Growing Ecommerce – The Retail Growth Podcast
Feed your growth mindset. Ecommerce is growing, and so are the challenges and opportunities for online retailers. In the Growing Ecommerce podcast, Mike Ryan and other smec experts are joined by industry leaders in ecommerce, digital marketing, and data science. By sharing business trends, practical solutions, and best practices, this podcast helps online retailers solve the challenges of tomorrow.
Growing Ecommerce – The Retail Growth Podcast
Google Ads' New Frontiers: Performance Max, Demand Gen, and YouTube Shorts
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Are you ready to uncover the future of Google Ads? Brace yourself as we navigate the rapidly evolving landscape of Google's advertising platform, with a specific focus on the rising dominance of Performance Max (PMax), Demand Gen campaigns, and YouTube shorts. Mike dissects how PMax is transitioning from a mere extension of Smart Shopping campaigns to a possible replacement for all campaign types, and grapples with the changing nature of this technology.He dives into the prospect that PMax could replace keyword search campaigns, an idea that Google is at least flirting with, as evidenced by a recent survey. Mike further attempts to disentangle the relationship between PMax and Demand Gen campaigns, and predicts a sharp rise in YouTube Shorts ads throughout 2024. This future could be a mixed bag for different kinds of advertisers, presenting both challenges and benefits. So gear up and join us on this enlightening exploration as we decode what future holds for Google Ads!
About Smarter Ecommerce (smec):
Smarter Ecommerce (smec) empowers e-commerce brands with AI-driven PPC automation that optimizes for profit and business outcomes while maintaining strategic control.
The platform activates first-party data - profit margins, customer lifetime value, and key business metrics - to automate campaign optimization toward goals like profitability and efficient growth, while detailed campaign insights provide full transparency and enable PPC teams to focus on strategic oversight rather than manual execution.
As a Google Premier Partner and three-time Microsoft Retail Partner of the Year, smec manages over €500 million in ad spend and drives €5B+ in annual e-commerce revenue for 350+ global retail clients including THG, Snipes, REWE, and Intersport.
Make sure to follow smec - Smarter Ecommerce for more performance marketing insights:
smec - Smarter Ecommerce: https://www.smarter-ecommerce.com
LinkedIn: https://linkedin.com/company/smarter-ecommerce-gmbh
Newsletter: https://smarter-ecommerce.com/en/newsletter/
Instagram: https://www.instagram.com/smarterecommerce/
Changes in Google Ads
Speaker 1Welcome to Growing Ecommerce . I'm your host , mike Ryan of Smarter Ecommerce , also known as Mech . Today I'll be discussing changes that are occurring in the Google Ads platform and how this will play out next year , in 2024 . I'll focus my attention on performance , mechs , demand gen campaigns and YouTube shorts . Plus . There are a few items in here you may not have heard of before . That includes a new ad format called GMC image shorts . Let's serve on YouTube from Pmax campaigns , ginny Marvin settling the debate of whether or not Pmax is full funnel , and a leak from a Google focus group suggesting that keywords really are finally dying .
Speaker 1So , whether you're with me now in December sipping a hot chocolate , or whether you're listening from five years in the future , laughing scornfully at how wrong I got it , while AI gives you a back rub , it should make for good listening . All right , let's get into it . So today I want to take a moment and talk about next year for Google Ads , kind of the future of Google Ads , what 2024 is going to look like and the three main areas that that's going to cover . Kind of a spoiler here . That'll be about performance mechs , demand gen and YouTube shorts , and I don't really have like a thesis statement in mind . Maybe by the end we can kind of arrive at one , but I don't know . A first sort of thought would be that all three of these things that I've just mentioned are really closely related and they're going to somehow become even more closely related and they're going to become more dominant over the next year . So , to start into that , I do want to back up a little bit and talk about a couple things that I thought like a year ago or two years ago , and where we are today . Don't want to spend a lot of time there , but , like the way that I first viewed performance mechs , I was thinking about this campaign type as not just an evolution of smart shopping campaigns . That's the way a lot of people described it . I said no , you're wrong . This is bigger than that . This is the future of Google Ads , incubating like it's a new platform , incubating inside an old platform , and I kind of talked about it , maybe even on this podcast before , but in kind of biological terms , like you know that one day will be left with these vestigial elements of what Google Ads used to be like used to be called AdWords , of course , and that the center of AdWords was the keyword , keyword advertising and one day that'll just be kind of like a tailbone or an appendix , like a leftover organ or something from how the platform used to be .
