Growing Ecommerce – The Retail Growth Podcast

Google AI Max is A TRAP?! New Data on ROAS, Demand Gen & DSA Sunset

• Smarter Ecommerce • Season 4 • Episode 17

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Is Google's new AI Max for Search the future, or is it a hidden trap?

In this episode of Growing E-commerce, Mike Ryan and Chris dive into brand-new, independent test data on AI Max for Search and discuss the strategic role of Demand Gen and the future of Dynamic Search Ads (DSA).

The analysis of over 250 e-commerce campaigns reveals significant concerns:

  • AI Max delivers an average 35% lower Return on Ad Spend (ROAS) and a higher Cost Per Conversion (CPA) compared to traditional broad match campaigns in retail.
  • The conversions AI Max drives are often at a lower Average Order Value (AOV), raising questions about incrementality versus cannibalization.

Mike predicts that Dynamic Search Ads (DSA) is on its way to being fully sunset/upgraded to AI Max by early 2026. The shift signals Google’s move to consolidate broad automation into AI Max and the visual discovery into Demand Gen. The hosts also warn that many advertisers are creating unnecessary data fragmentation and overlap by running AI Max, DSA, and PMAX concurrently.

The key discussion focuses on the Demand Gen Strategy: Demand Gen is best used as a visual discovery engine to compete with Paid Social/Meta and is heavily driven by video ads across YouTube and Shorts. Learn how to use it strategically as a mid-funnel tool to feed Performance Max (PMAX).

What to do now: AI Max is here to stay. Mike and Chris offer advice on how to use AI Max's built-in controls (like negative keywords) to make the feature work smarter for your business.



About smec (Smarter Ecommerce):

At smec - Smarter Ecommerce, we specialize in transforming business goals into optimized ad campaigns. With over 16 years of experience in Google & Microsoft Ads, our intelligent software and expert services help retailers achieve superior results.

We're committed to giving you the tools and insights needed to stay ahead in the ever-evolving world of digital advertising.

Make sure to follow smec - Smarter Ecommerce for more performance marketing insights:

SPEAKER_01:

Welcome to another episode of Growing E-Commerce. We are your hosts, Mike Ryan, and Chris. Chris, thank you for joining us today. What do we have today? Chris, let's yeah, let's get right into it. We have some data with us today. We brought some data up our sleeves. I think interesting data. Yeah.

SPEAKER_00:

I would even say that every data you bring up is interesting. But this one is maybe even a bit more special because the market is really in yeah, it's a big unknown.

SPEAKER_01:

Yeah. It's a big unknown. Well, thanks, Chris, because the the secret reality is that most data is boring and it's hard work to find the interesting part inside of it.

SPEAKER_00:

Yeah, really. And unless you can connect it to, you know, the real challenges clients have. And I think this is the perfect segue. Because as far as I know, is that the market is not fully sold on, for instance, AI Max for search. Right.

SPEAKER_01:

Exactly. That's one of two technologies I want to talk about today. AI Max for search. And just as a as a recap, this is a new DSA-like technology introduced by Google. They basically and DSA, this is a way of matching landing pages and search terms, generating headlines, stuff like that. And it this technology lived inside of search as dynamic search ads. It also lived inside of PMAX. Yes. And Google decided that rather than bringing search to PMAX as they've done with some other campaign types, migrating campaign types, they want to take the PMAX into search. The confusing part for me is that it already kind of was there in the form of existing search ads. So we now have a situation where there are three very similar technologies as each other: dynamic search ads, AI Max, and PMAX and PMAX, the search part of PMAX. All doing very similar activities, similar goals.

SPEAKER_00:

And by the way, let let's be clear about DSAs and Dynamic Search Ads. This has been a gr fucking great technology, right? Yeah, absolutely. This been has been here for years. And I I mean, by the way, before we jump into the numbers and what what you find or found, what is your take on on dynamic search ads as a standalone campaign type? Do you see a bright future for it? Do you see it being sunseted because it's embedded in PMAX and AMX to search? What what's your take on it? Oh, it's it's it's dead as a doornail. Unfortunately, yes. Yeah.

