Drive and Convert

Announcer:
You're listening to Drive and Convert, a podcast about helping online brands to build a better e-commerce growth engine, with Jon McDonald and Ryan Garrow.

Jon:
So, Ryan, welcome. I'm glad to be chatting with you. It's been a while. I think-

Ryan:
It's been too long.

Jon:
It's been too long. We haven't done anything since we connected for the event with the eCommerce, I guess it was a high level ... VPs, CEOs, things of that sort in Bend, Oregon when we did a little mini conference there.

Ryan:
Yeah. We went and drank probably too much wine and ate s'mores out of at Brasada. It was great.

Jon:
So for people who haven't attended any of the logical position events, Ryan has a way of agreeing to a catering contract that's always more than what we can finish. So we end up having to order, I don't know, the most expensive wine on the list in order to meet our minimums, because it's going to go away anyways. So, that's always fun. And I do appreciate that. And so we had a good time

Ryan:
And this time Troy had to pay, so it was even better.

Jon:
That's true. That's true. Well, I enjoyed that event. Got some great feedback on it and I hope we get to do more of those soon. Love the smaller intimate conversations and dinners. I think that stuff is where it's at now.
So, today we're going to talk about winning with automation and more specifically, Google's Performance Max, I believe, in the context of that. So I know very little about Performance Max. Although you tell me it is coming whether we like it or not, which makes me scared quite frankly, when people say that, because I'm like, I don't know if I want it or not, but when you put it that way, you make it-

Ryan:
I hate being forced into things. I always want options, but Google's fast taking away options.

Jon:
Well, there we go. So I'm interested to learn more about this, but my understanding is the agencies and companies that have relied on these manual approaches over the years to driving traffic from Google, well, they're going to need to change a few things and rethink this.
So let's just start high level. I always like starting high level with you because you bring something new to the table I know nothing about, so educate me on what is Performance Max and why does it matter? Let's just start there.

Ryan:
Performance Max, it's something I've generally pushed back a lot over the years with Google and I like control. You can ask my wife, I am a control freak, my core. I like to know exactly what's happening, and when I do this, this happens. Google does not like that when it's not them. And so Google's also a control freak, and they want to control everything. So which is fine, it's their platform.
So if you're listening to this, you probably understand Google a little bit and you've been familiarizing yourself with Smart Shopping campaigns. Smart Shopping is generally Google saying, hey, give us all your products. We will put them on Google based on the goal you give us and we'll also do some remarketing for you as well.
You don't get to see search queries. There's a lot of differences with standard shopping campaigns that I haven't liked, but for a lot of our clients at LP, they've been working fairly well. Now, we had to put some parameters in place, put some segmentation and get a little more granular, but we can get performance out of them pretty good.
So the next version of Smart Shopping is what Google's referring to is profit max, or not profit max, Performance Max. I wish it was profit max, maybe they should have called it that.

Jon:
Well, that's probably how they're going to sell it.

Ryan:
Yeah, exactly. But it sounds awesome. I mean Performance Max, I mean all the words Google's using to describe things are great. I mean, they've got a good marketing team. Smart Shopping. Well, I want to be smart so I'm going to use Smart Shopping.
So Performance Max takes that shopping and adds a few layers on top of it. So Smart Shopping has been pretty good at bottom of funnel traffic. We've seen a lot of good things, for example, in the automotive space where there's a lot of product number searches or really long tail, very specific, I have this exact car, I need this exact product to fit that. And there's generally lower search volume there, and Smart Shopping's been phenomenal doing that and then engaging remarketing on the layer above that.
So profit max says, all right, we're doing good at that. We're going to keep that. And then we're going to add on display prospecting type things, we're filling the top of the funnel, and we're going to leverage YouTube because there's a lot of excess inventory available on YouTube. And we're going to create video ads for you, for example.
And so it's same basic structure that you throw your products in there and give it a goal and it goes off and does this stuff, and you get to see traffic come to the site and hopefully money print out from the site.

Jon:
So they're replacing Smart Shopping with this. Is that accurate?

Ryan:
Yes. So Smart Shopping will be going away and the campaigns will be ... Google's supposed to have a migration tool coming out that says, "Hey, use this to convert your Smart Shopping campaigns into Performance Max." And it's been delayed a couple times. I think it's supposed to come out in July as of now, maybe August, it might have been delayed till August now.
We internally keep hoping it's pushed back again and again, until we get to put, for example, some negative keywords in or see some queries, have some semblance of some control.

