Google Ads Performance Max Explained (Setup, Strategy + Tips)

Performance Max is a Google Ads campaign type that automatically builds and serves ads across all of Google’s channels. It uses goals and conversion data to optimize performance — but getting strong results hinges on proper setup and management.

AI and machine learning are nothing new in the Google universe — Google’s Performance Max campaigns are proof.

This automated campaign type assembles and optimizes ads based on the creative assets, suggested audience information, and goals you provide — alongside real-time data and insights.

This might make you think that Performance Max, or PMax, campaigns are virtually hands-off or “set it and forget it.”

And while they do simplify ad management, there’s a lengthy setup and management process you need to follow to yield the best results.

Below, HawkSEM’s Senior SEM Manager Liz Samardge and Director of Account Performance Jessica Weber offer their expert insights and tips inside this step-by-step guide.

What are Google Ads Performance Max campaigns?

Performance Max is Google’s AI-powered, goal-based campaign type that uses automation to serve ads across Google’s channels, including Search, Shopping, YouTube, Display, Gmail, Discover, and Maps.

Crafted dynamically from assets and copy you provide, the ads adapt to various ad formats across Google’s advertising channels without you needing to do any of the additional work.

Performance Max (also known as PMax) campaigns are designed to allow advertisers to structure their campaigns around their goals, not Google networks.

So, rather than creating a display campaign, you create a campaign centered around a goal like customer acquisition.

How Performance Max works

Performance Max campaigns use asset groups (images, videos, and copy) provided by you to create ads on the fly — instead of ad groups created by the advertiser.

It combines these assets to show users an ad that’s tailored to their behavior and preferences. Google does this by using machine learning to optimize both bids and placements.

This optimization focuses on increasing your conversions or conversion value based on your preferences.

Not only is machine learning used for the optimization of these elements, but it’s also used to seek out the best audiences for your ads.

In other words, Performance Max campaigns use AI to analyze where an ad is likely to perform best, according to that campaign’s goals and audience.

This involves user behavior, search intent, and past performance. With that information, Performance Max automatically combines your assets into ad formats optimized for different placements.

Assets

Assets are the creatives an advertiser provides, such as images, video, and copy.

Google leverages these assets to build (and test) each ad — and the quality and number of assets provided will ultimately determine how well the ads will perform.

Audience signals

Audience signals are guidelines given to Google by the advertiser, suggesting who they think their target audience might be (i.e. their interests or demographics).

Google’s machine learning uses these signals as a starting point before learning more about the types of people who convert. After gaining enough data, PMax can optimize ads efficiently to reach that audience type.

Search themes

Search themes are keyword-based signals that help Google understand the types of searches your target audiences use.

Unlike traditional keywords, Search Themes don’t restrict targeting, but they provide additional context and can help guide campaigns and improve relevance.

PMax key features and benefits

As with any marketing tool, there are pros and cons. This is especially true of any tools that rely heavily on automation and don’t allow for much manual control.

Performance Max pros:

• Focused on performance
• Automated and simple to set up
• AI finds opportunities that your other campaigns may not
• Can reach users across multiple stages of the customer journey within a single campaign
• Consolidates multiple Google channels into a single campaign, reducing campaign management complexity
• Offers the ability to use custom audience segments, in-market and affinity audiences, customer lists, and your data segments
• Google does much of the real-time data analysis and optimization for you

Performance Max cons:

• While reporting has improved, it is still somewhat limited compared to other campaign types
• There can be brand campaign cannibalization
• You have a limited number of inputs you can control
• You can only use Smart Bidding
• Limited placement transparency compared to other campaign types
• Less control over search query targeting than traditional Search campaigns
• Can overlap with other campaign types if not structured carefully

Who should use Performance Max?

Generally, Performance Max is best for industries or niche businesses with existing demand.

“Performance Max is a demand capture campaign type that focuses on warm traffic,” says Weber. “There needs to be cold traffic and brand awareness injected from other sources.”

