Performance Max campaign – Pros, cons and benchmarks

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Performance Max campaigns allow performance advertisers to use a single campaign to access all of their Google Ads inventory. It’s designed to help you find more converting customers across all of Google’s channels like YouTube, Display, Search, Discover, Gmail, and Mail.

In this blog post we’ll focus on the following:

  • pros and cons of the Performance Max campaign
  • differences between the Performance Max and Shopping campaign
  • the benchmark CTR for Performance Max campaigns
  • the benchmark CPC for Performance Max campaigns
  • the benchmark conversion rate (CR) for Performance Max campaigns
  • the benchmark CAC and ROAS for Performance Max campaigns

Performance Max is a campaign type in Google Ads designed to help businesses achieve their performance goals, such as increasing website traffic, leads, or sales. They use machine learning algorithms to optimize ad delivery in real-time. Ads are shown to the most relevant and likely to convert customers. This means that the ads will be shown to customers who are more likely to take the desired action.

Performance Max campaigns are particularly well-suited for businesses that have well-defined performance goals and want to maximize the return on their advertising investment. They are a good option for businesses that have a limited budget and want to get the most value out of their advertising spend. However, Performance Max campaigns are more complex to set up and manage than other campaign types, so they are not suitable for all businesses.

PROS of the PMax campaign

Here are some benefits of using Performance Max campaigns:

  • Completely automated: Performance Max campaigns are completely automated, which means that they require minimal ad management. This is a good option for businesses that don’t have the time or resources to manage a more complex campaign.
  • Simple to adjust: Performance Max campaigns are very simple to adjust, as you only need to set up your desired target return on ad spend (ROAS) and budget. This is a good option for businesses that want to quickly and easily adjust their advertising efforts based on their performance goals.
  • Easy to set up for eCommerce businesses: Performance Max campaigns are very easy to set up for eCommerce businesses on platforms like Shopify, as these platforms are tightly integrated with Google Ads. This make it easier for businesses to get started with performance-based advertising and start seeing results quickly.
  • Real-time optimization: Performance Max campaigns use machine learning algorithms to optimize ad delivery in real-time, showing the ads to the most relevant and likely to convert users. 

Overall, Performance Max campaigns are a good option for businesses that have well-defined performance goals and a limited budget, and are looking for a targeted and cost-effective way to reach their audience. 

CONS of the PMax campaign

There are also some drawbacks to using Performance Max campaigns:

  • Complexity: Performance Max campaigns are more complex to set up and manage than other campaign types. Especially, if you are not using an eCommerce solution like Shopify that is tightly integrated with Google Ads. 
  • Limited control: Performance Max campaigns are automated and completely black-box. That means that businesses have limited control over the targeting, ad delivery, and other aspects of the campaign. While businesses set their performance goals and budget, they have less control over the specific targeting and ad delivery than they would with a manually managed campaign.
  • Limited insights: Compared to Shopping or Search campaigns, performance max does not give you any insight on keywords or phrases that convert customers. The most you get is “top signals” for conversions, which are usually tightly related to your brand name.

Difference between the Performance Max and Shopping campaign

Starting in September 2022, Google began automatically switching Shopping campaigns to Performance Max campaigns. This is clearly seen in the attached graph, which shows the trend of Shopping campaign adoption over time. At Lebesgue, we prefer Shopping campaigns to Performance Max campaigns, as they offer more control and insights. 

However, since Performance Max campaigns are now mandatory, there is nothing to do but adjust for them and maximize your performance

Here is a table with key metrics comparison between Shopping campaigns and Performance Max:

performance max and shopping campaign performance table

As it can be seen, Google managed to improve average CTR with the Performance max campaign, decreasing average CAC by 6%.

The Performance Max campaign’s benchmark CTR

The average click-through rate (CTR) for your Performance Max campaign is 1.01%, which means that about 1% of users who see your ads are clicking on them. This CTR is relatively low compared to the average CTR for Google Ads, which is around 1.42%. 

