Google shakes up ad auction dynamics for holiday shopping

Google is changing how Performance Max and Standard Shopping campaigns compete in ad auctions.

Key changes:

• Performance Max will no longer automatically trump Standard Shopping campaigns
• Highest Ad Rank will now determine which ad serves for overlapping campaigns
• Brings these campaigns in line with other campaign types’ auction behavior

Why we care. This update alters how Performance Max and Standard Shopping campaigns compete, which could significantly affect campaign strategies and performance during one of the most crucial sales periods of the year. The update offers more flexibility but requires fine-tuning to maximize success in holiday campaigns.

By the numbers:

• Performance Max drove 17% higher ROAS than AI-powered social campaigns during Q4 2023 holiday peak (per TransUnion study)

Between the lines. Google aims to offer more flexibility and simplify testing while maintaining or improving account-level performance.

Dig deeper: Salesforce sees a shorter, more competitive holiday season in 2024

What they’re saying. Google expects this change to have a “neutral or positive impact on performance at the account level.”

This update was shared by Mike Ryan, Head of Ecommerce Insights at Smarter Ecommerce, on X where he noted “Google is making such healthy choices lately that I’m actually getting worried”:

What to watch:

• How advertisers adjust budgets and targets in response
• Impact on campaign management strategies

Best practices for advertisers:

• Adjust budgets and targets as needed
• Ensure Performance Max campaigns follow fundamentals:
  • URL Expansion
  • Strong asset groups
  • Quality creatives and video

The big picture. This update aligns with Google’s push towards AI-driven advertising while offering advertisers more control.

Bottom line. Advertisers should prepare to fine-tune their strategies to capitalize on these changes during the holiday shopping season.