Two Years Of Performance Max: How Black Box Marketing Technology Is Holding The Industry Back

August 16, 2023
Posted by
TrafficGuard

TrafficGuard CEO, Mathew Ratty, gives his thoughts on the issues surrounding black box algorithms, in the face of recent criticisms surrounding the opaqueness of Google’s Performance Max.

Black box algorithms are the dominant force across advertising ecosystems; closed off computational processes making automated decisions about ad placements based on vast amounts of data and complex machine learning models. While these algorithms may appear efficient on the surface they rarely serve the best interests of marketers, and are often intentionally opaque to remove decision-making. 

But is that really what marketers want?

The lack of transparency in surrounding ad placements and the granular details of channel conversion metrics leaves marketers in the dark about their campaigns performance and ability to optimise. Their ability to understand their target audience, assess the success of their strategies, and make data-driven decisions is stagnated when black box algorithms refuse to divulge data.

With a monopoly over the global advertising ecosystem, Google and Meta control the ad setup, distribution and measurement of the world’s paid advertising. Marketers have limited options outside of these platforms, reducing competition and potentially leading to inflated costs for advertising services. This asymmetry of power has left advertisers at a significant disadvantage; and with the news that $100 billion USD worth of advertising spend per year is stolen by sources of invalid traffic, it’s more important than ever for advertisers to have complete visibility of their data. 

Marketers are beholden to the decisions of algorithms they do not fully understand or control, making it a huge challenge to align their marketing efforts with the best interests of their clients or businesses. While big players refuse to divulge algorithmic decisions, we can never have a completely equitable and efficient advertising ecosystem.

The Performance Max problem: Large potential, big problems

Google’s Performance Max, rapidly approaching its second anniversary, is not immune to these accusations. This opacity surrounding Performance Max's bidding decisions has created challenges for marketers in understanding the rationale behind specific bids and their impact on campaigns, a recurring sentiment voiced by our clients who leverage this platform for their digital marketing endeavours.

The campaign's organisational structure revolves around Asset Groups, similar to Ad groups, where marketers can group assets based on brands or item categories. However, a major issue arises when it comes to data reporting. Google currently provides data only at the campaign level, making it impossible to access data at the individual Asset Group level. This limitation hinders marketers from accurately assessing the performance of different Asset Groups, identifying top-performing ones, or addressing underperforming ones.

Tracking the sources of ad clicks becomes problematic, leaving marketers without a clear picture of which elements, such as display, search, video, or shopping ads, are driving clicks and subsequent conversions. While Google's AI optimisation may be at work, marketers with domain expertise may spot patterns faster and gain deeper insights into specific actions.

The absence of data granularity also impacts bid performance based on keywords or audiences. Without access to sufficient data, it becomes challenging to distinguish which clicks originate from which audience, hindering precise audience targeting and optimisation efforts.

Genuine Insights Derived from Our Alpha PMAX Product Trial

While Google continues to introduce new reporting features gradually, the underlying challenge persists: obtaining comprehensive insights for each campaign or asset combination remains intricate. This includes effectively managing invalid traffic within campaign media spend.

This is why we have built a new Performance Max reporting suite, which will be formally launched in September. Through its capabilities, we initiated a thorough analysis of our clients search conversion performance on our Alpha program, our suspicion regarding potential inflation of PMAX campaigns through branded search conversions was substantiated by our insights.

Following this revelation, our strategic approach involved the exclusion of branded search terms from their Performance Max campaigns, achieved through Brand exclusions. The results were striking: our clients Brand Search performance rebounded significantly, attaining levels comparable to those prior to PMAX integration. 

In a parallel context, during the initial phase of our PMAX solution testing, spanning from January to July, TrafficGuard effectively mitigated invalid traffic for one of our Alpha program clients. This achievement led to a substantial reduction of -7.5%. The lion's share of this decline was attributed to the successful mitigation of bot-generated traffic. Refer to the accompanying screenshot below for visual reference.

Figure 1

Note: Bot traffic, non-incremental engagement, and non-genuine engagement within this Performance Max campaign fall dramatically after TrafficGuard’s invalid traffic prevention mode is switched on.

What does this mean for marketers?

The most concerning aspect of black box solutions like Performance Max is the potential for someone else to arbitrage with marketers' advertising dollars. Without insight into the algorithms' decision-making, marketers may inadvertently fund placements in poorly performing and less desirable channels for digital business strategy. The lack of control and transparency can expose marketers to financial risks and diminish the return on their advertising investments.

Performance Max, like other black box programmatic programs, may become whirlpools that drain marketing budgets rapidly. The absence of detailed reporting at the individual asset group level and limited data granularity makes it difficult for marketers to assess which strategies are truly effective and which ones are underperforming. This lack of visibility can lead to budget wastage and ineffectual campaigns.

This is exactly why we have incorporated advanced visibility for our clients into our PMAX reporting suite, providing a comprehensive channel breakdown of spend both in aggregate and as a percentage, along with detailed conversion performance data for each channel. Giving the power back to those in charge of their companies media spend. 

TrafficGuard’s Performance Max dashboard demonstrates which campaigns are receiving the most invalid traffic, and the exact amounts this is costing advertisers. 

The way forward

Marketers need to question the efficacy of black box solutions like Performance Max and the potential risks they pose. To safeguard their investments and ensure maximum impact, marketers should prioritise platforms that offer transparency, data accessibility, and control over their advertising strategies. By embracing more transparent and accountable solutions, marketers can steer clear of the pitfalls associated with black box algorithms and make informed decisions that lead to more successful campaigns.

Marketers can also explore tools which bolt on to black box solutions and open up insights not usually provided. TrafficGuard’s solution for Performance Max includes a reporting suite which goes well beyond the data provided by Google—providing a dashboard for unique channel breakdown and volumes of invalid traffic across Performance Max channels. It also includes an audience targeting solution, which enables marketers to upload dynamic audience lists for Performance Max to target.

The onus is on the industry’s big players to create a more equitable and efficient advertising ecosystem by increasing algorithmic transparency. But until they are driven to make those changes, businesses must explore alternative means to wring transparency from their advertising networks to optimise their marketing efforts accordingly.

….

For those seeking to experience the transformative capabilities of the TrafficGuard Performance Max solution firsthand, an invitation to initiate a trial awaits. You can contact us here.

Embark on a journey into the future of digital advertising with TrafficGuard today.

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