Growing Ecommerce – The Retail Growth Podcast

Google’s CSS "20% Discount" Myth, Busted | Plus: The Hidden CPC Tax of PMax + Shopping

• Smarter Ecommerce • Season 4 • Episode 47

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Everyone selling in Europe has heard the pitch: use a third-party CSS and get a "20% discount" on your Google Shopping bids. Mike Ryan and Chris finally settle what that number actually means — and it’s not a discount at all. They break down the real math behind Google Shopping Europe’s mandatory margin, whether a multi-CSS strategy still makes sense in 2026 (spoiler: it doesn’t), and why the fear of "bidding against yourself" across multiple CSS partners is a myth Google has gone out of its way to debunk.

Then: a lesson for every advertiser, EU or not. If bid is the only real differentiator between a PMax shopping ad and a Standard Shopping ad serving the identical product, what happens when you run both at once? Mike shares fresh CPC data across shopping-only, hybrid, and PMax-only accounts suggesting the answer is: your account gets hotter. Whether or not you technically "bid against yourself," running overlapping campaign types may be quietly inflating your CPCs — and Google’s new Channel Diagnostics report might be a tacit admission of exactly that.

In this episode:

• Myth #1: the "20% discount" claim — it’s purchasing power, not a discount

• The real math: how Google Shopping Europe’s mandatory margin actually hits your bid

• Do you still need a third-party CSS in 2026? (Yes — here’s why)

• Myth #2: does a multi-CSS strategy still make sense, or is it a "last-mover penalty"?

• Myth #3: are you bidding against yourself with multiple CSS partners?

• The bigger lesson: what happens when bid is the only ad rank differentiator?

• Fresh CPC data: shopping-only vs. hybrid vs. PMax-only accounts

• Google’s new Channel Diagnostics report for PMax — a tacit admission?

• The verdict: hybrid PMax + Shopping setups can work, but only with a real strategy

Growing Ecommerce is brought to you by smec (Smarter Ecommerce). Learn more: https://www.smarter-ecommerce.com

👉 Running PMax and Shopping side by side? Tell us what you’re seeing in your CPCs — drop a comment.

#GoogleAds #CSS #GoogleShopping #PerformanceMax #PPC #Ecommerce #GrowingEcommerce #SmarterEcommerce


About Smarter Ecommerce (smec):

Smarter Ecommerce (smec) empowers e-commerce brands with AI-driven PPC automation that optimizes for profit and business outcomes while maintaining strategic control.

The platform activates first-party data - profit margins, customer lifetime value, and key business metrics - to automate campaign optimization toward goals like profitability and efficient growth, while detailed campaign insights provide full transparency and enable PPC teams to focus on strategic oversight rather than manual execution.

As a Google Premier Partner and three-time Microsoft Retail Partner of the Year, smec manages over €500 million in ad spend and drives €5B+ in annual e-commerce revenue for 350+ global retail clients including THG, Snipes, REWE, and Intersport.

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

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Intro — CSS myths, and a lesson for everyone outside Europe too

SPEAKER_02

Welcome to another episode of Growing E-Commerce. We've got a couple of exciting topics lined up for you today. First off, we're going to do myth busting about Google's CSS program. And in case you're not in Europe and you don't care about CSS, don't worry. We have something for you at the end. We're going to explain about how a specific thing we learned from the CSS program transfers to all of Google bidding. So stay tuned to hear more about that. As always, I'm one of your hosts, Mike Ryan. And with me, Chris. Chris.

SPEAKER_01

Should I do something at for Riponga? No. Mike, great topics, as always. Yeah. Chris, what are you wearing? Ah, come on, man. I told you not to do it. Why are you dressed like that? Look. In I want to defend myself here. A, we have a summer fest today. Yeah. That's the reason why I show up like uh I don't know, 70s Miami Vice dude. But I love it actually. No, it's you love it? You can you can pull it off.

SPEAKER_02

Is it is it distracting? I don't know how it plays on the cameras, if it's like breaking the cameras right now. There's like strobing and stuff. We're probably ruining the life of our of our of our production team over here.

SPEAKER_01

But by the way, you are not high. This is the the colors are real, right? I'm just saying.

SPEAKER_02

Yeah. Is that because what?

SPEAKER_01

Uh no, come on. Let's move on. Yeah, all right. But uh I I like it. And again, maybe maybe I will it will be my my new new suit. Yeah. Um would you be what do you be up for it?

SPEAKER_02

Listen, you you do you. I was in I I was in Google Dublin uh a couple weeks ago, and you know, they were asking me, they were talking about like wardrobe vibe and yeah, what options do I have? Can I bring more options? I was like, I don't have a wardrobe.