SPEAKER_01:

I didn't want to be that bold, but Yeah. I'll I'll I'll go ahead and be that bold. Um I've I've been, I mean, it actually How much time is left?

SPEAKER_00:

I want to put you on the spot now.

SPEAKER_01:

By this time next year, it will be already gone. Wow. That's my prediction. Wow. And I've I've I've made so I mean I already saw a redundancy between DSA and PMAX when PMAX was launched. Let's see what how that's gonna go. And it, you know, they haven't touched it since then. There's a lot of uh about 20% of search advertising costs, at least in e-commerce, still seem to be running through there. So that's a lot of money. And they they need to be careful with how they do these things. I think they were evaluating that strategy. There were focus groups. Should we migrate search to PMEX? What should we do here? And this is where they've come up. But it's now at a point where there are two, or excuse me, rather, three highly equivalent technologies. Two of them are in Google's so-called power pack. The future of search. Yeah, this is what they're this is these are their smiled-upon technologies, as I would say. They're they've received the blessing. And, you know, it's clear that a dynamic search is left over. So I I've seen Google migrations and sunsets come and go. And my prediction is that in early 2026, they're gonna announce that DSA is being upgraded to AI Max, and then you know, they want that resolved by end of September so that everything's set up for the holidays. We see this pattern time and again with expanded text ads, with with shopping migrating to PMAX. This is the recipe. This is what they do, yeah.

SPEAKER_00:

And I mean, ladies and gents, this is this is big news because as you stated, roughly what is it, 20% still running running through DSAs? Yeah, so that's that's the level that we're talking about. It's it's huge. DSAs doesn't matter if it's in the accounts we run for our clients or the accounts we have analyzed throughout the last couple of years. It's a great campaign tab, it's a great technology. This campaign tab will be sunset. The technology lives on, so to speak, but embedded in PMEX and AI Max or search. Exactly. And the most important thing is, again, before we jump into numbers, Google will, of course, the great marketers they are, call it it's upgraded. Yeah, yeah. But is it this it's a no-brainer? Yeah. But is it a no-brainer?

SPEAKER_01:

Yeah, it's not it's not a migration. I mean, it and it's an upgrade. It's an it's an upgrade. We saw this, we saw this time and again. I left it. I left it. Yeah, me too. But what's your take on it, man? Well, I mean, so that's not official information, but I I'm very sure that this is what will happen. It's just been clear for a while. Yeah, I mean, that that's like well, let's talk about a couple of numbers first. Like right now, um, we're seeing that about 12% of accounts have some level of AI max activity in the account.

SPEAKER_00:

So it's just activation. Doesn't uh correlate with spend share. Well is is it the 12% related to the spend already running?

SPEAKER_01:

No, not yet. Like the the spend is at small levels now. And that's because you know it's not activated in all campaigns. And even when it is activated in a campaign, it is basically one match type among others, among four or more match types now. So, you know, if we look at the search spend at an account level, it it it's typically at less than one percent of at that level. But if you look within campaigns where it's activated, then it jumps up. It's like five five percent of cost within campaigns where it's activated. Still low for I I can't assume this is satisfying for Google. Well, I I I don't know. I disagree. It's early. Like their la we did earnings on our last episode, and a statement that their chief business officer made back then was that it's growing very fast. And I mean, of course they say that, but I I mean I think that it just went to general availability recently. It's only been, you know, it's been in beta and stuff like that, gradually rolling out. So I think that twelve percent of accounts have testing it. It's not really well adopted in those accounts yet, but the foothold is there. And then this all won't matter because I I I think that'll there'll be a migration and it will, you know, we remember this with PMAX. We saw this gradual organic or naturally occurring rise in cost share, and then it went vertical due to the migration, and then it found its level. And that I think that'll happen with AI Max too. May I correct you? It's not a migration, it's an upgrade.

