Unveiling the Downsides of Performance Max Campaigns

We consider ourselves “The Performance Max Agency,” but now, we don’t love PMax campaigns anymore to the extent that we’re moving our customers off of it. Learn more about why this is happening.

Kasim and Ralph talk about the new discoveries about Performance Max, its good and bad sides, and why it's not the best choice for getting new customers. Plus, they touch on how Google keeps changing things and what it means for advertisers.

This clip is from The Perpetual Traffic Podcast, watch the entire video here:

• Why Google Performance Max Now Kinda ...

other side of Solutions Aid.

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We love John.

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We've had John on here,

obviously many times.

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Why are you guys all of a sudden

hating on Performance Max?

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drop the goods here.

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This is a big story.

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Stop the presses.

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It's interesting because we're

the performance max agency.

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I'm pretty sure I can prove this.

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We were the very first Google ads

thought leaders to really start

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charging forward into performance max.

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And I'm saying that out loud.

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So people know that I

realize the hypocrisy here.

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But it's a good example of why you

just can't get romantic about the

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methods that you're using because

performance max really was working

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phenomenally well, it was one of the

coolest things that we've ever seen.

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It was even more powerful and impactful

than smart shopping in a lot of ways.

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And now we see some

really major drawbacks.

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And some of them I think they're

based off of the market conditions.

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What ended up happening is nobody used

performance max for the first two years.

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And so it was blue ocean and we're

getting all this insane inventory for

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literally nothing, like no dollars.

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And then one day everybody migrated

over to performance max either

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because Google forced you to do it or,

whole world just caught on and said,

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okay, we can't fight it, join them.

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And then as soon as that happened,

blue oceans become red very quickly.

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And that's issue number one.

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And that's my guess incidentally.

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I have no real proof of that other

than observation, but my observations

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I think are pretty sound because I

have 200 clients, we have a hundred

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million dollars in ad spend and each

of those clients, if you look at their

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auction insights has anywhere between,

five and 50 potential competitors.

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And so I have the opportunity to see

some just more data than most people.

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And then the other issue that we're

seeing is Google's getting more

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aggressive with how they use

performance max, how they dictate

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terms, how they dictate placements.

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And so performance max sucks at new

customer acquisition specifically.

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So I'm not telling you never

to use performance max.

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That's not what I'm saying at all.

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But if your primary goal is

new customer acquisition.

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And incidentally, you're not going to be

able to tell this inside of Google ads.

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That's the real key, because if you're

running performance max, or if your

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agency is running performance max, or if

your employees are running performance

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max, your row as probably looks great.

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That's why we hate row as here.

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It's why I don't accept

row as a goal any longer.

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When I take on a new client.

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Because you're always looks great,

but what you don't realize is Google

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selling your own traffic back to you,

leaning heavy into remarketing, having

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a brand heavy into competitor traffic,

poachable traffic, bottom of the funnel

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traffic interest based traffic fine, but

those aren't necessarily new customers.

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And if your goal is new customer

acquisition then performance maxes,

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actually not an exceptionally strong tool.

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And what we've had to do is we've

had to pull back on performance max

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massively and lean into more traditional

campaign types for e com that's.

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Standard shopping or even DSA which

is dynamic search ads for Legion,

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that's traditional search and DSA.

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And there's other campaign types that work

really well, but especially when you're

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trying to teach the Google algorithm

where conversions come from and then

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lean into, your healthier models of

traffic search is always a great place

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to start because you're getting in front

of somebody that wants what you got.

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And for new customer

acquisition, it's really helpful.

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It's not awareness building per se.

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So the cost of your acquisition is going

to be a lot higher than performance max.

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And this is where things get really

hard and convoluted Ralph, to be

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honest with you, because everybody

wants their cake and eat it too.

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So a customer says to us I have

to have this row as, okay, great.

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I can get you that rose

and performance max.

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Awesome.

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I want new customers.

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These are all repeat customers.

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Okay.

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I can get you new customers,

but they're going to be.