Jon:
I mean, let's just play the advocate here. I'm the brand, I'm upset that they're going to create video ads for me. Really?That I'm a brand who's spending hundreds of thousands on Google and Google gets to just go and create a video ad for me? What if I don't want to be on YouTube?

Ryan:
At this point, you don't have a choice. And so you have to give Google the right assets and hope they create something that's appropriate and that you can keep yourself off inappropriate videos. If you are taking a stance on a cultural issue as a company, you might not want your video being shown on something that is directly or right against that stance, and moving into Performance Max, you won't be able to do those types of things.
And my hypothesis is that some of the things Google's trying to figure out is they've rolled this out to brands already and probably heard or seen some of that feedback. But a little secret of Google in theory is that if you don't give people access to see where their ads are showing or the search queries, they'd have to see it in the wild to be able to catch it. And they might be betting against you being able to see it in the wild.

Jon:
Yeah. That's fair. To me, that sounds like a negative, but there's got to be some good in this, otherwise they wouldn't be doing it because people would just stop advertising with them.

Ryan:
True. And so Smart Shopping adoption has probably not been as quick as Google wanted it as a whole, but it's been adopted and it's, in many cases, performing okay. And I think that a lot of the pushback against those things has been probably twofold. Agencies a lot of times maybe like Logical Position that have been doing a lot of manual work and take a lot of pride in being able to drive results from that manual work and offer a lot of insights into what's happening and let their clients know where they can pivot or grow.
And then also internal teams at companies that are really wanting to show that they have value or providing a lot of that. If you've been doing paid search for 15 years, you're used to being in the minutiae of search query reports and showing that value to your organization. If that's gone, then you may cease to have as much value to that organization. If they can run a Smart Shopping campaign at the same level you were before and you don't have to be there and you're not a cost anymore. But I can see some arguments in where there may need to be less humans managing paid search campaigns. And so there's obvious pushback around that just fo are being able to have job security.

Jon:
So what does an advertiser need to be doing then in this new world of Google? That is unfortunate. And I have one question before we jump into that though, this is really replacing Smart Shopping. So I could still go to Google and just run a campaign on AdWords, essentially?

Ryan:
Yeah, you can. Text ads are going to be not part of this. So you can still run general text ads. You basically just go and give Google a goal for your performance match, whether you're going to be looking for leads or looking for sales, what type of goal you look at, you look for a cost per acquisition or do you look for a return on ad spend goal? There's some protections in there in places you go set these campaigns that'll allow people to still do many of the same things.

Jon:
And if I want to go to YouTube, I can still just go advertise only on YouTube. I don't have to use Performance Max, right?

Ryan:
Yes. You can still do ad-only creative. I mean, Google wants to fill inventory, so they're not going to take away people's ability to advertise there. What they want to do is generally continue to increase the cost of that.

Jon:
So in theory, your team could cobble together almost like they've been doing today where they say, "We're going to run a discrete campaign in each of these channels that Google's offers. And then we don't have to worry about being part of the Performance Max." Is that accurate?

Ryan:
Yes. But Google has done a pretty good job of keeping certain ad positions or ad types available exclusively to these campaigns. We're going to creating Performance Max, so we're going to keep some ... Gmail is part of the Performance Max. You can't run Gmail ads anymore, but on Performance Max, you can get in there. And so there's benefits to it.
So a lot of companies are going to be more or less forced into using it at some point. And so I think that's what a lot of companies have to come to accept. Fighting Google can only get you so far. They've got a lot of very, very smart people. And so you can either fight against this engine or figure out how your company can operate within what Google's doing, because that's generally where you're going to find the most growth. You're always going to be able to fight against it to a degree, but if you find that you can't make Google work the way you want it to, because you've been doing it this way for a long time. Great. Go work on Bing and see how big your business grows. It's just, there's not enough search volume on Bing to grow your business probably.

Jon:
Sorry. That had me cracking up.

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You're listening to Drive and Convert, the podcast focused on e-commerce growth. Your hosts are Jon McDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers, and Ryan Garrow of Logical Position, the digital marketing agency offering pay-per-click management, search engine optimization, and website design services to brands of all sizes.
If you find this podcast helpful, please help us out by leaving a review on Apple podcasts and sharing it with a friend or colleague. Thank you.

Jon:
So we've talked a little bit about this, but I feel like this comes back to the line we hear you say quite often, which is set better goals.