SPEAKER_00:

Upgrade. I said I'm sorry. It's an upgrade. Thank you. Thanks, man. Uh let's again, I mean, I was pretty, pretty, pretty bold with regards to Google in the last episode. I think they have a great set of products. I think Google is doing a lot of things right. I think they're listening to the market way more than they have been listening to the market for the last 10 years. So there's a lot of good things going on. What I see is not just talking to our clients, also following some influencers, including you, my favorite one. There's not the I mean the the the reaction to AI Max research is not utmost positive. And what I would be interested in, I think this is pretty, pretty normal. New campaign tabs get shit on a lot. It's just the first reaction by by some by the online marketers to something new. But if you cut out all the noise, Mike, what do you see? What are the numbers already telling a story, although it's very early? What do you have here? Yeah, I I basically And what's your take on it? Oh yeah.

SPEAKER_01:

Sure. Well, I mean, I I agree that Google has been much more, let's say, amenable to advertisers, or it's felt more like a partnership again. And the first reaction, including mine to AI Max, was pretty positive, I would say. Like that it offers, you know, search term reporting was available from the get-go, and that's not to be taken for granted. No, this is this is you. And there's these good levels of customization. They really split it out into kind of three main features, and you can mix and match these, turn off what you want or don't want. And so from a product design standpoint, I really like it. And then from a performance standpoint, though, it ha that hasn't been so satisfying. We talked in the past about it being on competitor terms and stuff like that. Um, these were based on really sample sizes of one, which is looking around. I was because that's how I was looking in single campaigns and seeing what's going on there. And it it's a bit opposite because like P Max was pretty satisfying from a performance standpoint and from a feature standpoint it was lacking. But I feel like AI Max right now is still opposite. Yeah, it has good features, but the performance isn't quite there.

SPEAKER_00:

And you know, before we jump into the performance numbers, I'm really interested in because I haven't seen them. I think I know where we're going here. We're not talking probably about the most positive numbers, but but let's let's dissect this in a minute. You know what I found interesting is from a product marketing or product management launch strategy, it's it's quite interesting that Google launched a product with AI Max or Search where you instantly have a pretty clear understanding if this campaign type is performing yes or no. I mean, they could have could have chosen differently, right? There were ways to do it differently. But especially a search time report. I completely understand what this is there an increment, yes or no? And now the question is, you know, do the numbers support the story of Google that this is the future of search, or is it hurting the story? I found it very interesting. I love it that Google did it that way. But they they open themselves to market feedback, right? Exactly. Which is which is numbers driven.

SPEAKER_02:

Yeah.

SPEAKER_00:

But Mike, what what do you have? What what are the numbers telling you?

SPEAKER_01:

Well I I looked at over 250, so actually 271 campaigns that have AI Max activated. It's a it's a first sample. It's decent, yeah. Yeah. I mean when we first started writing bigger reports about PMAX, we had like 3,000 or something. And we'll get there. We'll get there. Yeah, we'll get there with AI Max for sure. But I still think you know there's a lot of impressions and clicks and conversions tied up in here. And so it's it's it's it's not a bad sample. And I'm comparing it like against broadmatch, exact match, phrase match, but it's it's not perfectly fair. Like you wouldn't really want to compare AI Max to Exact Match because they're serving different roles in a campaign type. But I think it's fairest to compare it to broadmatch. Because broad match is supposed to help you expand your coverage. It's about incrementality, yeah. It's about exactly. And in the turn in the sense of on top, and not in the sense of like marketing incrementality that's causative or something. But but it should find you conversions that you were missing before or opportunities to convert that you were missing before. And you you wouldn't expect maybe the best performance for something like that. Absolutely. But Google says that they can deliver 14% more conversions at a similar efficiency target. They do mention that that's for non-retail campaigns. And of course, we're in e-commerce and we're talking about retail campaigns. Interesting. But for retail, it doesn't look that nice.