That means Performance Max is also ideal for businesses that leverage omnichannel marketing. “This can be social media, email, CTV, brand campaigns via other Google campaign types,” explains Weber.

Additionally, this campaign type can be useful for businesses with multiple physical locations to drive foot traffic to their brick-and-mortar stores.

“Ecommerce is also a prime candidate for PMax in general,” Samardge adds.

“Be mindful of the competition of your industry — apparel is going to be competitive and benefits from the most consolidation of budget with asset groups broken out by product types.”

When not to use Performance Max

Performance Max is not always the right fit, especially when you need maximum control over targeting, placements, or messaging.

You should avoid PMax campaigns when:

• Relying on keyword control or search term visibility: While PMax does offer search term insights now, it isn’t at the same level as standard Search campaigns. Without full search query transparency, it can be difficult to manage highly specific keyword strategies or protect against irrelevant traffic.
• Your brand requires strict placement or inventory control: Because PMax runs across all Google channels, including YouTube, Display, Discover, and Gmail, it may not be ideal for brands that need precise control over where ads appear.
• You’re still building conversion data: PMax relies on conversion history for effective optimizations. Without enough conversion volume, performance can be inconsistent or slow to grow.
• You need separate messaging by channel: PMax automatically adapts creative across placements, which limits the ability to tailor messaging specifically for the placement location (i.e. Search vs. Display vs. YouTube).
• You want full transparency in reporting and optimization levers
  While reporting has improved, PMax still offers less visibility into placements, queries, and audience performance compared to traditional campaign types.

What is the difference between Performance Max and other Google Ads campaigns?

The main difference between Pmax and other campaigns is how machine learning is used.

Audience signals are a guide for advanced algorithms to seek out the most profitable or highest-converting audiences.

Google crunches data and learns from your account performance to target new users to benefit your performance.

Performance Max also works well for both lead generation and ecommerce, making it a highly flexible campaign with its reach and versatility.

Performance Max automatically combines assets into ad formats optimized for different placements.

Performance Max vs. Search campaigns

Traditional Search campaigns rely on keywords and give advertisers granular control over targeting, bidding, and search queries.

Performance Max uses AI to automatically find potential customers across Search, Shopping, YouTube, Display, Gmail, Discover, and Maps based on the advertiser’s goals, audience signals, and creative assets.

Performance Max:

• AI targeting
• Runs across all of Google’s advertising inventory
• Limited targeting controls
• Best for scale and automation

Search:

• Keyword-driven targeting
• Search results only
• Granular targeting controls
• Best for precision and transparency

Performance Max vs. Smart Shopping

Performance Max replaced Google’s Smart Shopping campaigns in 2022 as the primary AI-powered ecommerce campaign type.

While Smart Shopping focused on Shopping inventory across Search, Display, YouTube, and Gmail, Performance Max expands reach across all Google channels, expanding out to Discover and Maps.

PMax also provides additional controls and signals, such as asset groups, audience signals, customer acquisition goals, and expanded reporting capabilities.

Performance Max:

• AI targeting and optimization
• Runs across all Google inventory
• Uses audience signals
• Limited placement and targeting controls
• Best for scale, automation, and cross-channel reach

Smart Shopping:

• AI-driven bidding and targeting
• Primarily Shopping inventory with some cross-network reach
• Product feed-focused campaign setup
• Fewer audience and creative controls
• Best for ecommerce automation and product sales

How to set up a Performance Max campaign in Google Ads

Now that you know more about Pmax, let’s talk about how to set up a new campaign.

Luckily, these campaigns are relatively straightforward to create, and it shouldn’t be long until your first search ads are up and running.

1. Create a new campaign and choose your goal

The first thing you need to do is log in to your Google Ads account and navigate to your account dashboard.

Then choose Campaigns from the left-hand menu. Next, click the plus button and select New campaign.

