TL;DR Summary:

• Performance Max campaigns are being promoted more aggressively to new advertisers.
• While the setup of Performance Max campaigns may seem simple, life science marketers need to do the necessary groundwork to accurately track conversion value.
• Google Ads’ AI will aggressively optimize for whatever goal it is set to.
• Performance Max provide very little visibility into the audiences being targeted.
• If life science marketers aren’t optimizing for actual business results, they will waste their ad budgets on ineffective campaigns.
• We’ve seen Google’s attempts at self-optimization go wrong before …
• … but executed correctly, Performance Max campaigns can significantly improve return on advertising spend (ROAS) compared to legacy Google Ads campaign types.

Google Ads AI is smart, but it’s your job to ensure it has the data it needs.

Google Ads AI: a Blessing and a Curse?

Performance Max (also known as PMax) a newer Google Ads campaign type which heavily leverages AI to achieve specific goals, such as sales, leads, or phone calls. By using all of Google’s advertising inventory, Performance Max campaigns often achieve a lower cost per action (CPA) than traditional search ad campaigns, and frequently even outperform retargeting campaigns in CPA. Performance Max campaigns are also wider-reaching, capable of advertising to customers through search, Google shopping, display, YouTube, Maps, Gmail, and the Discover feed on Android devices. They use the data you feed it through your conversion goals and Analytics connection, combined with Google’s own proprietary audience signals, to aggressively optimize for the stated goals. It will even mix-and-match ad assets to find the best performing combinations, create new ad assets for you, and find the best performing landing pages on your website. Sounds great, right?

It can be, but life science marketers who don’t have deep experience in Google Ads need to be careful. Performance Max campaigns are “black boxes” with limited visibility and control of keywords, placements, and audience targeting. Marketers who erroneously believe they can simply set up a Performance Max campaign, add some assets, and let Google’s AI handle the rest are going to burn money and see poor campaign performance. This is further complicated for many life science companies, which often conduct transactions partially or entirely offline (unlike e-commerce) and have complex buying cycles involving numerous stakeholders. As a result, revenue can be significantly disconnected from easily traceable online actions.

Furthermore, Google has not consistently proven that it is fluent in the language of the life sciences. We have seen this before, with product ads (for which Google chooses the keywords it believes to be relevant) for laboratory equipment showing in searches for drug paraphernalia and auto-applied recommendations jumbling search ad copy through obnoxious keyword stuffing devoid of context.  I therefore do not recommend blindly trusting Google Ads without providing significant guidance – and for PMax campaigns, that guidance primarily comes from your conversion data.

Conversion Tracking vs. Revenue Tracking

Implementing comprehensive conversion tracking is much simpler than setting up revenue tracking and feeding actual data on conversion values back to Google Ads. Is conversion tracking alone sufficient for most life science organizations who want to use Performance Max campaigns? Almost never. The unusual exceptions are if you only sell through ecommerce or if all your conversions have approximately the same value. Therefore, life science marketers should do one of two things in order to property attribute sales data:

• Get actual revenue data and feed it back to Google Analytics and / or Google Ads. Since almost all life science companies have offline sales, this requires having the proper technology implemented to correctly attribute sales data to leads and then send this data back to Google Ads. Many CRMs do this, for instance. If you do not have a CRM, you can achieve this yourself using the Google Ads API, but it is non-trivial to set up properly.
• Estimate the average value for each type of conversion event whose value you can’t automatically track (i.e., all but ecommerce events) and add those conversion values to Google Ads / Google Analytics. This can be done in a number of ways, but using Google Tag Manager is often the simplest.

Failing to provide Google Ads with some measure conversion value will lead to your Performance Max campaigns optimizing solely for the number of conversions. This can lead Google Ads to inadvertently optimize for lower-value conversions, which frequently have a lower cost per acquisition.

PMax vs. Shopping Ads vs. Search Ads vs. Display Ads?

If you are curious which campaign is correct for you, there is no universal answer. You can scour the internet for data and case studies and find a lot of conflicting reports (and even more anecdotes devoid of data). Google Ads performance is so sector-specific and even business-specific that no blanket statement can be made. In our own experience, however, this is what we’ve found:

• Performance Max campaigns get far more clicks at a much lower cost per click (CPC) but have considerably lower conversion rates and conversion values than search ads. PMax traffic tends to be lower-quality, which is to be expected. It’s hard to get better traffic quality than people who are in the process of looking for what you are selling. When using Performance Max ads to replace or supplement search ads, the objective is to get decent traffic quality at a low enough cost that the higher volume of PMax traffic compensates for its lower quality. Achieving this will depend on your specific circumstances and thoroughly optimizing your campaigns.
• Since Performance Max campaigns recently added search terms reports, there is little practical difference between PMax and Google Shopping ads if you are using feed-only data. However, PMax also allows additional assets to provide more cross-platform exposure.There isn’t a definitive correct choice here, as shopping ads with Smart Bidding are extremely similar to PMax.
• Display ads are almost functionally irrelevant after the launch of PMax. Even for display retargeting, PMax is often able to achieve better conversion rates. PMax almost always generates more traffic, typically of comparable quality to display ads. Costs are usually similar, although PMax campaigns can be somewhat higher than most display ad campaigns depending on your display ad targeting.