SPEAKER_00:

So just to be pr precise here, so Google is literally saying that the incremental return on ad spend of these incremental conversions should be more or less on the same level than the return on ad spend of your core existing search setup. Exactly. That's a hell of a statement. I mean, that that would be a no-brainer, right, to activate it.

SPEAKER_01:

Oh, yeah, it would be that's that's the dream. Really? Who wouldn't accept where can I sign up for who wouldn't accept 14% more conversions? At the same risk, the same efficiency. Because that's just you know, you there's always a trade-off that if you go and chase down those next conversions, you're gonna accept diminishing returns. But they're saying that with this technology in non-retail campaigns, that won't happen. And I think it's a bold claim.

SPEAKER_00:

It's a bold claim. And this leads me always to the to the to this question on super high meta-level. I mean, where are these 14% additional conversions are coming from? I mean, let's assume everyone is adopting IMX. That's the thing.

SPEAKER_02:

Yeah.

SPEAKER_00:

Where are is there from one day to another 14% more demand? Or I I just don't get it. If you would be the one advertiser who had this secret power that no one else has.

SPEAKER_01:

Awesome. Fine. There is it. 14%. This is it's it's a commoditized technology within the platform.

SPEAKER_00:

Anyone can use it. I mean, that's it's it's so interesting. And and you know many Googles, I know many Google, yeah, they have the smartest people. But this is I I don't I don't understand how how this whole narrative I mean, maybe maybe the online retailers buy this straight up, but this is would be the first question. Okay, these 14%, they might be there if I'm an early adopter. Yeah.

SPEAKER_01:

But down the line, who they could be there if your campaign is not well built and it's missing a lot of and there's there's low-hanging fruit that you're just missing. And maybe, you know, for there's maybe a lot of advertisers out there where that's the case, but if your campaigns are some are set up well. Yeah, this should be. It's interesting.

SPEAKER_00:

Okay, but this is the claim of Google. But uh to be to be fair here, for non-retail, right? Exactly.

SPEAKER_01:

But we we're neither here nor there because we're retail, so that the it is what it is. Let's assume that like there's I guess a reason they don't make a performance claim for retail. But we're gonna tell you what that looks like. So I'm gonna just compare AI max and broad match. We'll put this on screen for viewers as well, and we'll just run down some metrics here. So click-through rate. AI max, or let's say we'll start with broad match's kind of status quo, 2.3%. AI max, two percent. Okay, good. Who cares? Fine. Convert conversion rate, broad match, five point six percent. Pretty high if you ask me. AI max, four point six percent. So it's uh percentage point less full percentage point less. Starting to be a bit concerning, but I don't think that that's a bad conversion rate. No, by the way, it's it's uh it's a strong conversion rate. Yeah. CPC, here we go. Broad match, 1 euro 57 cents, AI Max, 1 euro 58 cents. They seem everything's fine so far. Fine, fine-ish. Very comparable. And then this is where I get a little concerned. Cost per conversion, this is also sometimes called CPA, cost per action. Your action is usually yeah, but conversion, yeah. Yeah. But broadmatch, 28 euros we'll say. 2798. AI max 3421. So that's costing you several euros more perfect, 40-50 percent more. Yeah, exactly. That's uh That's huge. Yeah. And then and the average order value, let's jump it down to this broad match, 112 bucks and AI Max 89. So this is where it starts to break down. You are paying more per order, and these orders are less valuable. And this results in an aeros difference where broad match is clocked at four and AI Max is clocking at 2.6. And so this is where you see it fall apart. This is huge.