You will then be prompted to pick your advertising objective. If none of the objectives offered fit what you’re looking for, you can choose the option to create a campaign without a goal’s guidance.

Once you have confirmed the conversion goals for your campaign, your account goals will then be pre-populated by default. You can leave them as they are or edit them and add new ones.

Then select “Performance Max” as your campaign type.

If you are an ecommerce advertiser and want to add your products to the campaign, select your “Google Merchant Center account” to connect your product feed.

Last, name your campaign and click “continue.”

2. Set your budget and bidding

The next step in creating a Performance Max campaign is to set your budget.

Go to the “Budget and bidding” section and enter how much you want to spend per day.

Scroll down to “Bidding” and choose a bid strategy.

Performance Max supports two primary Smart Bidding strategies:

1. Maximize Conversions: When you select this option, your campaigns will be optimized for conversions. You can enter a target cost per action (tCPA or target CPA). Smart Bidding will then work to get you as many conversions as possible for that value.
2. Maximize Conversion Value: This option helps you to optimize campaigns to values like online sales revenue or profit margins. You select a target return on ad spend (tROAS or target ROAs), and Google places bids based on the value you have entered to drive the best possible results.

Next, go to “Campaign Settings.”

3. Add location and language

In the Campaign Settings section, you can choose the location you’d like to target from a list of options.

You can also enter another location and type the location’s name. Here you can select both locations that you want to target and those you wish to exclude.

Under “Languages,” pick which languages you want your ads to be served in. Alternatively, you can pick “all languages.”

By using all languages, you’ll target people who speak more than one language and who also search in more than one language.

Then scroll down to “Asset Group.”

4. Build the asset groups

In the “Asset group” section, enter your asset group name.

Build out your asset group by adding media such as images, logos, videos, and copy for headlines, descriptions, CTAs, etc.

Even though Google will allow you to do final URL expansion, you’ll still need to add a final URL specifically for your asset group. Choose the one that fits the best.

To create an asset group, you’ll typically provide:

• One final URL
• Up to 20 images
• Up to 15 headlines
• Up to 5 long headlines
• Up to 5 descriptions
• Up to 5 logos
• Up to 5 videos
• Your business name
• A call to action

You can also add any ad assets (ad extensions) that you want to include here. These include:

• Sitelinks
• Callouts
• Call assets
• Promotion extensions
• Price extensions
• Lead forms

5. Add audience signals

Your audience signals teach your campaign who is most likely to convert.

Add any existing data segments like customer lists, page visitors, cart abandoners, and other data you own.

Custom segments can also be added. These would be keywords, URLs, and apps that reflect the audience you’re trying to target.

In addition to these audiences, you can also target interests and detailed demographics, like education or pet lovers.

Last, you can adjust demographics — gender, age, parental status, and income — to really home in on your target audience.

Google’s best practice is to add your data segments and custom segments.

You can also add Search Themes to help Google understand the products, services, and search intent most relevant to your business. While they don’t function as keywords, they can provide useful guidance during campaign learning and expansion.

6. Publish

Your setup is now complete, and you can publish your campaign.

Performance Max budget best practices

“PMax does not do well when limited by budget (or at least not as well), so be sure you give your campaigns a lot of headroom,” says Samardge. You can still control your spend through your bid strategies.

If you have a small budget, “try to consolidate as much as possible into one campaign,” she adds.

“You can break out your product types into different asset groups for custom audience signals, creative, and copy but you want to maximize your budget as it’s not advisable to be capped.”

Tracking and measuring campaign performance in Performance Max

The metrics you choose to track and prioritize inside your Performance Max campaigns will depend largely on your business.

“If you’re an ecommerce company, you’ll want to make sure you’re tracking revenue as your primary action but you might want to add secondary actions for adds to cart or email signups,” says Samardge.