SPEAKER_00

What what are you what what do you mean with options? It's like I have option A and option A. Yeah, like Steve Chops. He he he was always wearing this black uh turtleneck, right?

SPEAKER_02

This is I wear jeans and a t-shirt and I I have yeah, I have a very restricted color palette. You're the Steve Chops of e-commerce influenced.

SPEAKER_01

Listen, I have other things to effing worry about. So yeah. Well, appearances do matter.

Why CSS is suddenly back in the news in 2026

SPEAKER_01

So yes, yeah.

SPEAKER_02

And uh with that being said, let's talk about I have a segue here, Chris. Okay, Chris, let's talk about some false appearances.

unknown

Wow.

SPEAKER_02

Myths too smooth and the CSS. You're too smooth, man. I yes, that's why that's why Google put me on the couch.

SPEAKER_01

Ladies and gents, it was so fun. When we talked well, because there's oh of course there's some prep going on. Mike uh uh gives me uh sometimes quite short notice the topics you want to talk about. And sometimes. And I was shocked that in the year of 2026 we are going to talk about CSS. Yes.

SPEAKER_02

Well, there's a couple reasons why there's sort of three three reasons why. Um so first off, there are the CSS program is back in the news because there are new rulings coming out, and actually, depending on when this episode's error airs may be already out. Um the EU commission is not done with the CSS, yeah, they're off that topic. Yeah, exactly. Like, you know, there because there's this uh kind of ongoing topic of the sufficiency of the of the CSS program and the measures that were taken back then. Um, and that's definitely under fresh scrutiny. Yeah. Has been for a little while. So that's one of them. Another thing is that there are 15 new shopping countries um coming out across Europe, and uh it's a lot. I didn't even know that there were that many markets left as in the as an ignorant American. Yeah. Well, you know, the thing is I did a little math on that, and they all 15 sum up to about the size of Poland. Okay. So like the number seven. Okay. So it by GDP. Um but that, you know, it does offer upside, of course. And why this connects to CSS is that to advertise in Google Shopping in Europe, you have to advertise through a CSS. And by default, that CSS is Google's comparison shopping service, which is known as Google Shopping Europe or GSE. Um, but of course, it's highly recommended that you advertise through a third-party CSS. We are one, by the way, and I'm not gonna sell us exactly. But why not? Well, you know, I think we will sell ourselves because we we are we're about to be very truthful. Yeah, we're gonna lift the veil. We're the most straight talking CSS partner that you'll find. Um, so there is that. But uh the other reason is just I don't know why, maybe it's related to these, but I've just had this topic come up in multiple

Myth #1: The "20% discount" claim — busted

SPEAKER_02

client conversations and having people in our team reach out to me lately asking specifically about the multi-CSS strategy, which we'll explain. Um, and yeah, again, I have a very specific viewpoint here.

SPEAKER_01

But uh and the most important question is the 20% discount claim. Yeah. Real. And what what what's behind the 20% discount statement, right? Let's start. Let's let's start there.

SPEAKER_02

So and and by the first, because in case you're right now Googling our CSS, um, you'll see on our website that we talk about the 20% discount. Yes, which annoys me to be honest. But I also understand from a marketing standpoint, uh, because I had this conversation with our marketing department, and every single CSS on the market talks about the 20% discount, and you more or less have to. I I disagree actually, but it is what it is. Um, so no, the 20% discount is fake, or it doesn't work like that.

SPEAKER_01

I think this is the better explanation because of course uh the CSS topic, I mean, look, me, it's it's it's really it's fun and surprising that again, 2026 we still talk about CSS. I remember the the wild times when when this whole CSS really was on the news. It was insane, yeah. It was insane. Uh a crazy time. We were one of the fastest players in Europe to adapt to it. We created massive chances and opportunities for our clients. It was a fun time. Yes, because you had a chance of being the first mover. Yeah, there was a huge first mover advantage, it was a gold rush. It was a gold rush. This, ladies and gents, listeners, that first mover advantage is gone. It evaporated because it's commoditized. Yes, however, there is still the claim out there that there is this 20. Let's call it the 20% click advantage. Because I think this would be the more correct framing. Yes. Let's talk about that. Is it a discount? What is it? And is there an advantage at all? Let's break this down because I think this might be one of the most interesting questions.