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Five times as much.

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So your ROAS is going to drop.

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and what really, what people are saying

is I want new customers, but I want it

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at this ROAS, which it's difficult as

a narrative to sell and this is where I

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start to overstep my bounds massively.

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So forgive me for lobbying

grenades, but most agencies don't

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even realize that performance max

sucks at new customer acquisition.

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I get a customer that thinks

they've been getting a 900

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percent ROAS this entire time.

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Migrate over to solutions eight.

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And we're like yeah, you're getting

a 900 percent ROAS, but your cost to

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acquire a new customer, if you factor

in the fact that most of this is

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repeat business, it really puts you at

the, maybe a one to three potentially

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because those new customers are so

expensive and where performance max

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does help repeat purchases, and those

are potentially repeat purchases that

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you weren't necessarily going to get.

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that's why I said, we're

not abandoning it entirely.

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If your goal is new customer

acquisition, then you have to

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budget something for that goal.

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I'm going to pause there.

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How did I do?

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I threw a lot out there all at once.

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I look at performance max as

two separate things, either

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selling physical products online.

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Let's just call that e commerce.

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And then there's lead gen and lead gen.

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We've never been able to figure out

the lead gen side of the equation,

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and which is really sad because we

should be able to, the click farms

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are just like, It's too crazy.

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actually have exceptions to that

rule, but for the most part,

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I'm a hundred percent with you.

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Okay.

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Maybe we can explore that in just a bit

because we obviously, we have a lot of

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lead gen customers here, but pretty

much abandoned Depending on the forms and

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we've tried all the stuff like together

and then separately, I think that are

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both of our agencies, but on e commerce,

like the new customer acquisition goal.

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I'm just saying e commerce meaning

selling a physical product.

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Are we really talking about that here

when we say, all right, here's what I

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know, or what I should be talking about

when it comes to performance max, or

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are there other business types, other.

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niches that you folks have found.

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Performance Max works really

well with SaaS when it works.

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And what's nice about SaaS is it

either works or it fails quickly.

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And I love campaign types like that.

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Because there's so many campaign types.

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It's we'll know in 12 months.

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that's just frustrating.

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It's nice to know it's

going to fail quickly.

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But Ecom, I think, is Performance Max.

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That's really where

Performance Max belongs.

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Because Google can see everything.

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And we're speaking

specifically of consumables.

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Or not even necessarily

consumables, but E commerce.

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where repeat purchases are likely you

can think like apparel accessories.

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If you're selling saunas I'm

not telling you that performance

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max won't work for you.

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I'm just saying that the

problems that we're discussing

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probably don't necessarily apply.

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So I had actually thought from

your perspective, the new customer

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acquisition goal for It doesn't,

performance Max was working some what?

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No.

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And so it's helpful, but not, yeah.

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And for our listener, if you don't

know, Google has a button you can press.

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Quite literally, there's a box you can

check and it's basically asks Google

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to prioritize new customer acquisition.

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And man, it just tanks,

campaigns to date.

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I have yet to see it work one time.

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Of course it would.

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What's interesting is.

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It's strange either.

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see two things happening.

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The first one is the campaign just goes

to absolute shit and doesn't sell anything

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or it continues to sell to repeat clients.

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And Google is unable to

identify who a repeat client is.

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Every now and again, you see a minor

lift in new customers, but it's not.

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Enough to justify just leaving it

to that one box and letting go.

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I'll continue to test it and, like

we continue to test everything.

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And that's the other really frustrating

thing about Google is you can never

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be sure what happened yesterday

is what will happen tomorrow.

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It feels a lot like being gas lit.

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learned 29 days out of 30 that the

new customer acquisition setting

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and performance max doesn't work.

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But if I don't test it again tomorrow,

I could get left behind because

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one day some Google engineer will

realize Oh goodness, we put the

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wrench where the sprocket should be.

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And then they fix it.

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And now all of a sudden the damn

thing works and I'm the last to know.

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So you just have to be comfortable.