“If you’re a lead gen company, you’ll want to track your leads as a primary in whatever form they take: applications, contact requests, etc.”

Lead generation businesses may also track smaller actions, like content downloads or email signups, “but be very specific about what level these conversions are given,” warns Samardge.

“You should only be setting to primary the most valuable conversion action for your business and it should only be the ONE. PMax will use that to optimize its bids.”

This means avoiding pageviews, for example, because “it would be a very elevated conversion rate compared to a valuable action that you want to base your bidding on, like a purchase.”

Other metrics to track in Performance Max campaigns include:

• Cost per conversion: How much you spend to get one conversion on average.
• Click-through rate (CTR): The percentage of people who click on your ad.
• Return on ad spend (ROAS): How much revenue you generate for each dollar spent on ads.
• Impressions: The number of times your ad is displayed.
• Cost per click (CPC): The average amount you pay for each ad click.

Optimization tips for Google Ads Performance Max campaigns

While Google optimizes these campaigns automatically, it requires proper ongoing management to make them thrive.

Here are some tips for creating the best Performance Max campaigns possible:

Provide a mix of audience signals for better targeting

Prioritize retargeting data, “particularly any customer lists you have or main conversions (purchases, leads, etc),” says Samardge.

“If you can, break up your customer lists to be more relevant to the products or services you’re including in that asset group.”

Review the Google-provided audiences to see what might also fit. “If you’re unsure if an audience should be included in your signal, test it in another asset group first,” says Samardge.

“If it passes the performance check, you can add it to your main asset group and its audience signal later.”

Don’t neglect the demographic data either.

“Cut it down if you have a very clear view of what your customer looks like,” she adds. As for the search themes, “try to keep them very specific to the products you’re listing.”

For example, if your asset group contains products that are women’s tennis shoes, don’t include the search term “tennis shoes,” but try “tennis shoes for women” instead.

Use enticing and diverse assets that work at multiple stages of the funnel

Audience targeting is important, but the creatives you choose will be one of the deciding factors in whether that audience clicks on your ad or not.

Luckily, creative is one of the areas you have complete control over. High-quality lifestyle images or videos will spice up your ads, rather than making them look like your product feed — and go a long way to boost your campaign performance.

To ensure your creativity is performing at its best, monitor and update it regularly. A big part of managing a successful Performance Max campaign is iterative testing and implementing improved designs.

Integrate Performance Max with other campaigns

“PMax campaigns can step on some toes because of the available ad placement inventory that they present,” says Samardge. However, they can and should be used alongside your other campaign types.

“Some of my ecommerce clients have been reverting most of their campaign spend purely to PMax due to performance,” explains Samardge.

“For the remaining search efforts, they have switched to a higher-in-the-funnel approach with less concern for return and more for new customer acquisition.”

Use placement exclusions

Placement exclusions are controls brands can use to prevent ads from appearing in undesirable placements.

In the “Content” section in the campaign setup, you can start excluding certain placements for your ads, such as websites, YouTube channels, YouTube videos, apps, and app categories.

Exclude URLs and URL expansion

During campaign setup, many advertisers opt in to “Send traffic to the most relevant URLs.” This option can work well — but without using URL exclusions, you can end up sending your prospects to irrelevant pages like your privacy policy or terms and conditions.

“Only send traffic to the URLs provided” is another option that you could choose. This is often better for the majority of advertisers — especially if you’re doing lead generation for a specific product or service.

If you create granular enough asset groups, they should each have their own dedicated URL or landing page.

Monitor conversion tracking and goals

Conversion tracking and goals are the backbones of your Performance Max campaigns. Don’t try to set one of these up before you ensure tracking is working properly. Then, once you do this, you’ll need to decide your end goals.

Remember, you don’t have to use all of your account-level goals in your PMax campaign. You can customize it as you see fit. For instance, it’s probably unwise to try to force the AI to optimize for add-to-carts and purchases in the same campaign.