SPEAKER_02

So basically, what happened back then? Um, just as a reminder, it's a long time ago. Uh the European Commission ruled that Google is a comparison shopping service,

The real math behind Google Shopping Europe’s CSS margin

SPEAKER_02

or that Google Shopping is a comparison shopping service and that they were self-preferencing themselves through their organic results and advertising and stuff like this. Because back then I believe uh CSS could not participate in Google Shopping. I was limited to Google Shopping. Yeah, yeah. Yeah. So there was a major self-preference preferencing accusation, and it was probably well founded. Um but so Google Shopping Europe had to split off as a rather own entity, as its own entity, and they had to demonstrate, they still have to, that they are independently profitable from Google. So as part of that, that's why I talk about you can advertise through Google Shopping Europe. If you just if you make a if you make a shopping campaign and you don't have a third-party CSS partner, then Google is your CSS. Exactly. And because they are required to be independently profitable, they have to deduct a margin. Um, and it's said to be 20%. 20%. Yeah. We don't know, maybe that's changed over time. I don't know, but it it is said to be 20%.

SPEAKER_01

By the way, just what does that mean? I mean, we know what margin is, of course, but what does that mean? Yeah. I have a product and I bid 70 cents. Uh what is what what is the margin doing to my my my net bid, my real bid. Okay.

SPEAKER_02

Yeah, well that's as hard of it. But um can we do choose easier math, Chris? Because I can't do 20%. I'm looking at my hand like, what's 20% of 70?

SPEAKER_00

Should be 56. I get double treatment that's anyway. 7 times 2, 14, 70 minus 14. 50 cents. 56.

SPEAKER_02

All right, 50.

SPEAKER_01

So let's roll with the 70s. I'm not a mathematician. But the 20 cent, uh the 20, 20% margin, what does this do to my bid? All right. So if you so what happens?

SPEAKER_02

Because if you enter via Google default, you let's say you have a euro bid, please from okay. Got it. You make a one euro bid. Yes. Um, 20% is deducted from your bid. And so 80 cents actually enters the auction. Enters the auction. Yeah. And now if you're if you're doing it via a third party, you enter that same one euro bid. There is no 20% deduction. You enter with the real one euro. Yes. And so you can see that you didn't there you did there was no 20% discount, but rather your bid is worth 20 cents more relative to these other apps. So it's actually an increase in purchasing power. It's not a discount.

SPEAKER_01

And this is why um I So I think in general that the 20% click advantage, and we we no one knows precisely if it's 20%, 18%, 21%, whatever. Uh, we did massive analysis on it, and you it it's hard to pin pin pin down. But you have an advantage, but the advantage is rather direct to directed towards you can make more market because the net bit should be 20% higher. But you're not saving literal money.

SPEAKER_02

No. Like, and and yeah, and you have to remember back then in the days of the first mover. Exactly. So you had 20% more purchasing power, and also there was a lot of manual bidding going on back then, and everything was different. Um, so you know, this would in principle, it could push you into a higher position within a given auction. It could also push you into different kinds of auctions than you were in before.

SPEAKER_01

Broad or search terms. So you you you you would make market because your your net bid, I don't know if it's the correct term, is higher.

SPEAKER_02

Exactly.

SPEAKER_01

You're you have to bid 20% less to get the same bid.

SPEAKER_02

Yeah. Yeah.

SPEAKER_01

Right? Well, you you'd have to bid 20% on a Google Shopping Europe, you'd have to bid 20%. 20% more, yeah, exactly. Exactly. Uh so so you you you you have by default more purchasing power power using a third-party CSS. Yeah. So is the claim which I'm about to make correct that as an online retailer selling products, you should have at least one

Do you still need a third-party CSS in 2026?

SPEAKER_01

third-party CSS in your setup strategy.

SPEAKER_02

Well, now I'm gonna next I'm gonna take issue with the phrase at least in there. But Okay, you should have one. You need to use, yeah. Okay. Yeah, we can say at least, but you need to use, I would use a third-party CSS. Okay, because there is this click advantage. And that will CPC advantage. Yes. And even now we have to think about it a bit differently. Because it is the year 2026, everyone is using third-party CSS.

SPEAKER_01

Do we have adoption rates here? I I assume it should be around 85, 90 percent.

SPEAKER_02

It must be. It must be so high. Yeah. All right. Um, it must be so high. And you know, that could be different now in these new 15 new markets because there needs to be a whole cycle there. So again, well, we'll get into that in a sec. So it's the year 2026 now, and it's rather instead of a first mover advantage, it's a last mover penalty because this is as you said at the start, this is all commoditized. Everyone's using this. Um, so everyone has that same kind of basis. Yeah, and it's rather if you're only shopping advertising through Google shopping, you're at a disadvantage relative to anyone else. And all of course framing, yeah. All of the bidding by now is way more automated by Google. This is just the baseline. Yeah, so it's really moved from a first mover advantage to a late mover penalty.