SPEAKER_00:

My my question, let's say I'm walking in the shoes now of an e-commerce director of an online job. Is because like again, the the the rows of 2. what is it, four compared to 2.6 against 2.6, 4? Huge drop. Depending on okay, what my margin situation is, I can live with the 2.4, 2.6, yes or no. But the the most important question for me would be are the AI max or search conversions really incremental? Or are are they eating into something what I already have? Because the worst case, of course, would be, ah, okay, this new campaign type, uh dubbed as the future of search from Google, is eating my eating into my existing search setup at a worse row. Yeah. Do we have can we can we evaluate this? What's your take on it?

SPEAKER_01:

It's possible to evaluate, but it would it would take, you know, I think what it would take is uh you would need to map the search terms and see comparative terms. Yeah, and see if they're being covered by other match types. And that's big lift to to do something like that because search term data is is just huge. It's just it's vast.

SPEAKER_00:

If someone can do it, you plus some data engineers, maybe. I mean I can do it. The question is if I want to.

SPEAKER_01:

I can do it. But like But but I I my anecdotal observation and my gut feeling is that that's not that's that's not the case. That's not okay. I I think that it I think that it's not finding so many unique.

SPEAKER_00:

It's not purely incremental.

SPEAKER_01:

Yeah, not purely incremental.

SPEAKER_00:

I mean, c correct me if I'm wrong, Mike, but but this because if if I look, I I think every online retailer, depending on, of course, other other factors, but I think every online retailer is forced to grow, right? Yeah. Now the question is, okay, how can I grow? I can go up a funnel, like like demand chain we talk about in a minute. And then I have probably also my my my my lower funnel where I can activate a new campaign type such as AIMX or search. If it's really incremental, then maybe I can even live with a worse ROAS. Yeah. Because this is what new clients cost me, right? It's a it's a trade-off, yeah. Yeah. Because I think this is very important to have this nuanced discussion about AIMX to search. If it's really incremental, don't shit on AIMX for search just for bringing a worse ROAS. This is what the reality is when it comes down to bringing new clients to your game.

SPEAKER_01:

Yeah, your new customer ROS will never be the same as your existing customer ROS.

SPEAKER_00:

Exactly. And if it's really incremental to what to what you have, I think your worst ROS is completely acceptable. The question is, is it really incremental? Yeah. This would be the most important question for me. Yeah. Yeah. And I mean Maybe Google assembly, though. We we can maybe we can we can talk to them.

SPEAKER_01:

Yeah, we can ask them. And and and there are, you know, this can be solved through testing and it it just takes it takes some work. Uh Google's also, that's why Google's getting into the marketing mix model game with Meridian and stuff like that. They want to be in these conversations. Actually, they want to own those conversations if they can.

SPEAKER_00:

But if someone could do it, it's SMEC. I mean, man, let's let's let's think about it. Yes. But yeah, but but to to to to understand you correctly, Mike, your anecdotal evidence and and of course the the the vast knowledge you have, you don't think that what you have seen that AIMAX research is purely incremental.

SPEAKER_01:

Aaron Powell I don't think so. And and I and I to be clear, I don't find this situation like damning. I don't I'm not gonna tell people hands off AIMAX, but I think it's very important to go in with eyes wide open. Exactly. And to control it. Yeah. And also like we've talked about in the past, make sure that it you know, if it it's genius idea is to find competitor terms that you purposely weren't bidding on before, you know, you can handle that with brand exclusions. You can add competitor terms. Exactly.

SPEAKER_00:

You can force the IMAX to work smarter for you.

SPEAKER_01:

Yeah, exactly. You can handle some of the stuff with negative keywords. So I think we're also it's an early and rather unoptimized state. And another huge complexifying factor I just want to quickly mention, I said that this technology is three times redundant. And that is the next thing that I looked at. I wanted to find out what other technology these advertisers are using. And so when AI Max is activated, I found that roughly we can put the numbers up on the screen, the exact numbers, but roughly one in five times, they're also using dynamic subjects. Between a quarter and a third of the time, they're also using PMAX. So there's a redundancy there.

SPEAKER_00:

And we have we're talking about the activation of DSAs in different forms of three times, right? In different campaign times. Yeah. That's the worst case, you have to.