Again, this is in our own experience, which is strictly in marketing to life scientists and closely adjacent sectors. The only way to definitively determine if Performance Max campaigns will work for you is to test them.

Tips to Get Your Performance Max Campaigns Performing

Properly Establish Campaign Priority

Campaign priority can be directly set for campaigns with shopping ads. For search ads, it’s less simple: there are automatically applied prioritization rules you can’t easily get around. The rules summarize to this: if there is an exact match, regardless of whether the keyword rule used is exact match, then the campaign with the exact match will be used (which for PMax would need to be a search theme since keywords aren’t directly set). If there are no exact matches, then Google’s AI takes its best guess. If AI can’t figure it out, then Ad Rank is used. For display ads, expect PMax to get priority.

Don’t Allow PMax to Cannibalize Organic Leads

Some things you just don’t need to bid on. For instance, if no one is bidding on your branded terms (and even potentially if they are), you don’t need to be bidding on them either. Ads for branded terms will perform extremely well, however, so Performance Max campaigns will aggressively pursue them, causing you to spend money on leads you would have acquired anyway. Stop this unproductive behavior by setting negative keywords for branded terms.

Closely Monitor Keywords & Make Use of Negative Keywords

This is crucial for all Google Ads campaigns, but particularly for Shopping and PMax campaigns where direct keyword control is limited. Be vigilant about your keywords and proactive about setting negative keywords to prevent wasted ad spend on traffic that is irrelevant or low-value.

Use Audience Signals

One of the biggest gripes about Performance Max campaigns is traffic quality. Force Google’s AI to optimize for higher-value audiences by feeding it audience segments, customer lists and remarketing lists. (In our experience, PMax campaigns are particularly effective for remarketing. We’ve largely stopped using standalone Google Ads remarketing campaigns in favor of PMax.)

Keep a Close Eye on Low-Volume Campaigns

Google Ads’ AI needs enough data and signals to be able to optimize itself, or else it may not perform well. The key question is: how much data is enough? Smarter Ecommerce ran an ROAS test for PMax campaigns with different monthly conversions to measure how they performed. The result? Less than 30 conversions per month leads to poor performance and the performance gets better the more conversion data that Google Ads has to work with within the Performance Max campaign. Even campaigns with over 1000 conversions per month performed slightly better than those with 500 to 1000 conversions per month. Their takeaway was that 150+ conversions / month was the sweet spot. Less than that and it might not perform. It is noteworthy however that in their experiment the number of campaigns with “below target” ROAS declined rapidly as conversions per month increased, but those performing above target stayed roughly flat. If their data is to be believed (and it is from 14,000 campaigns), then there is a roughly 30% chance that PMax campaigns will perform well no matter how many conversions you have. Either that or there is something uncontrolled in the data regarding how highly converting companies vs. low converting companies set their target ROAS.

Chart from Smarter Ecommerce

Use PMax as a Supplement for Search and Shopping Campaigns

It’s easy for PMax campaigns to be wasteful and burn through ad budgets. Run PMax concurrently with search and shopping campaigns until it consistently demonstrates superior ROAS

Optimize, Optimize, Optimize

This is not a recommendation which is specific to Performance Max campaigns, but it is especially important for Performance Max campaigns. Your manual optimization efforts are what will keep the guardrails on and help Google Ads’ AI better learn what works. Create diverse creative assets, replace periodically underperforming ones, A/B test, and run experiments.

Segment Your Campaigns … But Not Too Much

PMax campaigns perform best when segmentation is used intelligently to guide Google Ads into doing what you want. For campaigns without product feeds this could mean segmenting by geography, audience signals, “similar to” segments, lists, etc. For campaigns with product feeds, you may want to segregate your best performing products, segment by overarching product types, new vs. returning customers, etc. It is also recommended to have a “catch-all” segment to include offerings that fall outside of your defined segments. The best segmentation to use will depend on the nature of your business.

You’ll need to segment your asset groups as well and ensure you have appropriate ad assets for each segment. PMax is decent at figuring out what assets make sense with what products or landing pages, but ultimately you should take responsibility to ensure that you have sensible, coherent ads.

However you segment, be sure not to over segment. Remember that PMax needs enough data to optimize, and if you are hyper-segmenting to the point where many segments have relatively few conversions, Google Ads’ AI won’t be able to optimize your campaigns well.

The #1 Thing To Remember for PMax Campaigns

PMax can be a powerful addition to almost any life science Google Ads account – if done properly. The #1 thing to remember is that Google Ads’ AI can only optimize for what it has data on. Without accurate tracking of conversion values, Google may make assumptions or optimize for suboptimal actions, negatively impacting your campaigns. With proper tracking of conversion values, however, Performance Max campaigns can help unearth leads and customers that might be untargetable through other Google Ads campaign types while delivering low CPAs and high ROAS.