SPEAKER_01

Okay, uh, I co-signed that. Uh, I love that. At the statement stands, you should have in brackets at least one third party CSS because it gives you this you you make sure that you're not at a disadvantage with your CPC entering the auction.

SPEAKER_02

Yes, if you're advertising purely through Google, you're at a disadvantage. There could be tactical applications

Myth #2: Does a multi-CSS strategy still make sense?

SPEAKER_02

of this, there could be a reason to use Google, but um I come up with it with a second question now.

SPEAKER_01

Okay. Because and I was man with you in the trenches in these early gold rush days. Yeah, and of course there were a lot of strategies floating around, and and one strategy was let's go for as many CSS as possible because I can drive let's call it market share, presence on the SERP. Um, and I I can remember that we always said, guys, even back in the days, and I don't want to pet on our phones, but we said you should have the CSS running because this gives you this advantage, but don't be too granula because there are a lot of disadvantages coming with it. Yeah. So question to you might share your open opinion. This multi-CSS in terms of having more than one third party CSS. Exactly. Is this still a strategy to go with? What is your take on it?

SPEAKER_02

Well, again, I the I I hope there's someone working at CSS right now shaking their fist at me because then I've done a good job. You probably will be a good job. Yeah. I I like to I I see it in your eyes. I like to uh provoke people sometimes, but um I said I'm gonna just lift lift the veil here. So here's what happened with the multi-CSS strategy. Um at the beginning, there was a very material advantage because there were first off, there were these, there the 20% purchasing power boost was extremely tangible at that time. And in the earliest days, do you remember this? Google was giving like cash back incentives to advertisers. Of course, of course. Because they needed to drive CSS adoption to satisfy the European Commission.

SPEAKER_01

And you know the craziest shit back in the days, and I thought by the way, I think the reason why we we we adopted RCSS so so powerfully is because we were literally giving the click advantage 100% back to the client. Yeah, I can remember, man, there were some shady offers out in the market.

SPEAKER_02

This is what I want to talk about. Because there were it was it was price skimming. There was a material advantage. CSS could charge a lot of money and often did charge exorbitant amounts of money. Yes. Um, even you know, we also we charge it was for our commercials were different at the start than they are now.

SPEAKER_01

But we had technical reasons because our product was able to manage multi-cSS. Yes, exactly. Pure CSS providers were just taking a big part of the share.

SPEAKER_02

Anyway. So what happened, what yeah, we had the bid mirroring every year. We had a lot of tech that we built around this back then. But anyway, what happened pretty quickly is that just the whole market just kind of collapsed. So um pretty soon it was a race to the bottom on the CSS side, and it wasn't long before there was someone with like a hundred euros a month flat rate, and then it was someone with like 30 euros a month flat rate. 70, 50, yeah. Yeah. And I think I think now the probably the going rate is probably like 30, 35 bucks per month flat rate. Depending on the service level, but yeah, yeah, exactly. And then and then what they try to do is upsells. They'll try to sell you into feed management services or stuff like this. Um, so it's an entry point, it's a just a thin, it went from a price coming strategy to a thin wedge strategy. Um told you I'm gonna unveil things. And the other thing that happened is this multi-css narrative emerged. Um, and the idea was that you could get more visibility by advertising through multiple CSSs. Um, and in principle, the way that this would work is if these CSSs are very engaged with managing your campaigns the way that we were actually a, I think, a bit of an outlier for doing that. But um, and they could have different bidding strategies. Maybe this could there could be some truth to that. You could at least apply different tactics or different advantages of different CSSs. Um, but you know, in reality, the these CSSs just started making partnerships and you know, just referring each other and all that kind of stuff. And so this was just a revenue expansion strategy among the CSS's, in my opinion. Because the most prevalent claim is that advertising through multiple CSSs um will enable or massively increase your ability to double serve, and we need to define that term a little bit. But basically, that there could be a single search term and you would have a product. Yeah, exactly. You get a product appearing from CSS A, CSS B, CSS, and so forth. And that this would, and yeah, this was this is kind of the main argumentation there.

SPEAKER_01

And uh I know for a fact, Mike, and I think Google got way better at it, um, because I mean these these were the talks of the town back in the days, and what Google basically claimed was there might be a double presence, but very importantly, it will never ever be the same product. Yeah, I can remember the early days where there were some loopholes, and Google was not really bulletproof here. So you could force with, and by the way, I'm not talking about seven CSS now because we let's talk about the massive disadvantages having that granula of setup, but there were even loopholes where you could force Google to show the identical product for the same search grade, but Google got bad at it. So this double serving in terms of pushing one and the same product for the same search grade, yeah, it's not possible anymore. Yeah, so let this is a rumor and it's not possible anymore.