Speaker 1And then , as I kind of got to know performance mechs a bit better , my sentiment or what I thought would happen changed a little bit . Because when I looked into the data and I saw how this campaign type was actually performing , I saw that it's mostly shopping , at least when we're talking about an e-commerce context here . Of course it's different for lead gen campaigns , but this is an e-commerce podcast and it's mostly shopping ads . It's mostly the smart shopping part of what we know , what we would recognize from Google Ads . And I was like did I get it wrong ? Is Pmax really just a fancier version of smart shopping ? And I had some doubt about that over the last year or so or last couple of years . But I'm kind of returning back to what I originally thought there . I'm going to explain that a bit . I'm also going to maybe change the way that you think about performance mechs , because recently the way that I thought about performance mechs has changed a little bit .
Speaker 1Leo , let me just get into it . I don't need to beat around the bush . I always thought of performance mechs as a kind of a full funnel campaign type from Google . It's a campaign that's designed to serve across all their ad inventory from one single campaign . In principle , I don't recommend just having one , but I mean I looked this up and I did a search for Pmax or Performance Max in quotes and full funnel in quotes and there are thousands and thousands of articles and help pages and forums and YouTube videos and all kinds of things that come up here with those two phrases in conjunction with one another , those two specific phrases , and even there's some Google documentation . I think a lot of people out there , almost every agency or tool provider or anyone who's written about Performance Max there's a pretty good likelihood that they describe it as a full funnel campaign , and I recently had an exchange with Ginni Marvin , the Google Ads Product Liaison . She's been on this podcast before Check it out . I recently had an exchange with her on Twitter or X where she said , no , actually it's not a full funnel campaign . Performance Max is lower funnel .
Speaker 1Now , the context for that is I was trying to get some some clarification on how PerformanceMax and DemandGen campaigns defer from one another , and we'll talk about that more later on , I think . But . But Ginny explained that PerformanceMax is a conversion or conversion value oriented campaign and this kind of inherently puts it in the lower funnel . And so I don't know . I think that that's to me that was really a change in how I've understood Google to define PerformanceMax . I kind of can't disagree with it myself because I think we've all seen with these campaigns that they're quite heavy on remarketing , they're quite heavy on brand traffic . If you don't try to control those things , even if you do , they do seem to kind of love the warm traffic in the lower funnel . So it's hard , you know , when you actually look at the reality on the ground it makes sense .
Speaker 1But I still had this sort of mapped differently in my mind . So just to recap that so far , like personally , I thought this campaign type is going to be the future of Google Ads , it's going to be the new launching pad for everything that they do , and I've gone back and forth on that . I kind of do think that's the case now , even though there's a new campaign type out . I didn't really expect to see a lot of new campaign types out . I thought they would all get served through PerformanceMax . But DemandGen is new and there are YouTube short campaigns which are new . I mean , that's a kind of a different beast , but so , but I am kind of returning my thinking that that this is a platform inside of the platform and we're gonna elaborate on that more . And I also am kind of re rethinking it on in another way , which is that it's not a full funnel campaign after all , and that kind of brings us to the next actor in in the Google Ads landscape right now , which I've mentioned a couple times DemandGen campaigns , and these campaigns are very nakedly a play for social media budget .
Speaker 1I mean very openly a play . Google's not shy about it . If you look at any other sales collateral , the way they talk about it . They position YouTube against TikTok and against Facebook . They're kind of talking about the in this sort of war for attention or this attention economy , how Google plays a role there too , and that they're able to actually generate demand . And it's very openly or explicitly positioned as a mid funnel campaign type . And so I think it makes sense then to see performance max repositioned as a lower funnel campaign if they're going to then position demand gen as a mid funnel campaign .
