Google’s Ad Auction Shake-Up: What it Means for Marketers

Google has rolled out notable changes to the auction dynamics of Performance Max and Standard Shopping campaigns starting October 2024. These modifications aim to align the auction behaviour of these campaign types with other existing campaigns. 

Earlier, PMax campaigns had a built-in advantage over Standard Shopping campaigns in ad auctions. However, with these new changes, the highest Ad Rank will now be the determining factor in deciding which ad appears for overlapping campaigns. 

Standard Shopping campaigns can now outperform PMax campaigns if they achieve a higher Ad Rank. Advertisers who rely heavily on PMax campaigns may need to adjust their strategies during the 2024 holiday season to optimise their ad performance.

Key Changes to Ad Auction Dynamics

The latest update to how Performance Max and Standard Shopping campaigns compete in ad auctions could affect campaign strategies and performance during one of the most crucial sales periods of the year. 

Here are the key changes to the ad auction dynamics:

• No More PMax Priority: PMax campaigns will no longer have a built-in priority over Standard Shopping campaigns in ad auctions. Both campaign types will now have an equal impact.
  
  
• Highest Ad Rank Wins: The highest Ad Rank will now be the deciding factor of which ad appears for overlapping campaigns. This means that Standard Shopping campaigns can potentially outperform PMax campaigns if they achieve a higher Ad Rank.
  
  
• Consistent Ad Auctions Across Campaigns: The auction behaviour of Performance Max and Standard Shopping campaigns will be in line with other campaign types, creating a more predictable ad auction environment.

Why Google’s Ad Auction Tweak Matters

In an update, Google said, “Starting in October, we’re gradually launching an update that will change how Performance Max and Standard Shopping campaigns interact in auction when they are in the same account targeting the same products.”

“For these overlapping campaigns, instead of Performance Max automatically being prioritised over Standard Shopping, normal auction dynamics will now apply and the campaign with the highest Ad Rank will serve. This brings Performance Max and Standard Shopping campaigns into alignment with other campaign types, where ‘highest ad rank serves’ is the general behaviour, enabling more flexibility on campaign management with less complexity for testing.”

These changes to the ad auction dynamics between Performance Max and Standard Shopping campaigns introduce a greater degree of flexibility for strategic campaign management. 

Google’s goal with these changes is to provide advertisers with greater flexibility and they anticipate that this update will have a “neutral or positive impact on performance at the account level.” 

This suggests that advertisers should see no significant decline in their results and can better position their campaigns to reach their target audience, drive conversions, and achieve their holiday sales goals.

How Will These Changes Impact Marketers?

If advertisers would like more control over the spend of each campaign type, Google recommends adjusting budgets, and making sure PMax campaign is following best practices such as URL Expansion, asset group strength, creatives and video. 

Marketers using standard Shopping campaigns for brand traffic may see irrelevant, generic queries. To optimise performance, they should consistently monitor and add negative keywords.

PMax will continue to be the most sophisticated AI product to multiply conversions and capture the highest-ROI opportunities during holidays, across Google’s channels. In fact, in MMMs run by TransUnion among Retail & Consumer Electronics advertisers in the US, Google Performance Max campaigns drove 17% higher ROAS than AI-powered and automated performance campaigns on Paid Social in aggregate during the holiday peak period in Q4 2023.

Key Areas to Monitor:

• Budget and Target Adjustments: How advertisers will respond to the changes by adjusting their budgets and targets to optimise campaign performance.

• Campaign Management Strategies: The impact of these changes on existing campaign management strategies, particularly for those who have relied heavily on Performance Max campaigns.

Best Practices for Advertisers:

• Budget Management: Regularly review and adjust budgets and targets based on campaign performance and evolving market conditions.
  
  
• Performance Max Campaign Optimisation: Ensure that Performance Max campaigns adhere to best practices:
  
  
  • URL Expansion: Utilise URL expansion to reach a wider audience and improve campaign efficiency.
    
    
  • Strong Asset Groups: Create well-structured asset groups with relevant and high-quality assets to enhance ad relevance and performance.
    
    
  • Quality Creatives and Video: Develop engaging and visually appealing video assets, to capture attention and drive conversions.

This update aligns with Google’s ongoing efforts to power AI-driven technologies to give advertisers greater control over their campaigns. Advertisers should proactively prepare to fine-tune their strategies and achieve their holiday sales goals.

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