SPEAKER_02

Well, exactly, like it's not legally possible. Legally in the first place, and technically Google because yeah, you're right. On a technical basis, Google has always tried to prevent, they call these offers, like when the exact same offer, so the exact same product, um, because if you appear on the same search term, it's it's because you might have multiple different products or different offers that are eligible for that search term. So it could be um different, different Nike shoe, like models of Nike shoes or product lines or whatever, but the exact same shoe should never serve. And that's right, Google's technology wasn't as bulletproof back then. Um, so maybe you could end up with this. Now they've gotten a lot better at in the main way people will do tactics in their feet. Um, if you try to circumvent the system, you are just begging to get a disapproval. This is against Google policy and you will get disapproved.

SPEAKER_01

Okay.

SPEAKER_02

Um, yeah.

SPEAKER_01

However, you can be shown with a different or similar product, but we our stance on it is that it's not massively increased by the fact that you have a third-party CSS.

SPEAKER_02

I'm here to tell you, or that you have multiple. I'm here to tell you that you can, you can absolutely have different products appearing for one career. You can potentially dominate the entire board. We saw this with Timu back in the days because they were so aggressive on their bidding. Yeah. But um that has nothing to do in foundationally, that has nothing to do if you're using one CSS or multiple CSS or which one you're using. It is just about your bid and your budget.

SPEAKER_01

So the bottom line is the one third party CSS makes sense on top to the Chia Z, the Google Shopping Europe, because there is this click advantage, or let's make sure that you're not at the click disadvantage. Yeah, that's the recommendation we have. But this multi-CSS strategies that you have uh third party CSS, uh CSS A, B, C, D, that's not recommendable for one major reason, because you are splitting your data set. Exactly.

SPEAKER_02

Like it's neutral at best, this strategy. I think there are very few cases where it's advanced genuinely advantageous. It's neutral at best, and it's potentially a disadvantage because yeah, you're splitting your data. Sitting splitting your data, and we're in the year 2026. You should not split your data. You must not split your data.

SPEAKER_01

Or at least you shouldn't split it to a level where it's disadvantageous.

SPEAKER_02

Every time that you split your your data, there needs to be a clear reason behind it. Why? Yeah. And I don't think that multi-cSS is that reason.

SPEAKER_01

All right. Uh man, we were quite clear

Myth #3: Are you bidding against yourself with multiple CSS?

SPEAKER_01

on that. Yes. But there's another thing. Sorry to come. Yeah, I don't I don't that don't let you go to the next topic. Well I think it's a great segue to the next topic.

SPEAKER_02

Yeah. Well, hold it. Yeah. Or do you because it's it it arises out of this. One thing that CSS because CSS is like to pursue the multi-css strategy, um there was another myth in the market there, or there was a concern. Will I, if I'm advertising through multiple CSSs, will I bid against myself? Against myself. And um, you know, I believe that this the C I don't know what happened behind the scenes here. Um, I wasn't one of the CSSs lobbying, but I believed that CSS has lobbied Google to make some very clear statements here about that because they like the multi CSS strategy. Um I'm making enemies, Chris.

SPEAKER_01

Shit. I will pretend. Thank you. And I look very dangerous with my shirt. But it's not just the shirt, mate. It's all the uh thing. Oh God. All right. Yes. I will do my best to protect you from some mad uh CSS uh CEOs. Yeah, exactly.

SPEAKER_02

Or Googlers, who knows? I I speak truth to power, man. So um so Google went out and has explicitly made this statement. They have a support page for CSS where they're they explicitly address this. They even have a video I found on YouTube where this Google person looks like they're held at gunpoint and they're like, no, you don't have to worry. And but what they say is factual, but um it really looks like hostage held video. But anyhow, so the point is um no, there is no bidding disadvantage in doing multi-css. You don't have to worry about that, in all fairness. Um Google specifies here that you will not second price yourself. And what that means, uh the way the Google auction works, just real quick if you're not familiar with it. Um should we do weird math, Chris, or should we do normal people math?

SPEAKER_01

No, I I did I did the weird part with the 70. You're asking me 20% of 70. Yes, man. I I didn't want to shock you. Let's go with man.

SPEAKER_02

I use I use AI to think now. I can't do math. You have it in front of you. You could have used it. Let's use it, use one euro. All right. So imagine um that you have the first two bids or the highest bids in a shopping auction with two different, like CSS A bids a euro. Yes. Um, CSS B bids 75 cents. Okay, and then the next competitor is at uh you know 50 cents or whatever. So the concern would be that that if you second price yourself, CSS B would pay, or rather, yeah, CSS A, who won, would pay one cent more than CSS B. So they would pay 76 cents. And you'd have an artificially high bid because actually the nearest external bid was 50 cents. That won't happen. You'll only pay 51 cents. You'll pay more than the next competitor. Competitor. Assuming that your accounts are market equivalent, there's this is very important.

