When it comes to Google Ads, choosing the right campaign type for your e-commerce business is both an art and a science.
With recent changes introduced by Google, understanding how different campaign types interact—and how to leverage them effectively—has never been more important.
Two of the most discussed campaign types, Google Shopping and Performance Max (PMAX), offer distinct advantages, levels of control, and data visibility.
In this article, we’ll explain the key differences between Google Shopping and Performance Max campaigns, the latest 2025 trends, Google’s 2024 policy updates on how they compete, and strategies for testing and optimizing them in your advertising mix.
What Are Google Shopping and Performance Max Campaigns?
Google Shopping Campaigns
Google Shopping campaigns are designed specifically to promote online products. They rely on your product feed—pulled from your Google Merchant Center—to showcase product images, prices, and titles directly in search results, on the Shopping tab, and even in Google Images search results.
Traditional Shopping campaigns have long been a staple for e-commerce advertisers who value transparency and granular control over bids, budgeting, and product segmentation.
One of the key benefits of Google Shopping ads is their ability to automatically use keywords from product listings, unlike Google Search ads which rely on keywords selected by advertisers for visibility.
This distinction highlights the unique functionalities and targeting strategies of each ad format, emphasizing the importance of choosing the right one based on the type of products or services being offered.
What are Google Shopping ads?
Google Shopping ads are a powerful tool for e-commerce businesses looking to boost their online sales. These ads appear directly on the Google search engine results page (SERP) and showcase product images, titles, prices, and other relevant information.
This visually appealing format allows shoppers to browse and compare products at a glance, making it easier for them to find exactly what they’re looking for.
Known as product listing ads (PLAs), Google Shopping ads are a popular choice for businesses aiming to increase their visibility and drive more traffic to their online stores.
How Google Shopping Ads Work
Google Shopping ads work by leveraging a combination of your product data and the user’s search query to determine which ads to display. When a user searches for a product on Google, the search engine’s algorithm matches the search query with the product data you’ve submitted through your Google Merchant Center account.
If your product is relevant to the search query, your ad will appear on the SERP alongside other relevant ads.
These ads operate on a cost-per-click (CPC) bidding system, meaning you only pay when a user clicks on your ad. This ensures that your advertising budget is spent on potential customers who have shown interest in your products.
Key Benefits:
- Clear reporting and visibility into which products are performing best.
- Precise bidding strategies at the product or product group level.
- Predictable placements: primarily the Google Shopping tab and standard search results pages.
Drawbacks:
- Limited to product listing ads within Google’s search and shopping properties (no automatic expansion to YouTube, Display, or other channels).
- Requires more manual optimization and management compared to automated campaign types.
Performance Max Campaigns (PMAX):
Performance Max is a campaign type in Google Ads that utilizes machine learning to drive more conversions across all of Google’s owned inventory.
Launched in 2021, Performance Max campaigns can serve ads across Search, Display, YouTube, Gmail, Discover, and Maps. This all-in-one approach is designed to complement keyword-based search campaigns, helping advertisers reach more customers and maximize their return on investment.
While Performance Max has been met with both praise and criticism, its ability to automate and optimize ad placements makes it a valuable tool for businesses looking to streamline their advertising efforts.
How Does Performance Max Work?
Performance Max campaigns represent Google’s next step towards a more automated, all-in-one advertising solution. They allow advertisers to serve ads across the entire Google ecosystem—Search, Display, YouTube, Gmail, Discover, and Shopping—using a single campaign type.
PMAX campaigns tap into Google’s machine learning to optimize placements, creative assets, and bidding strategies, all with relatively limited transparency.
Audience signals are essential tools for optimizing ad campaigns, as they guide Google in identifying potential customers, enabling targeted marketing strategies, and improving overall campaign performance.
One of the key benefits of Performance Max campaigns is the access to various Google Ads channels, which allows for seamless integration with different ad formats and inventory. Utilizing these channels provides automated strategies and the ability to access new formats as they are released.
Key Benefits:
- Access to Google’s full inventory: search, video, display, and more, all from one campaign.
- Automated optimizations aiming to maximize conversions or revenue within given targets (like target ROAS or CPA).
- Potential to find new audiences and placements you might not have considered manually.
Drawbacks:
- Reduced visibility into where your ads appear and which segments drive performance.
- Limited control over individual product-level bids and segmentation.
- A “black box” feel that may frustrate advertisers who want granular insights and hands-on management.
Setting Up Google Shopping Campaigns
Setting up Google Shopping campaigns involves several key steps, including creating a Google Merchant Center account, setting up a product feed, and creating a Google Ads account. Here’s a quick step-by-step to get you started:
Create a Google Merchant Center Account
- Sign Up: Go to the Google Merchant Center website and click on the “Sign up for free” button.
- Enter Business Details: Provide your business name and the country where it’s registered.
- Continue to Merchant Center: Click on “Continue to Merchant Center.”
- Verify Email: Verify your email address and complete the account setup.
