Segment Performance Max and Shopping campaigns

When setting up Performance Max or Shopping campaigns, one of the most critical aspects of success is how you segment your campaigns. Proper segmentation helps align your ad strategies with specific business goals, target the right audiences, and maximize campaign performance. Whether you’re working with a small business or a large enterprise, the way you structure your campaigns can have a significant impact on your return on investment (ROI). In this article, we’ll explore seven segmentation techniques that can help you get the most out of your advertising campaigns.

1. One Campaign Fits All

For small accounts with limited conversion data, the “one campaign fits all” approach is a common starting point. This method works best for businesses that don’t generate enough conversions to justify segmentation. A rule of thumb is to aim for around 50 conversions every 30 days to maintain Return on Ad Spend (ROAS) and Cost per Acquisition (CPA) targets.

This method is also suitable for medium-sized accounts with high-end products or industries with high average order values (AOV), such as SaaS or insurance. In these cases, splitting the campaign into smaller segments may not be necessary. However, as conversion numbers decrease to around 10-20 per month, consolidating campaigns into one can actually improve overall performance.

Advantages:

• A single campaign aggregates all available data, giving more power to Google’s algorithms to optimize ads.
• Works well for smaller product catalogs or accounts with limited pricing variance.

Disadvantages:

• Lack of product differentiation leads to potential wasted spend on poorly performing products.
• Limited control over prioritizing high-performing products.

2. Segment by Best Sellers

If your main goal is to generate the highest revenue, segmenting your campaign based on best-selling products is a solid strategy. This approach involves prioritizing products with a proven sales history and reducing spend on underperforming products. Best seller segmentation can also be beneficial when promotional periods align with seasonal demand, giving you the flexibility to push high-demand products more effectively.

Advantages:

• Enables more control over pushing successful products.
• Efficiently integrates promotional products with tailored assets.
• Easy to implement with custom labels in Google Ads..

Disadvantages:

• Heavily reliant on past data, which may not predict future performance.
• May not be suitable for businesses with rapidly changing prices or promotions.

3. Segment by Product Attributes

Segmenting by product attributes, such as brand or product category, is one of the simplest ways to structure your campaigns. This method is especially useful for businesses with large product catalogs, where managing individual SKUs is impractical. By grouping products based on shared attributes, you can better allocate budgets and optimize campaigns based on performance trends within specific categories or brands.

Advantages:

• Quick and easy to set up using existing feed data.
• Simplifies the management of large product catalogs.
• Seamless integration with campaign assets such as promotion extensions and snippets.

Disadvantages:

• SKU-level performance can vary greatly within each attribute group, leading to inefficient spending.
• Segmentation is often arbitrary and may not be closely aligned with business goals.

4. Segment by Location

For businesses targeting different regions or countries, segmenting by location is essential. This strategy allows for better customization of ads based on regional preferences, currency differences, and localized landing pages. Additionally, segmenting by location can help optimize shop visits for brick-and-mortar stores.

Advantages:

• Allows for regional customization and optimization of user journeys.
• Simplifies budget allocation across different locations.
• Effective for exploring new market opportunities.

Disadvantages:

• Managing multiple regional feeds can be time-consuming and complex.
• Limited ability to further segment by product performance or profitability due to already fragmented conversion data.

5. Segment by Profit

Segmenting by profitability allows businesses to focus on their most important metric—profit, rather than revenue. This approach is growing in popularity as more businesses integrate profitability data into their ad strategies. Using tools like Profit Metrics or Google’s profit optimizer (currently in beta), businesses can allocate more budget to high-margin products, increasing overall profitability.

Advantages:

• Aligns ad strategy with business goals, rather than just marketing KPIs.
• Creates opportunities to scale performance by optimizing for profit.
• Builds greater trust with clients by focusing on their true business objectives.

Disadvantages:

• Some businesses may be reluctant to share profitability data.
• Accurate and consistent cost of goods sold (COGS) data is required to make this strategy effective.
• Shifting focus from ROAS to profit may negatively impact short-term revenue.

6. Segment by User

Segmenting by user type is a powerful strategy for businesses that want to grow their customer base. Performance Max has been criticized for focusing heavily on returning users, making it challenging to measure the true incremental impact of ads. By creating separate campaigns for new and returning users, businesses can optimize for customer acquisition while still driving revenue from repeat customers.

Advantages:

• Allows for precise targeting of new and returning customers with tailored messaging and budgets.
• Unlocks product insights that can be used across other marketing channels, such as email.
• Helps measure the long-term value of new customers.

Disadvantages:

• Difficult to accurately distinguish new users from returning ones, leading to potential inaccuracies in campaign reporting.
• Over-reliance on new customer acquisition can hurt revenue if too much focus is placed on growing the customer base instead of nurturing existing customers.

7. Segment with a Product Matrix

A product matrix approach is ideal for businesses with multiple advertising priorities, such as improving gross profit, increasing average order value (AOV), and driving new and returning customers. This advanced segmentation method requires a deep analysis of product performance and a comprehensive understanding of the business’s goals.

Advantages:

• Helps achieve multiple advertising priorities simultaneously.
• Reduces wasted spend by focusing on high-priority products.
• Flexible and adaptable to changing market conditions.

Disadvantages:

• Requires extensive collaboration with the client to ensure all data points and business objectives are incorporated.
• May not be suitable for businesses with large and diverse product catalogs.

Conclusion: Optimize Performance Max and Shopping Campaigns with Strategic Segmentation

Ultimately, the effectiveness of any segmentation strategy comes down to the availability of conversion and product data, as well as clear communication between the business and the account manager. The right segmentation strategy should align closely with your business objectives, ensuring that your campaigns are optimized for maximum performance. By exploring these seven segmentation methods, you can build a campaign structure that not only drives revenue but also aligns with your broader business goals.

Implement these strategies thoughtfully, and you’ll find that segmentation can be a powerful tool in improving both your ad performance and your bottom line.