To create the right campaign structure and perform data-driven optimizations you need to understand how your conversion volume, current CPA and daily budget impact your campaign delivery and performance.
Daily budget: We recommend committing to invest at least 30€ - 100€ per day, per campaign, to collect enough data for each campaign. You need to carefully think if you have the budget to run multiple campaigns or need to focus your efforts and budget on a single PMax campaign with different asset groups.
Expert tip: You need to commit to your daily budget amount for at least 6 weeks. Google supports that the machine learning algorithm requires at least 6 weeks to collect sufficient data and optimise accordingly. During this 6-week period expect fluctuation on your PMax campaign performance.
CPA and Daily Budget Correlation: A more accurate way of determining your daily budget is to use your current CPA. Your daily budget should be at least 3x times your current CPA for each campaign to be able to collect significant conversion data. In an ideal world your daily spend should be 10x times your target CPA. Let’s do the math: If your target CPA is €15, we recommend that your minimum daily budget for this campaign, to be at least €50.
Conversion data: PMax campaigns are built around your conversion data. You can either choose the maximize conversion or the maximize conversion value bidding option. That’s your conversion data need to be high quality, for the algorithm to optimize your campaign efficiently.
By using high quality audiences in your PMax campaign you give quality data inputs (called ‘signals’) to Google’s machine learning algorithm, to understand the patterns and structures of your conversion data and look for users with similar characteristics. The more data you provide the algorithm with, the better the optimization of your campaign will be. So, your conversion data need to be accurate, high-quality, and abundant.
Our advice: We suggest having at least 30 conversions (or purchase events) in a given month for optimal campaign performance. Having fewer than 30 conversions might result in insufficient data for the campaign optimization to be optimal.
Expert tip: Use the Google Ads Tag to track your conversions (instead of importing goals from GA4 or tracking conversions alongside GA4) to enrich your conversion data and provide more accurate attribution.
How Google works towards your target ROAS
Your ROAS target is an average for Google
Your campaign ROAS target is an average that Google tries to achieve. To reach your average ROAS, Google employs a compensation model, where low-quality clicks (those not resulting in conversions) are compensated by high-quality clicks (those expected to generate most of the conversions).
PMax campaigns, running across Google's network, utilize a broad targeting to reach your most valuable customers. This can result in many 'easy wins’ for Google to average out the low quality clicks. These easy wins involve:
ads on branded search queries
retargeting your best customers
focusing on small percentage of products
Google Pmax Optimisation Mechanism
In terms of optimization, Google’s bidding system adopts a descending approach, focusing on the easy wins first and progressively moving downwards, to more cold audiences and opportunities. That’s why your average ROAS or CPA may differ a lot from the incremental ROAS or CPA.
In other words: the low quality clicks in your campaign are often far below your CPA or ROAS target. And this creates a big performance discrepancy between low and high-quality clicks. This way the algorithm can prioritize and allocate resources more efficiently, based on the conversion probability of each click.
Google PMax Mechanism: the major issues
Google’s optimization mechanism might work in favor of PMax campaign’s but for you and every other advertiser the following crucial problems are generated:
scaling your account gets harder, especially as your budget increases
since PMax campaigns offer minimum insights, you can’t actually know which components of your strategy actually generate revenue
PMax cannibalises your existing campaigns by targeting previously retargeting or hot audiences, which results in unrealistic performance for your PMax campaign
Need Help With Your Performance Max Campaigns?
Google Performance Max campaigns are designed to maximise ecommerce performance using machine learning models. This doesn't mean you can set and forget them. You still need to stay on top of Google PMax management.
If you are a retail business in need of help with Google PMax, get in touch with our specialist performance marketing team to discuss how we can help you achieve your business goals.
Date:
Monday, 05 Feb 2024
Written by:
Performance Team
Category:
Google Ads
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