your audience is becoming important again and personalised content is proven to maximise ROI. Therefore, the more information we can share with the platform from CRM, the more relevant the ads that are generated, thus the higher the effectiveness of the campaign.
Losing control with the rise of automated campaigns can be scary but it opens the opportunity to think more strategically and to consider performance beyond the platform.
Incorporating business data into Performance Max strategies provides a new level of control where you can manipulate the AI, feed it new information and encourage it to optimise its efforts in the most efficient areas to improve overall effectiveness.
Performance Max alone does a wonderful job in utilising AI to hit platform goals. It’s easy to set up, requires minimal effort to manage, and is effective in its optimisation. However, it’s still early days for the advanced campaign type and we’re not the only ones who have experienced teething problems with it. Many advertisers have flagged the ‘black box’ characteristic of the campaign to be a challenge and we’ve seen Google respond to this with the roll out of tools to improve its analysis and optimisation.
Whilst incorporating business data isn’t a new concept, nor one that is exclusively used by Vervaunt, we encourage brands to incorporate it and test its impact on performance. Across the agency we have seen strong improvements in performance, and we have been able to support our clients on broader business goals that aren’t directly ROAS driven.
If you need any help taking advantage of Performance Max for your paid search strategy, get in touch.