Speaker 1But I just I find demand gen campaigns really fascinating because if you think about the inventory that is served through performance max and the inventory that is served through demand gen campaigns . There's a lot of overlap . They both cover YouTube , they both cover Gmail , google Maps I think is even in there . Discover , of course , like demand gen , is actually kind of the successor campaign to discover campaigns . Those are being upgraded or migrated over to the demand gen campaigns , so they're very heavy on this Google owned and operated area or they both have the capability to serve there .
Speaker 1Pmax , of course , has like search and shopping and it has the whole Google display network as well and I actually sort of feel like , when you think about the type of ad inventory that is , in my opinion , premium out of that bunch , demand gen serves all that stuff . It's kind of like kind of skimming the cream from Google's inventory Because , yeah , google display network can work really well and all these like yeah , other Google search partners even has been in the headlines lately for some unsavory placements that they have . But there are parts of that that can work well . But , actually , like to mention , I think there's a part of me that feels like Google made it too good because it also has some some great features like look alike audiences and there's nice things that you can do with it , like these search lift studies and so on . I just feel like it has all the best non shopping placements from Pmax and it also has these cool features .
Speaker 1And this is kind of why I wonder where do they differ ? Like it sort of makes a case . There's the strategy that we've talked about in this podcast before of taking performance max and excluding the assets from it so that it only serves the this feed based inventory , like shopping , for example , and then it won't serve these other kind of inventory . And people do that because for different reasons , they want to separate that , they want to budget it differently , they want different performance goals . They just want that level of transparency and control .
Speaker 1And I mean then , when you see demand and rolling out with all like kind of the gravy placements from from Pmax , it sort of makes a case in your mind well , why wouldn't I just use a feed only Pmax campaign that's going to focus on shopping and dynamic remarketing and then use a demand chain campaign that has the best of the best and some cool features related to these other kind of placements ? And so the the attempt from Google to explain that , as Jenny explained to me she said that that will . Pmax is lower funnel and demand gen is mid funnel . Demand gen can optimize to website visits or conversions . Put them to me like the whole logic collapses again , because if you have a demand gen campaign that's optimizing for conversions and a conversion optimized campaign is kind of inherently lower funnel , then again I see , and I end up seeing a lot of redundancy or overlap between those two campaign types , and so I think that something advertisers will test in 2024 is the interplay of these two campaign types understanding how does a demand gen campaign and a full , like a full build or standard performance max campaign , how do they interact with each other and behave next to each other when they're covering a lot of the same placements ?
Speaker 1And also , can we hack that , like I've talked in the past about these different sort of personas that I see in this very automated ad platform environment that we're operating in , where you have people's there's kind of like hackers who are looking to increase the amount of manual control or do things that wouldn't typically be possible with these campaigns and you've got , like , for example , a feed only approach is sort of a way of hacking the build of the campaign to achieve a desired effect . And you've got like harmonizers , who are kind of taking the automation at phase value and just trying to just sort of find the role and end the right budget and how these campaigns actually complement each other . We're going to talk about that in a bit more detail in a minute . And then you've got like hesitators , who are people who are using the older campaign types , like this legacy or standard campaign types , like standard shopping , for example , and those are not discrete buckets like you can have people adopting a little bit here and a little bit there . But I do feel that there's something to me unexplained or unresolved going on with these campaign types next to each other that we're just going to have to learn about over the year ahead , and I the reason that I'm a little hesitant about this or how to explain this .
Speaker 1You know , if we rewind the clock a bit , the way that performance max launched it had a lot of overlap with other campaign types , with standard and smart shopping , with search campaigns , with local campaigns , with yes , not only search but dynamic search as a subset of that , with Google display ads with it , with YouTube campaigns , with everything and the way , if you'd like , google had a table for this . They were explaining the interaction of these different campaign types and it was kind of pitched back then . That was all totally fine . Everything was very complimentary toward each other , where any kind of campaign conflict would be solved by whichever campaign type . Whichever campaign has the higher ad rank , like in that moment , the best ad would serve for that audience . All those two , regardless of which campaign type , that was the fundamental logic . It's a little more complicated with search campaigns . There was a matching logic in there , and then for the shopping and smart shop it's more antagonistic .