SPEAKER_01:

Yeah, and that's and that's what that's the that's the next case, which is that in about one in two of these advertisers are using all three technologies. They're using AI Max, DSA, and P Max all at the same time. And this is I I can't tell you for sure if that's bad for performance, but I don't think it's good for performance. I think there's a risk that you're competing against yourself because of this adrenal thing we've talked about in the past. I think that at the very least, it's it's splitting data between campaigns needlessly and between different match types and so on and reports.

SPEAKER_00:

I just think it's not hygienic. No. No. And I think the hypothesis can be made, unless we get more clarity on the on the on how they solve the adrenal question, that you are maybe worst cases, like I said, all the things you said now is is true. But for me, the most thing, the the biggest thing which stands out is if you're not absolutely sure that you're not competing against yourself.

SPEAKER_02:

Yeah. Yeah.

SPEAKER_00:

I mean, and yeah. So but this is very, very interesting. Okay. One out of two. Yeah.

SPEAKER_01:

That that's huge. That's a lot. And and so the that what's left, by the way, there's only only seven percent of the advertisers are exclusively using AI Max. Trevor Burrus, Jr. Which would be the the probably it I mean it's pr in some it's the purest form. It's the purest form to choose one of these technologies. And I'm not saying that you can't use two of them side by side if you think it through and it's done well. I I think using three of them side by side, though, is not necessary. No, it doesn't make sense. It it's not necessary.

SPEAKER_00:

You can't convince me that's a good idea. Aaron Powell Before we really makes a lot of sense, man. And but before we jump on to the mountain, the the second child of the PowerPec. So IMAX for search, again, of course, it's it's here to stay. I I think would would it be a smart advice for I don't know listeners out there you have to test it in some way, shape, or form because it's it's here to stay. And the good thing is that the product design, uh shout out to Google. They they gave you uh leverages to control it, right? Yeah.

SPEAKER_01:

Yeah, exactly. So you you you you you can make this work better, you can optimize it. It's I think it's it's it's too early to draw conclusions because it's a new technology from Google Google's side, they're definitely gonna improve it. It's new for these advertisers, they're gonna improve what they're doing on their side. And you know, in 18 months from now, we could be having a totally different conversation.

SPEAKER_00:

But let's let's hope for like what happened with PMAX. Yes, exactly. PMAX came a long way and we became friends of PMAX. Yeah. It is what it is. Yeah. I don't know if we're we are there yet to call ourselves friends of Simon Gen, but I think we were very positive about positive about this this campaign time. What do you have for us today, Mark?

SPEAKER_01:

Yeah, I mean I've I've liked DemandGen from day one. I always wanted to like discover campaigns. That's what what came came before. And basically what they did with Demand Gen was to add more types of of more placements in there. And at first it was kind of like the cream of the crop from the PMAX placements. It was everything that you'd really want to have in there. Over time, on the positive side, they've increased the transparency and the controls. You can see what's going on in all these channels. You can also target these channels. So that's really strong. I mean, on the negative side, they've added in more of the what I would call fluff inventory. But again, you can you can see what's going on and you can opt out of it. So I don't I like Demand Gen in principle. And and what it needed was the ability to scale. And that is what Google has really given it. The primary way that they've done it is by adding in YouTube. We were talking in the last episode about what was YouTube's I think YouTube's up like 15% in the last quarter. And I think DemandGen has been a part of YouTube's numbers for the past few quarters and and will be ahead. I think it's it's a YouTube buying engine. So just to jump into that a little bit. Give me one sec. Yeah. So what I did, I called these the economics of DemandGen. I took all the network types that these are you might call them the channels or the networks that DemandGen can serve on, like YouTube, Discover, Gmail, Google Display. I don't have a lot of maps data yet, so that's not in there. And then I also took the ad type, which is is it an image ad, a video ad, a product ad, or a carousel? And then I looked at every combination of those and and I looked at every cost metric that I could kind of think of. And one of the reasons that I did that is because DemandGen, which we talked on a previous episode about what is a click and so forth, but DemandGen is neither purely a cost per click channel nor a CPM channel or even a cost per engagement channel. Um it can use all three of these billing models together. And this also depends on your bidding strategy. It's quite complex in how it gets billed. So I thought that people should see what those different billing metrics are in every possible format. But the at a high level, the most interesting thing to me from like the is the percentage cost share. And it's more than 50% YouTube video ads. So to circle back to what I was saying about it, YouTube is the scaling engine of demand gen, and demand gen is also a scaling engine of YouTube monetization. So but I think that I think that this is a win-win for Google and advertisers. I have a positive sentiment toward the technology.