Ryan:
If there's one thing I'm standing on regularly, it's probably that most e-commerce businesses have bad goals. And so that's part of what you have to think of when you're looking at all of this AI and automation that's in place for marketing, is if you're giving these systems bad information or bad goals, they're going to struggle to do things.
If you've got 20 people advertising or 20 companies advertising on a product, and in Google shopping, we can see when you go into Google shopping in the shopping tab, it'll say that there's 10 or more advertisers that have this product and there's one primary one at the beginning. So, hey, there's 20 companies advertising for this. Well, if all the companies are using Performance Max and you're the only company that sets some crazy goal, like every dollar I spend needs to generate $15 of revenue and all the other 19 advertisers have said, Google give us $5 for every dollar we spend.
You're not going to get any traffic. I mean, it's just, you got to think about algorithms almost being lazy and saying, hey, they're going to go for the easy money or easy revenue. And if you're giving a goal that doesn't make any sense, best of luck to you. So it's understanding what Google's role in your marketing ecosystem is.
I think still, I mean, I talked to, I don't know how many hundreds of businesses regularly every month that still, I come across business owners that are like, "I need Google to provide a profit or I'm not happy." I was like, "Well, I think Google engineers are smarter than your engineers and they're going to get more money than you with their goals." And so making sure that you're looking at Google as a customer acquisition tool, not as something that I'm going to go put money in and try to print profit out.
That's what your business as a whole needs to do. Obviously, you run business for profit. There's only so many years you can take tax deductions on businesses anyway. So you want profit, take care of your family, take care of employees. But Google is generally ... Google ads, at least, is generally not the best place for profit. And so set appropriate goals for your business that allow it to scale and allow the algorithm to go out and do more. Well, generally the business that can be more aggressive with their goals will thrive on Google more.

Jon:
So you want to have almost a set of goals specifically for Performance Max. Because your overall goal may be to have a 15X ROAS, but you know if you say 15 ROAS in the settings, you're not going to get traffic. So maybe if you're looking at customer acquisition, you set that to one and you just say, just give me one to one, and I'm okay with this. And Google will show you more often than anyone else. And you'll get your ad spend in. I guess it becomes a relevance issue of who the market that sees the ad. But at the same time, is that better than nobody seeing your ad? So there's a lot to consider here.

Ryan:
There is. And I think there's going to be a lot of testing and measuring for brands as they start to see, as I play with that goal and let the system do some work, what's my site doing? What am I seeing in analytics? Am I seeing people coming back to my site, am I seeing brand traffic increase?
If you're running Performance Max, you should for sure see, or have, a brand campaign and text ads to see how many people are searching for you. Because if you are filling the top of funnel, in theory, more people should be searching further down the funnel for your brand in a month or two as they started the process of looking for your product or service.

Jon:
So what do you think this is going to result in? I mean, this is a big move by Google. There's a lot of negatives that I'm hearing, maybe some positives, but definitely weighed heavier on the negative.

Ryan:
Nobody likes change. So I mean, there's going to be change and it's not the most fun. I mean, if you're really good at something and then it changes the rules. If your free throw line moved back five feet, that would just be annoying.

Jon:
That definitely would be annoying.