Speaker 1Pmax just takes precedent over those and immediately concerns started coming up from people about cannibalization , about conflicts between these campaigns . One of the first ones that came up was regarding brand traffic getting stolen or cannibalized from brand search campaigns and in a completely kind of intransparent and unregulated way in Pmax and Google . Their initial position on this and I still think they made a statement in good faith they said that PerformanceMax is not supposed to cannibalize that campaign . It's supposed to . You know , if your branded search campaign is not going to serve for some reason or like you've , you've , you've maxed out that campaign or you've maxed out the budget , or whatever the case might be , pmax is there to step in and and support kind of assist and and pick up traffic and conversions that you would have missed otherwise , that it's on top to what your branded search campaign was doing . And there was a lot of evidence coming up from just the grassroots of people saying no , that's not happening . And although I guess Google never really acknowledged that there was a cannibalization problem officially , they later on introduced brand exclusions in Pmax to help manage this problem because it was happening . It wasn't a problem , and I've heard people from Google's product team say that there are cannibalization and conflict problems with Pmax and all the other campaigns that it touches .
Keyword Campaigns and Performance Max Future
Speaker 1I think that this notion that AdRank would magically resolve things either it worked in the in the theory but not actually at scale in the wild , or I'm not sure what . But I mean AdRank is anyway kind of its own little black box inside of a black box as well . But what we've seen is that Pmax is indeed bringing more things under its mantle . As always , planned smart shopping like that was planned from day one . Smart shopping and local migrated over . They were upgraded , as the nomenclature is and my guess , from pretty early on . I wish I would have written myself on those like self-addressed , stamped envelopes so that I could just smugly open it and say I told you so , but it was so obvious that dynamic search ads would . There would be a conflict there and it's not a forced migration now , but Google recommends that you change your dynamic search ads to Pmax campaigns . Also , google display campaigns are moving over and so , yeah , actually , it's true , pmax Max is , bit by bit or bite by bite , swallowing up the other campaign types and swallowing up kind of reincorporating Google ads and building a new platform . So I think that my initial feeling about what would happen with Pmax over time is kind of playing out and where it gets really juicy . I wonder if you've heard about this yet , because I don't think that this news is that widely known .
Speaker 1But David Kyle on X and I think he's just at David Kyle , so go follow him but he shared some questions from like a focus group or sort of a survey from Google and there were two questions . I'll read them both aloud verbatim so that you can hear what we're talking about here . Question number one would you be open to consolidating both your keyword and Pmax campaigns into one Pmax campaign in the future ? So a keyword campaign , that's a search campaign right . Would you be open to migrating your search campaigns , your text ad campaigns , into performance max ?
Speaker 1And it's just really interesting , because people have been talking about the death of the keyword since , I don't know , 2014 or so , and maybe it's like what's that Ernest Hemingway quote rumors of my death are greatly exaggerated , but , bit by bit , the keyword has been taking its licks and getting degraded , and , you know , through match types and through the kind of the power of default settings and all this stuff , keyword campaigns have slowly but surely been eroding . But this is something else entirely , and there's the second question is how do you feel about migrating regular keyword search campaigns to Pmax campaigns ? So there's some slight changing or change in wording here . The first one was consolidating your keyword and Pmax campaigns into one Pmax campaign , and the second one was migrating regular keyword search campaigns to Pmax campaigns . I don't know if that's a meaningful difference in there and it's lost on me , but they chose to phrase those questions differently , and I kind of feel like the second question is more to the point , though , but the answers for that one are like they're ranging from absolutely not to yes , let's do it .
Speaker 1And I'm very curious about the results of that research and or that focus group . I just find it super fascinating because at Google Marketing Live this year , so like six months ago , google trotted out search campaigns and Pmax together and they were talking about it as like this power pair . I think they call it like a power couple , sort of like Brad Pitt and Angelina Jolie . If I'm not dating myself too much , I don't know what's a Gen Z power couple , you tell me , but yeah , they're kind of . They're like the brand Jelena of Google ads and like the power of keyword campaigns and keyword campaigns . That's how kind of how they , how they pair them together .