SPEAKER_03

Yeah.

SPEAKER_01

Uh so that there's this one cent incrementality rule. Yes. Um, which by the

The bigger lesson: PMax vs Standard Shopping ad rank

SPEAKER_01

way makes sense. And that this is factually true. Yeah. So there's no bidding against each other threats by having a multiple CSS strategy.

SPEAKER_02

And now I want to switch gears and take this and apply it to somewhere else. Yeah. To everyone who's not in Europe and didn't care about anything we just said.

SPEAKER_01

Absolutely. And uh, we have had a podcast about this. Um, about I mean, the ad rank, by the way, I still believe that the ad rank system is the the one biggest reason why Google has become the most dominant online advertising company in the world. Sure. Or in general, I mean, in general, the most dominating company in the world, because the ad rank made sure that it's not just the CPC which decides whether you are ranked first, second, third. Yes. Because there was this additional layer of let's call it the ad quality in general, right? And this created this win-win-win. I got the good result as a as a searcher. The company was forced to create good ad content, but they could win even with less budget. And Google had the greatest product of all.

SPEAKER_02

Yeah, absolutely.

SPEAKER_01

And there is now a new layer to it, or a new, not layer, but a new new framing around it. And maybe you can elaborate it because it seems like the ad rank, as we knew it, is more centered around the CPC than ever.

SPEAKER_02

Well, it is this correct to say it yes, and uh yes and no. It depends on the exact context. And where it it's very where where that's very much the case is if we're talking about because the problem is that Google is creating multiple technologies that are doing very similar work and they offer multiple paths into the same auctions from multiple campaign types. And nowhere is this clearer or more present than PMAX and shopping. Exactly. Because a large majority of your PMAX clicks and costs are going to be shopping based. And um to date, there is very little difference between a shopping ad served by a PMAX and a shopping ad served by standard shopping. That will change a bit, but it's another topic. Um so you know, we got confirmation about this from Ginny Marvin a ways back because the question was like, all right, what are the ad quality factors and stuff like that? If you have a shopping ad from PMAX and from and from standard shopping, they're targeting the same product, same landing page, same landing page, same feed assets, the product title will be the same. So the ad will be the same. Yes. Like, what on earth is supposed to determine the ad rank besides the bid? Exactly. And Google confirmed that the bid is the differentiating factor here.

SPEAKER_01

And um by the way, this is a big statement because this leads to somewhere.

SPEAKER_02

Well, yeah, and they and then they immediately follow up and say, but you will never self-compete against yourself. And it's true. You will not second price yourself. Because what I was always trying to get is what does that mean? Are we talking about the same thing here? Because okay, and now we got this, we found this documentation. You will not second price yourself. That's the that's just the statement that I needed to understand what they're talking about. But I still don't think that that prevents bid escalation.

SPEAKER_01

Yes, because it's a systemic issue, I believe. Yes. I'm not that much technically involved uh as you are. But man, let's look at standard shopping and P-Max because this is the perfect

Does running PMax + Shopping inflate your CPCs? (the data)

SPEAKER_01

example. Very simple, and I'm talking about the shopping part of PMAX, very similar in what they do. I have these two campaign types uh in parallel. By the way, there were times Google was pushing his hybrid setup massively. This has changed a bit. Maybe we can talk about that in a minute. However, I have these two campaign types. I have my budget goals and my rulers goals. What these two campaign types are doing is uh to fulfill my rulers and budget gate aims, right? Our goals. If one campaign is eating into the other campaign, which is factually true, because it it's uh mostly either or, yeah, what will the other campaign try to do? It will try to uh still uh apply to the goals I set, especially my budget goals. So it it it will do something to to get this exposure, to get to get towards the goals I set. And this is where I'm I'm like this this has to lead to some CPC inflation because the CPC is the only thing to tell the Google system, hey, yeah, I'm the campaign who should be served.