SPEAKER_00:

I think so too. And we had a we had a great discussion with the European product leader of Demand Gen and YouTube at European headquarters of Google. And what I found very interesting, so this man uh knows his stuff. It was absolutely deep and thorough discussions about how Google sees demand chain and what they are basically aiming at with Lich Campaign. And what's what what I found very interesting, Mike, uh in one of our episodes we talked about in our our talks on different stages and different in different places of the world. Our take on demand chain was let it do its thing. And the thing demand chain is really good at is generating new demand, but don't force it to be your performance channel, right? Don't look at incrementality in terms of revenue. And it's the the interesting thing was the product lead we were talking to more than one hour, he he he was absolutely convinced that a demand chain can be a performance-oriented channel, yeah, and that Google is really trying, yes, with everything they have to build this product to be that mid lower upper funnel demand generation machine, but with this clear purpose of it's about performance because they understand that especially for online retailers, it is about performance.

SPEAKER_02:

Yeah.

SPEAKER_00:

What is your take on this? I've I found it very interesting.

SPEAKER_01:

Yeah, I know. I know exactly what you mean. I wasn't in that conversation, but I can I can see that Google is doing this, and I find it a little bit confusing because I I mean I totally get it. Like they, if you look at the sales decks, Google sales decks for demand gen and the way they position it, they really position it against so paid social, but they're talking about meta ads basically. Yeah. And and it's it's a tricky spot for them because they they want to have this mid-funnel narrative and that it's doing some some of this branding, and that it's like gonna support your search lift and your brand lift, and that you'll you'll pick up this performance on your other campaigns down the funnel. But that that narrative alone is deeply unsatisfying to someone who's spending on on Meta. Yeah. Because yes, Meta is a demand generation channel, but it also performs. And I think that's what Google is trying to square this circle, and they they're definitely, you can see with features they've been rolling out, they're getting more interested in a performance narrative for this. But my problem is that the further you get in in interested in this, like it's hard for them. These are the same channels that they're running with PMAX. That's it. And it's hard to not collapse these things. I it's that that's the problem. I'm not saying that the man gen couldn't be a performance channel. No, but if it were, it would be called PMAX.

SPEAKER_00:

That that's the thing. And by the way, I I think I really love the take of Google on this to to understand how important that the performance narrative of a campaign type, even in mid and upper fund list, because at the you know, you you you talk to many clients, Mike, especially for clients where they are not maxed out, let's say in their PMAX campaign in terms of impression share. So there's money left they can spend in PMEX. Yeah. Why in the blue hell? Should I go to Demansion when I get when there's still market to be made with with PMAX at a better return on Net Sman? So I think this is also um an uh I don't know, maybe a logical error in the narrative because if it's performance driving, it it has to be at least at the same level of PMAX because else I I try especially if I can still make market with PMAX, right? Yeah. So I I I'm with you, Mike, that I think demand chain should be seen as something different. And demand chain is great at that.

SPEAKER_02:

Yeah.

SPEAKER_00:

In really doing something to a brand, in generating demand, but there is not this direct impact. And I think this the more they they try to be in this performance narrative, yeah, the better. Trickier it might be to have a clear decision framework, okay, as a online retailer, where should I spend my money now? So I I absolutely understand where you're coming from. I guess there's so much overlap, right?