This should not be surprising, as very specific search campaigns (like brand campaigns, competitor campaigns or long-tail keyword campaigns) can achieve very high CTR. In addition, optimizing for link clicks and cheap traffic can boost your ads CTR (and negatively impact your CR). Those optimization strategies should be avoided when running ads for a Shopify or other eCommerce store.

If you have a CTR below 1%, it can indicate that the ads are not resonating with the target audience or that they are not being shown to the right users. To improve the CTR of your Performance Max campaign, you may want to consider optimizing the ad copy, targeting, and placement to make the ads more relevant and appealing to the target audience.

Our Shopify app, Lebesgue: Marketing & LTV can detect mistakes in your advertising setup and find the latest best practices to optimize your Performance Max CTR. By analyzing the CTR of a Performance Max campaign and making adjustments as needed, it is possible to improve the campaign’s performance and achieve the desired results.

The Performance Max campaign’s benchmark CPC

The average cost-per-click (CPC) for a Performance Max campaign is $0.62, which means that you are paying an average of $0.62 each time a user clicks on one of your ads. This CPC is relatively low compared to the average CPC in Google Ads, which is around $0.85. If you’re not running a Performance Max campaign yet, and your CPC is too high – this is a good moment to start it.

The Performance Max campaign’s benchmark conversion rate (CR)

The average conversion rate for Performance Max campaigns that are optimized for the Purchase event is 2.04%, which means that 2.04% of users who click on the ads are making a purchase. This conversion rate is similar to the average conversion rate for all campaign types on Google Ads, which is 2.06%. Conversion rate is an important metric for evaluating the effectiveness of a campaign, as it indicates the percentage of users who are taking the desired action after clicking on an ad. A high conversion rate can indicate that the ads are effective at driving conversions, while a low conversion rate can indicate that the ads or landing pages are not performing well. A specific case is when ads have a high (above average) CTR and below average CR. That means the landing page is the weak part of your checkout process, and you should improve your website user experience. 

To improve the conversion rate of a Performance Max campaign, install Lebesgue: Marketing & LTV. The app will provide feedback on any underperforming metric, automatically detect advertising mistakes, and check what your competitors are doing to match the latest advertising best practices. You can also book a call with our experts to find mistakes on your landing page.

The Performance Max campaign’s benchmark CAC and ROAS

The average customer acquisition cost (CAC) for your Performance Max campaign is $36, which means that it costs an average of $36 to acquire a new customer through the campaign. CAC can vary widely depending on the industry, the average order value of the product, the target audience, and other factors. 

The average return on ad spend (ROAS) for a Performance Max campaign is 125%, which means that you should be generating an average of $125 in revenue for every $100 that you spend on the campaign. 

A high CAC or low ROAS can indicate that the campaign is not as cost-effective as it could be, or that there are issues with the targeting, ad copy, or landing pages that are causing the campaign to be less effective at driving conversions.

To improve the CAC/ROAS of your Performance Max campaign, you want to consider optimizing the targeting, ad copy, and landing pages to make them more relevant and persuasive and adjusting the bid strategy to ensure that the ads are being shown to the most relevant and likely to convert users.

In addition, make sure to break down these metrics into atomic ones – CR, CTR, and CPC, to detect which one is the bottleneck for your business success.

Summary

It’s important to note that these performance benchmarks are averages based on data from over 5,000 Shopify eCommerce businesses, and they may not be representative of the performance of a specific business. It’s also important to regularly track and analyze the performance of your Performance Max campaign to understand how it is performing and identify areas for improvement. Lebesgue: Marketing & LTV helps with this process, as it detects any mistakes and new strategies to test in real-time – comparing your store performance with publicly available data from your competitors and overall marketing trends.

Here are summary benchmarks for the Performance Max campaign:

  • CTR – 1%
  • CR – 1.42%
  • CPC – $0.62
  • CAC – $36
  • ROAS – 125%

To sum it all up, Performance Max will, on average, bring better results than the Shopping campaign did, but at the cost of limited insights on keyword performance.

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