SPEAKER_02

Yeah, and is it is it too simple of a view? No, I mean I think particularly if you follow some of the best practices that Google, or at least what Google says, uh like having looser return on ad spend targets, they're building whole new technology around the complex marketing exploration. Okay, yeah, and making sure you're not limited by budget, there are changes, there's really they're focusing on these themes a lot right now, um, because there's there's big changes coming in both of those areas. But um, you know, I think also the looser your constraints are, the more problematic this is. But because what happens? Like, okay, in this scenario where imagine your shopping campaign and your PMAX campaign are the first and second bid, you're not gonna second price yourself. That's fair. That's great. But how often does that happen? You know, uh you then your bids were already high. Um the reality is like imagine that your PMAX campaign is coming in first and your shopping campaign is coming in like third, fourth, it doesn't matter. Um your PMAX campaign like is always gonna win, or whichever one has a higher bid, it's just going to lead. And you can argue that that's a good thing, that you're getting higher, like you're getting the top position or a stronger position more often, and that that's positive. But I would contend, like I've actually for shopping, I've never been a believer that being in the first position is particularly good. Because yes, uh we read from left to right, at least in our reading system, it's different, but we read from left to right and stuff like that. But I don't think that people perceive shopping ad units that way. I think they tend to look as much like I think it's great to be in the third or fourth position. You're in the middle of the screen. Yeah, you're you're in a very central spot. And I I just I I have the belief that, and I have some data as well, um, that although you might not literally compete against yourself, you're still at a an account level, you're going to be escalating your bid because your higher bids will always be preferred. Can you uh can we pull up this this this this this chart?

SPEAKER_01

Yeah, I have two two things here to show. Mike, in in the meantime, while you're looking up uh for the chart, um maybe it's a stupid question, but I I I dare to to ask it anyway. You're not second pricing yourself or bidding yourself, meaning that even let's say I my my standard shopping campaign has a bit of one euro, my my my P-Mex shopping campaign has a bit of fifty cents. This will lead to and I'm in one first and second place. So this would lead that I'm only bidding 51 cents, uh right on the standard shopping campaign. Um what if for whatever reason the the campaign with with the lower bid uh uh wants to be in the first place? So how because I I can't basically I I can't force my campaign to always go for the second, third, or fourth. Then the new benchmark uh CPC is 51 cents. Uh could this just lead to a situation where my PMEX campaign wants to be in the first place because the ROAS dictates it, the budget, and okay, let's go for 52 cents. So it's not this this complete escalation, but this incremental upwards trend.

SPEAKER_02

Yeah, yeah.

SPEAKER_01

You know what I mean? Because I I have no I have no control over should it be the second, third, or fourth place. So what I mean is even if in in this perfect world where I'm in first and second place, couldn't even that lead to this slight incremental CPC increase. I mean yeah, it's complicated. And I don't I know it's super complicated.

SPEAKER_02

I'm not I'm not a Google engineer, but we we don't we don't get clear answers here. That's what I mean. I I I think I think it is possible that you're because the algorithm is always learning based on the performance and what's going on. And I think that you could end up potentially if you have these campaigns that are constantly competing against each other or cannibalizing each other, I think that could change what the algorithm learns. And and I also think that um, you know, Google, Google's smart bidding works, it's very good like at finding the right value per click and bidding recognition. But there there's there just becomes the question, like all right, it identified a valuable click, but was it necessary that I bid that much for it? Or could I have could I have bid less and still gotten that or still had a shot at that?

SPEAKER_01

Um this to me and still got a shot at it, it has to include my own second shopping campaign. Yeah, yeah. Like or or are these campaigns talking to each other? Like but and this is where where I'm I'm I'm I'm I became a big Google fan, but this is where the transference is missing because if the bit is the one discriminator, yeah.

SPEAKER_02

I I mean it's anyway, I think we all know that it's worse practice to advertise at least to yeah, to advertise the same exact products in PMAX and shopping, as certainly if you have similar targets. If you highly differentiate the targets or the budgets or something like that, then it could make sense. Then it could possibly make sense. But if you have similar targets, you're gonna get in this situation where it's ambiguous and maybe you could have gotten the same for cheaper. So what I what I did here, um, in the first place, I looked at um basically accounts that have shopping only, hybrid with PMAX or PMAX only, and um what happens with CPCs in these contexts? So what I see when I look at shopping only, the CPC range, and you know, this is just a trimmed range. Oh, yeah. There's a huge, vast range, but it's between like uh 15 cents and 40 cents in this interquartile range. Um and shopping campaigns, as soon as they're in a hybrid environment with PMAX, the floor doesn't change that much. It also lifts a bit, but the ceiling goes up to almost 60 cents. So it jumps from 40 cents to like 60 cents. And that merits investigation. Yes. When we look at PMAX only, PMAX has a range that is just higher than shopping. And we can get in, we'll get into that in a second because there are other things going on in PMAX. Makes sense. Um, but PMAX has a higher range, and so shopping CPCs, when they are in a setting with PMAX, they start to look more like PMAX CPCs. Yeah, and interestingly, what happens to PMAX CPCs? They start to look, they get a touch better actually than PMAX only, um, but they're still higher than shopping only. And you know, now to the next question is why are PMAX CPCs higher in the first place? And I wanted to disentangle this a bit. So I have the next data point here. I look at shopping CPCs, PMAX CPCs, and then shopping inside of PMAX. Um, and I can't tell you the reason why. I don't know, but it could just be, you know, maybe shopping has a low anchor on it from a lot of people using manual bids, using max CPCs. There's something that's dragging it down. But shopping inside of PMAX is indeed more expensive than shopping by itself. And again, I don't want to draw this, could also be people systemically for whatever reason set different ROAS targets for shopping than PMAX. But for whatever reason, shopping inside of PMAX tends to cost more. Um so that but the concern that I have is in any case, in the hybrid environments, you are it looks like you do in fact increase your CPCs.