SPEAKER_01:

Yeah, for for sure. And like the thing is the way people, I think the market at large understood PMAX when it rolled out, they thought it was a full funnel campaign type, and that like they're they're like, oh, it has Google display in there. So it's doing some branding and stuff like that. And it's got some kind of a multi-touch effect. But it's a shopping campaign. Yeah. Yeah. And even there is display in there, but it's it's re-marketing. And so it's it's not a full funnel. It's really Google has been clear about this, it's a bottom funnel campaign type. And you know, when I hear what they're trying to do with demand gen, it's almost like they would need to build them together to build that full funnel campaign, because that that it really would do what people imagined P-MAX would do back then.

SPEAKER_00:

And PMAX is not good at that.

unknown:

No.

SPEAKER_00:

And I think this is the great narrative I see. And by the way, the I think the strongest narrative when we talk about DemandGen is with P-Max, which is basically a shopping campaign, you are very much tied to kind of an existing client pool, right? And and P-MAX is good at maxing out the performance within this existing client. Yeah. But if you want to think beyond, let's say, this fiscal year, you should think about okay, how where can I create really new clients and new client potential for me? And this is where demand gen, I think, is really great at. But it's not this direct performance impact. Totally.

SPEAKER_01:

I think that I think that DemandGen and P-MAX make a good pair together. Yes. If you if you do it correctly. If you let them each play their role. But it's so hard to show that. And this is what this is Google's pain point. And they're they're focusing on how can we show demand gen. But they shouldn't really be focusing on showing the performance of demand gen in and of itself. They need to focus on showing how demand gen makes PMAX better or how these two things work together. Exactly. And it's that's hard. Meridian is something that could help with that, maybe. But it's it's not simple to do.

SPEAKER_00:

Because look, I mean, that's something we we we have to understand as as one of the biggest partners of of Google. It's also, I think, the correct expectation management. I think the worst thing you can do is to start demand chain and and and be not clear about what to expect, right? In terms of walking in the shoes of the client. It's not that direct one-month performance-driving campaign. It's not. And this is, I think, is by the way, I think Google is is working on that very fiercely, to make it clear and to make it obvious what's not even the short term, but the mid and long-term effect of doing demand generation. Because that's the game you're in. You have to feed the beast, right?

SPEAKER_01:

Yeah, and and I think I think that they pick the wrong fight by comparing themselves to meta and paid social because if you look at the properties that are in there, like a discover feed is it's not the same thing as a social feed. They're similar, but it's it's somehow it's not the same thing. And YouTube is, I would say it's also it's not really social media and it's not really a feed channel. There these things are similar but different from what Meta has in Instagram and Facebook. Yes. And that's just it is what it is. So I I I think I like the technology. I think it's going through an awkward phase in terms of product strategy.

SPEAKER_00:

But it's a great technology. And I really believe in demand chain. And by the way, I believe in in I don't know, especially for online retailers who are so much focused on performance. And I I totally get it. You have margin pressure, you have to grow. It's all about the incremental rows. But uh if you have a beast at your hands, which is P-MAX, and we know that P-MAX is working, especially if you do it correctly, right? You have to if you do it the right way, you still have to think beyond where where is your where your next growth pocket first and the margin is good at that. Yeah, you have to do it correctly. Absolutely. What a wrap. Yeah.

SPEAKER_01:

That's that was a good note 10 on.

SPEAKER_00:

Thanks, man. I'm I'm I'm proud of myself. Cool. But I think the outro will be again the highlight of this episode.

SPEAKER_01:

Let's go for it, Chris. All right, we'll leave it at that, ladies and gentlemen. Thank you very much for tuning in to another episode of Growing E commerce, brought to you by Smarter Ecommerce, also known as SMEC. You can learn more at smarter ecommerce.com. And as always, it's been our pleasure. We'll see you next time.