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So strange, man.

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Imagine every single day you have

to put your hand on the stove to

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see if it's going to burn you.

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That's what running Google ads is like

at a professional level because there's

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so many changes being made so often.

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can't take your experience at face value.

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Which is counterintuitive to the, I think

the last conversation that we had on

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this, where you actually felt the exact

opposite was coming your way, the fact

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that the agency model, the media buyer is

going to eventually become just another.

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Cog in the machinery and

no longer is valuable.

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But what I'm hearing from you is

with the volume of stuff that you

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guys do, that is actually not the

case because you have to have some

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intelligence in there in order to make

sure that the thing is working or no.

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I think, and this will get a little

philosophical, but it might be a worthy.

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Philosophical discussion.

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So you tell me Ralph whether

or not this is worth pursuing.

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I think looking at Newtonian time

as a factor all I mean by that is

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I'm sorry That's an obnoxious way to

phrase it apples falling on my head.

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Didn't you say you're supposed

to speak at a third grade level?

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The theory of relativity, let's

get into that just a tad, shall

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No, I'm trying to say is instead

of the way that you function with

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Google, as though this will exist in

perpetuity, which would be relative.

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the way that we have to exist

with Google now, the context

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that is time is very important.

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the context currently is Google's

trying to replace us with AI.

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And so if you think about what I said,

it actually makes a lot of sense.

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Like I have a dashboard in front

of me and the dashboard has 50

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buttons and two novels and a wheel.

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And then I wake up tomorrow and there's 49

buttons and they all do something a little

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bit different than they did yesterday.

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And then, the, now there's, instead of

two levers, there's three levers and

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there's two wheels and so on and so forth.

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And this is Google.

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It's breaking us down into the simplest

parts so it can ultimately replace us.

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If you've ever seen that

kids show Inside Out.

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It dude is phenomenal.

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It's one of the best, it's one

of the best movies ever made.

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this animated film and it talks

about the five key personality

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types that exist within you and

each has its own distinct character.

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And at one point during the movie

of Inside Out, they go into it takes

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place in this little girl's brain.

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And so the characters go into the

part of the little girl's brain

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that deals with abstract thoughts.

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And when they do that, they move

from being three dimensional to,

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with having like really nuanced

curves and they're like fully

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scripted little artistic beings.

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And then all of a sudden they

become blocks and they look

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like they're in Minecraft.

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And then from blocks, they get squeezed

into two dimensional characters.

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And then they look like

they're, dumpy little cartoons.

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And then from two dimensional characters,

they get squeezed into just shapes.

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Just like a line, and

a square, and a circle.

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That's what this feels like.

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It feels like we're in the middle of

the process of squeezing us into from

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a three dimensional, full on, decision

making, autonomous being, into you're

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just a block, and you can just, beep,

beep, boop, beep, I can just move the

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way that I'm allowed to move, and then

you're not even really moving as much

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as you're like, just pressing, and then

you're not even pressing as much as

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you're just a shape, and then you're gone.

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And where I do understand what you're

saying as far as, It sounds like

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the media buyer has much more to do.

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That's because we're in the

trash compactor in Star Wars, and

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we're trying to fight the walls

that are encroaching upon us.

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And what we have to do is fight the

AI from doing what it wants to do.

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And maybe I'm just trying to protect

myself from sounding like a hypocrite.

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How did I do?

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I think the world still

needs media buyers.

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Dude I don't disagree with you.

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It's not that the world doesn't need it.

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It's that the media companies.

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on a long enough timeline aren't going

to give you the buttons you need to buy.

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Yeah.

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That'll be up to them.

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It's going to be, give me your domain,

give me your credit card, and then hit go.

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Now, you'll still have a job, Ralph,

because you do post clicks, CRO,

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offer, creative, all that shit.

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And I'll come work for tier 11.

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I'm going to put in an application and

I expect to be hired at top salary.

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We'd hire John first, probably.

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I think everybody would hire John first.

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He actually knows what he's doing.

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