SPEAKER_01

And again, theoretically, although you can't second bid yourself, theoretically it makes perfect sense because the discriminator is the CPC. And I I fully assume that each campaign on itself has an egoistic point of view to get the click. Yeah. And in the worst case, when

Google’s new Channel Diagnostics report — and the verdict on hybrid setups

SPEAKER_01

I have literally the same product catalog run by shopping PMAX and standard shopping, yeah, then there is this competitive situation.

SPEAKER_02

Well, and I I think that although Google will never say out loud that this is happening, I think that they have tacitly or silently admitted it because of two things. But what do you want to say? No, no, go ahead. Go ahead. Well, first off, they were pushing hybrid setups for a while. Don't do it anymore. And now they're not doing that, from what I understand.

SPEAKER_01

Um or at least let's say they're a bit more defensive about it.

SPEAKER_02

Yes. But I from what I understand, they are backing away from the go with hybrid PMAX shopping setups. I think that strategy was useful for them a period of time. Coincidentally, we saw CPCs go up at a market level in that period of time. Um, but now they're walking away from that. And they're there's a new insight coming. Yeah, there's a new insight. So there's the channel performance report for PMAX, which lets you see your network reporting there. Um and I have many criticism, criticisms of that it's improved, but they're gonna be adding something new down the bottom, I guess. It's gonna be called channel diagnostics. And it's going to specifically help you understand your product overlap between PMAX and shopping. Why? How would that have diagnostic value if there's no problem? Well, obviously there's a problem.

SPEAKER_01

Yes. And the problem is rooted in and the data we have proves it, but different CPCs. The campaign types just cannibalize each other, and you can't tell me they don't. Yeah. And by the way, it the cannibalization wouldn't even be a problem if if we're talking about uh equal CPCs, yeah. Because I could care less, right? It's a standard shopping head on the SERP. Yeah, I mean, yeah, but it seems like that the CPCs are not equal. And then I'm wondering, hold on. So this is and by the way, I I fully understand that Google is is not 100% clear about it, although they try. Because Gene Marvin, shout out to her, but she she told us, no, that's not going that's not what what's going to happen. But for me, the explanation why it's not happening, that CPC inflation is missing.

SPEAKER_02

Yes, like I I understand her point and the documentation that's available. You will not compete head to head against yourself in that sense. I got it, but I still I believe, and to me, the data supports that you will increase the temperature at the account level.

SPEAKER_01

You're gonna turn up the heat. And even if it's just incrementally, uh, it's you know, depending on the volume you you you have to to manage here, it might make a difference. My I think my final point, which which I really believe in, is um the hybrid setup. We have been talking about this way before Google basically came up with. Yeah, yeah. It makes sense, but you have to be careful about it. You have to have a strategy behind it. Yes. That's I think this is very important.

SPEAKER_02

We have always talked about a separation of church and state. It's basically you know, even before yeah, but having different products or having different strategies, very different strategies.

SPEAKER_01

And um again, and we're open to talk with anyone who wants to challenge us on that. Um, but it's an an interesting topic. Again, maybe we have to keep an eye on it. We will for sure, and we'll have more talks probably with Google. Yeah, but we we we don't want to be uh I don't know, shitting on Google here by any means. It's just no it's it's not logical why it should why there shouldn't be this increased temperature to quote you. Not the first time you quoted me, Chris, but thanks again. Actually, true, man. Do you quote me sometimes? Yeah. Okay, cool. Definitely then I'm fine with it. I enjoyed it, man.

SPEAKER_02

As always. Likewise. Thank you, Chris.

SPEAKER_01

Thank you, sir.

SPEAKER_02

Thanks everyone for listening. This has been another episode of Growing E-Commerce. As always, you can find us at smarter-ecommerce.com. And if you like this episode, please give us a shout out on social media wherever you are. Leave us a review on your podcast platform of choice, subscribe on YouTube. You know, do the stuff. Thank you very much. We're off to the summer party now. Yeah. Let's go. Let's do it.