Ryan:
Especially with a bad shoulder. So there's going to be certain things that are more important, like feeds. Feeds have become more and more important over the last few years. But when your feed is controlling a lot more things within the Google ecosystem, if your feed going into the merchant center is ... like Shopify, for example, has a great integration right into the merchant center, takes your products, pushes them right into the merchant center. You can start advertising.
Good. It's not bad. But many times what you put on your website is not what you want to have in the merchant center. The title on your site might be good for when somebody's already at your site, but if you're bringing them to the site and they've never seen or heard from you before, you might need a different title there, you might need different images at the top.
I mean, there's a lot of optimization that needs to happen within a feed to start getting these to work better. And I think you're also going to need a lot more holistic brand strategy to understand where these campaigns fit in the process of, I've never heard of you, now I've heard of you. I'd like to buy, I'm considering buying. Let's buy. I mean, it's not a, 15 years ago there was a lot of clicking and buying. Like my wife's attribution, I think I made fun of in a few public speeches where it's basically a bowl of spaghetti where you're trying to track my wife and how she came to finally buy something on your site. You're not going to do that. But getting some of that clarity in play will be helpful.
So a lot more strategy from agencies or internal teams. Reporting is probably going to be way more important. How can you tell the story? It's something we tried to focus on a few years ago and I still don't think we're great at it yet, but it's being something we're forced to do more, is you can't just report spend and revenue. It's more of an, all right, what's the story of what's happening within this campaign and how your brand is growing online?
And the punchline, I think, to a lot of this is the rich are going to get richer. And I'm not talking about Google necessarily. I mean, they're going to get their money regardless, but it's more about brands that have a lot more data, a lot more of that first party data. They have audiences they can leverage on Google that the Performance Max campaigns will take advantage of, that have conversion data that the system can optimize off of, those companies will be able to grow a lot more efficiently with all of this data that Google has.
So if you're going to start something in two years, I don't know how you would do that on Google, because your site will have no data. You'll have no sales data for that. So if you're jumping into a vertical where other people are already selling, pretend you're a retailer, you're like, man, I'm just really passionate about product X and all of the things that go ... Like barbecue. There's a big barbecue retailer by my house and I love cooking meat and smoking meat. Most people are not starting up their own brand of grill or smoke, you're reselling somebody else's. So I feel like, I'd really love to get into that in a couple years. I save my money. I get the location. I got to get online to get people to come. You have nothing. Google doesn't know you from anybody, and you can't put the products on there and say, I'm selling everything everybody else is, because Google doesn't know how your site performs. So what searches will work for you?
Whereas, if I'm starting right now and I already have a few years worth of data on Google analytics and they see all of the products I have, they know exactly how they convert on my site. I can set the appropriate goal. You are light years ahead of somebody that's going to try to compete with you in two years. And that's a frustration of mine because I like how we can set businesses up or start businesses now and compete. And it comes down to just, hey, if your marketing's better, you've got a chance. But now when the marketing is kind of like taken out of the equation and it's just, if everybody has the same feed, they have the same goals, it's unfortunately looks like it's going to become more like the socialist world of marketing online.

Jon:
Where consolidation's happening.

Ryan:
Yeah. And it hasn't been that way before. And I think we're very quickly approaching that because it's just made logical sense to Google as they're building this up, that, hey, if we put this automation in place, we take out the risks of a small business being able to push the buttons to get on here. So it's very easy to do, but it's also, well, now you've ...
I've looked at actually in this space where on Google, you can own multiple businesses in the same vertical or industry and have all of them advertise at the same time on the same keyword. As long as the sites are different, the content's different, you can do it legally. You can't duplicate your site to Jon McDonald one, Jon McDonald two and have the same exact content, the same ads just to take up two spots. Google will flag you for that.
But if you go buy a competitor site and now you own two individual sites that all roll up into one owner, Jon McDonald, Google's fine with that. They were two advertisers before. There's still two advertisers. Good to go.
So in theory, if you go out and buy two or three competitors, you can monopolize Google if you are aggressive enough at the beginning that nobody's going to be able to break through that stranglehold you have with four or five large retailers in the same space, or large sellers. So I want to go roll up companies and buy my competitors now. Maybe after this year, because they're all going to be down this year.

Jon:
I was just going to say, you might want to put the breaks on that for a few months. Valuations will come down from the moon to something more reasonable. Awesome. Anything else you want to add on this topic? This is fascinating. I learned a lot today.

Ryan:
Well, we still have hope that we're going to get a little bit of control. Because it's not being forced out yet, I haven't given up all hope that we'll get some control around PM ads and negative keywords and things that you can do now. Even at Smart Shopping, technically Google says, "Don't add negative keywords or you can't see queries," but if you have a Google team, you can have them add negative keywords to it and actually do some cool stuff with it.
And text ads. I think those largely get ignored. In fact, I talked to a large advertiser today, spends well over 40 grand a month and they run a single Smart Shopping campaign and a DSA campaign. And so they let Google basically do everything. And I'm like, well the DSA campaign, which is a dynamic search ad, just captured your brand terms. And that was 95% of the revenue on your site. So it's not doing a good job at finding new people that don't know you yet.
And I think that's still going to be an important thing, is the text ads still get a high click-through rate versus shopping ads. And I think overall, somebody that understands the ecosystem and can test and measure and pivot quickly once they see data will always stay important. But I think it's going to become a larger component of a successful strategy than it is now where, hey, I can do some certain things and ads and tweak some things here and there and bids. But if you don't understand the strategy piece, then you're going to struggle.

Jon:
Well, it definitely makes sense. And man, I'll tell you what, I'm glad I'm not an ecom business right now. There are so many battles to be fought. It's like whackamole, things are popping up left and right. I'm glad that you're here to keep everybody informed and educate me as well, as I'm having conversations with these folks and know the head space they're in. So I appreciate it, Ryan. This has been-

Ryan:
Thank you, Jon.

Jon:
... enlightening as always.

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Thanks for listening to Drive and Convert with John McDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.