The target audience for these may be different, and it may make it more difficult to fully optimize your campaign.

Check ad suitability settings

You can control where your ads appear using ad suitability settings at the account level. These settings help you manage brand safety by limiting the types of content your ads may show alongside.

Google Ads offers three content inventory options: Expanded, Standard, and Limited, which determine how sensitive or potentially objectionable content is filtered.

In addition, you can further refine placement controls by excluding specific content types, sensitive categories, content labels, and keywords. These settings help protect your brand while shaping the types of environments your ads appear in.

Test customer acquisition rules

Part of you may always want to bid equally for new and existing customers, but they may not always provide you with the same value.

If you upload first-party data in the form of your customer lists, Google can give you an idea of whether your existing customers or new customers provide more value.

You can bid equally for new and existing customers or optimize for new customers.

Common Performance Max concerns and solutions

Samardge has seen her fair share of mistakes and concerns regarding Performance Max campaigns. Particularly regarding a lack of transparency in ad placements.

“It can be difficult to reconcile not having a full picture of where your ad spend went with the huge variety of placements that PMax offers,” says Samardge.

“In many cases, however, performance speaks for itself and those concerns are secondary to seeing a high-performing PMax campaign being capped at budget.”

Similarly, many advertisers worry about controlling spend distribution.

To that, Samardge explains that “the only real way to control your spend distribution between your product types is by breaking them out into multiple PMax campaigns.”

Budgets are set only at the campaign level; that said, “you should be mindful of the quantity of PMax campaigns you have running; you do not want to have small budgets for PMax,” she says.

If you have the budget necessary, you can build out as many Performance Max campaigns as you need to ensure your desired budget is going to the products you want to spend on.

Don’t have a large budget to start?

For ecommerce businesses, “it is advisable to only focus on one or two campaigns with your products split up by your top priority SKUs and a catch-all of the remaining,” says Samardge.

How to troubleshoot underperforming campaigns

The most common underperforming issues come down to ROAS and spending:

Poor ROAS

Performance Max provides insight into product performance, so Samardge recommends starting by “looking at the listing groups to determine if there’s a product segment that is taking up the majority of spend and not producing adequate revenue.”

From there, “I might either pull those products into their own campaign with a more strict ROAS target or exclude them fully (depending on client feedback).”

Finally, take a look at the asset scores and see if there are any images, videos, or copy that are also getting the majority of spend and underperforming — you would switch them out or remove them.

Spending

If you’re seeing decent performance but have difficulty getting the campaign(s) to spend their full revenue, you would either decrease your ROAS target or increase your budget.

“The issue there is Google is working very hard to keep your performance within the goals you set for the budget you provided and they can get a little too conservative over time if they see a dip in conversion-related behavior from users,” Samardge explains.

“You can launch PMax without a ROAS target but doing so gives the campaign a ‘shadow target’ of 100%,” says Samardge. You should still start it without a ROAS target but be mindful that performance might be slow in the beginning.

Once you get a baseline of ROAS, you should set your target.

Our experience with Performance Max: a case study

At HawkSEM, our PPC experts are Performance Max enthusiasts.

One of our clients, HomElectrical, connected with our team to increase efficiency and return on ad spend (ROAS) through PPC.

After a thorough audit of their existing efforts, the team built out new Performance Max campaigns to cover the entire site catalog of products more efficiently.

Our experts then reallocated spend to focus more on products that make an impact and conducted bid strategy testing to maximize ROAS.

The result? Within nine months, HomElectrical saw:

• 32% increase in clicks
• 99% revenue growth
• 19% increase in ROAS

The takeaway

Performance Max is a great tool that is built on powerful machine-learning technology.

These campaigns complement your other campaigns, and even other components of your digital marketing strategy — from SEO to social media marketing — to increase your revenue and ROI.

And if you need help from the experts, we’re here for you.

This post has been updated and was originally published in February 2023.