Speaker 1Six short months later , they're asking a question that I think many of us have maybe feared a little bit , also anticipated or expected somewhere in the back of our minds , and I just I guess it would really mark the end of an era . It would really mark a fundamental change in what Google ads is previously ad words because of , because of those , those keywords . If those keyword search campaigns are gone and it's my opinion that Google is not genuinely conducting market research in this case Like I don't think that if enough advertisers say absolutely not , I don't think that that means that they're not going to do it . I don't think they're asking if it's a good idea or not . I'm pretty sure that they have a view on this and I think they're trying to understand . Okay , how hard is this going to be ? How uphill will this battle be ? To migrate keyword campaigns , do we need a one year sunset period ? Do we need longer ? What's the right time of year to announce something like this ? What kind of marketing collateral do we need to have to accompany this ? What kind of damage control do we need to do , etc . So , just summarizing a bit , because I feel like I've been rambling . Hopefully , not Hopefully , you're still with me .
Speaker 1Google ads is . I think it really is being reinvented through performance max , but there's , you know it's consolidated shopping , or at least you know , smart shopping and it's dominant over standard shopping . But it has a solution to shopping . It's taken on local campaigns . Google display discover is being upgraded to demand gen . It's a different topic , but that's going away . Dynamic search is going away , maybe now keyword search as well , and that just sort of leaves like in the future , is there going to be a P max and demand gen world ? Like , do they ? It's just so interesting to me that , amidst all this campaign consolidation , all this absorption .
Speaker 1They then also rolled out a new campaign type demand gen , which feels in a certain extent really redundant with performance max . So let's just talk about that a little bit more . I mentioned earlier that I think a popular strategy would be to try to combine a feed only performance max campaign that doesn't serve these non shopping placements really just sort of shopping and dynamic remarketing to combine that with a demand gen campaign that then covers some kind of more premium inventory , let's say , and has some nice audience targeting , controls and things like that that are absent from performance max . There are only audience signals and performance max , but feed only campaigns are , I think , kind of slowly but surely become meaningless .
Speaker 1Another prediction I had from last year was that Google would make concessions or changes to the platform , but always on their own terms , and that they would also seek to close loopholes , and so I feel , like you know , they added some nice features last year , like they added this these brand exclusions I mentioned , and that's a Google friendly or Google approved alternative to negative keywords . They added search term insights and that's kind of a Google friendly or Google approved alternative to search term reports . It's a slight difference there between reports and insights , but the way that the data structure is meaningfully different , and so that's an example of how they would make concessions on transparency and control on their terms , in a way that suits them , which I mean . I'm not trying to criticize them . It's their app platform . They can make sure that things suit them on there .
Speaker 1But the other thing that I said is that they will close loopholes , and I think that that came true as well , and we'll start seeing that play out more next year because in August or September they kind of buried in a press release they had one sentence was , which was that one sec . Let me read it to you and I'm sorry if I'm like too deep in the weeds here with these little little details and you know exactly quoting things , but these are the small things that together sum up and change the course of this , of this whole channel . So the sentence I want to read performance max will start using images from your product feed to unlock additional inventory and formats , including YouTube shorts . So in other words , they're taking images from your feed that are available , for example , in a feed-only campaign , and they're going to , as they say , unlock additional placements . So , in other words , they don't need you to supply special assets to serve those placements , and their first area that they're starting is YouTube Shorts . So I think that the which will bring us to our next point . But I think that the feed-only campaign , while it might still be possible , will become increasingly deluded and sort of meaningless , because other kinds of Google-owned and operated inventory will serve from your campaign , with or without those assets . And I'm not talking , I'm not saying , that they're going to automatically create assets . That's a different program that they have . These are actually , it's more like a dynamic creative . In a way , they're taking pre-existing assets and they'll arrange them as needed in a creative to fulfill format or placement and
Google Ads
Speaker 1I don't know .
Speaker 1Let's talk about the last chapter here . So I mean , we're talking about PMAX continuing to swallow campaign types , including I would not be surprised to hear sometime in the course of 2024 , that there will be a one-year sunset period coming on keyword campaigns . The only new campaign type really is right now DemandGen , and there's a lot of overlap there and we're going to have to figure out really how to properly use those next to each other , because the way that I think could be cool , like this kind of feed-only plus DemandGen , is maybe not that feasible . And then the last thing I want to talk about here is YouTube shorts , because I mean , I think it's clear why it's such a big bet for Google , like this is sort of their answer to TikTok and I've , by the way , been bullish on YouTube for a long time .
Speaker 1There are a lot of negative headlines about YouTube . Sometimes our quarterly numbers didn't look that great . Everyone's talking about TikTok , but I've always felt that TikTok is politically a hot potato , that TikTok is not as strong at creator monetization and ultimately , yeah , creators are going to look for a place where they can , you know a new platform that's not saturated yet , where they can stand out , where they can build a following . That was working really well on TikTok , but if they can't monetize it effectively , they're going to go back to even a more saturated platform where they can't monetize . And it was also so obvious that YouTube could at any time ship a product innovation that would just rip off the or tap into the zeitgeist of short form content , and they did that a while back . Now with YouTube shorts and they've come around to the point where they're working on aggressively monetizing that with that inventory .
Speaker 1And to me , right now , almost the biggest thing on Google's product roadmap is YouTube shorts . Youtube shorts shorts because we see that they are baking YouTube shorts into Pmax , whether you like it or not , because they're first thing that they did . It's what they chose . They're like OK , we're going to serve some asset campaign , asset inventory , even on campaigns that don't have that enabled , and they chose YouTube shorts , of course . So all Pmax campaigns will be serving YouTube shorts . There's a very limited means of controlling that at this point . And then there's the man gen , where YouTube shorts is kind of the darling of that campaign type . Like that's one of the big things that sort of differentiates it from its predecessor , which was Discover . It is . There's more in there , but the thing that where they're really kind of betting on to attack social budgets and then win social budgets from Metta and TikTok , is that YouTube short component and YouTube in general . And then they also you can serve it through now , youtube short standalone campaigns and you can serve YouTube shorts through DV360 . And there might be other means that I'm not that familiar with because I'm not that into YouTube .
Speaker 1But the point is they are firing every single option that they can find to add , to put ads into YouTube shorts or to get advertisers to spend money on there , whether it's dedicated campaigns or campaigns where it's a core component , or campaigns where it's a rather hidden piece of inventory that you can't do something about . They're doing it . They're taking every opportunity that they can , and I'm not saying that in any kind of like a critical way or anything like that , but it's just clear that they're expecting results on that , on their quarterly earning statements . It's clear that that's a growth area for Google and , yeah , maybe it's a growth area for advertisers too . They're just going to be pushing it as much as they humanly can . So those are the things that I see in 2024 .
Speaker 1I see that , if we think of it as kind of hacker persona in advertisers , I think life's going to get a bit harder for them . I think the harmonizers if we think of someone who just kind of takes automation more at face value and tries to harmonize that I think in some ways their job's getting easier because there's less to harmonize , because campaign types are going away , they're being consolidated and because Google is giving some controls and reports on their terms that people were missing before . And I think , yeah , I think 2024 is going to be the story of two campaigns , or maybe I'm even speaking forward to like 2025 . But I think there are two campaign types that this platform is built on , and it's PMAX and DemandGen . It's not search and shopping as it was for so many years before , and that to me it's something that is happening slowly all the time and it feels like it's also happening in a blink of an eye , because one day we'll blink and we'll look back and say where did that old platform go ? There'll just be the tailbones left , the appendix , these kind of relics of how that platform used to work , and I'm just presenting this for your consumption . I'm not trying to judge it too much one way or the other . I guess you can probably tell that I have some feelings here and they're not all positive , but that is what is happening to Google ads now and in the future , in my opinion . I don't know if that's kind of the elegant thesis statement , but I think it is a platform within a platform and that is really going to bear out in 2024 .
Speaker 1Thanks for listening to Growing Ecommerce and if you enjoyed this podcast , please consider sharing it with co-workers , friends or within your professional network . We really appreciate it . This podcast is produced by Smarter Ecommerce , also known as SMIC . To learn more , visit Smarter-Ecommercecom .