Once your Google Merchant Center account is created, you can set up your product feed and start creating your Google Shopping campaigns. This process ensures that your product data is accurately represented and ready to be used in your Google Ads campaigns, helping you reach potential customers more effectively.
Setting up Performance Max Campaigns
Setting up a successful Performance Max campaign requires a balance of setting up a strong set of high-intent audience signals, high-quality and engaging images, video and text assets, and ongoing optimization.
Your audience signals should include a comprehensive mix of your first-party data (including customer lists, website visitors, and previous converters) and custom audiences that you can create based of specific keywords or websites that resonate with your ideal customer.
This data helps Google’s AI better understand and target your ideal customers which will carry similar characteristics as the audience signals you provided.
Measuring Performance Max Success
Conversion tracking and goal setting form the backbone of your campaign’s success. When setting up your Performance Max campaign, it’s crucial to implement proper conversion tracking and choose goals that align with your business objectives, setting the most important ones as primary conversions (i.e. Purchase for ecommerce)
After the initial learning phase, making smart adjustments based on your metrics and KPIs will yield better results.
Your ongoing optimization efforts should include:
- Reviewing asset performance and basic metrics
- Updating creatives and text assets, observing the assets’ performance individually,
- Evaluating audience signals and overall Campaign metrics
- Use negative keywords wisely
- Test different bidding strategies and bids
This approach to managing Performance Max campaigns combines the power of Google’s automation with strategic human oversight, helping you achieve better ROI while maintaining a bit more control over your advertising efforts.
New Trends for 2025:
The role of AI in Google Ads has become increasingly prominent in 2025. Performance Max campaigns, in particular, have benefited from advancements in Google’s AI algorithms. The platform has also improved transparency in Performance Max campaign insights, giving advertisers better visibility into campaign performance and placement data.
These updates aim to provide advertisers with more control while maintaining the benefits of automation.
Recent Changes: How Shopping and PMAX Campaigns Compete
Traditionally, Performance Max tended to take precedence over standard Shopping campaigns when both were running in the same account and targeting the same products. This “priority” led some advertisers to assume that if PMAX was running, standard Shopping wouldn’t get much traction.
However, Google’s changes have leveled the playing field. Now, when the same product is eligible to serve in both a PMAX and a Shopping campaign, the campaign that wins the ad auction is determined by ad rank. Put simply:
- If your Shopping campaign can achieve a higher ad rank for a product, it will serve that product’s ads over your PMAX campaign.
- If the PMAX campaign’s algorithmic bid and quality signals result in a higher ad rank, then PMAX wins the opportunity.
It is important to set appropriate ROAS targets across multiple campaigns to balance aggressive and conservative strategies for optimal performance.
Google’s Ads Liaison clarified on social media that the determining factor often comes down to the effective bid. Since PMAX campaigns use automated bidding strategies (e.g., Target ROAS) and standard Shopping campaigns can use manual or automated bidding, the actual bid comparison isn’t always straightforward.
Still, these changes give advertisers more potential to influence which campaign type serves by adjusting their bidding strategies.
The versatility and effectiveness of a Performance Max campaign lie in its ability to reach potential customers across various Google platforms like Search, YouTube, and Display, utilizing machine learning and AI to optimize ads in real-time.
Key Takeaways:
- Ad Rank Decides the Winner: The campaign with the best effective bid and quality signals gets priority.
- More Influence for Advertisers: If you want a particular campaign type to lead for certain products, adjusting bids and ROAS targets in that campaign can help tilt the scales.
- Testing Remains Important: With these changes, you can (and should) test running both PMAX and standard Shopping simultaneously to see which yields better performance and at what costs.
Scenarios for Using Standard Shopping vs. Performance Max
- If You Value Control and Transparency:
Standard Shopping campaigns are perfect for advertisers who want detailed insights into product-level performance. You can segment products, set manual bids, and analyze results without the complexity of PMAX’s automated approach.
Unlike search ads, which focus on keyword targeting and bidding strategies, Standard Shopping campaigns offer more control over product-specific data and visibility.
- If You Want All-in-One Coverage:
If you’re stretched thin on time or resources, or if you want to simplify management, PMAX can streamline your operations. By using machine learning to handle placements and bidding across channels, PMAX frees you from some of the more granular tasks—albeit at the cost of transparency.
Additionally, local inventory ads are beneficial for brick-and-mortar stores, allowing them to attract nearby customers with messages encouraging immediate pick-up and ensuring accurate in-store inventory listings in Google Ads.
- If You Prefer a Hybrid Approach:
With the recent updates, it can make sense to run both standard Shopping and PMAX simultaneously. For example, use PMAX to discover new audiences and scaling opportunities while standard Shopping focuses on your proven best-sellers and controlled segments.
Over time, analyze performance to see which approach delivers more profitable conversions, then adjust your strategies and budgets accordingly.
The Bottom Line
The interplay between Google Shopping and Performance Max campaigns is more balanced than ever. Standard Shopping campaigns provide precision and transparency, while PMAX offers cross-channel reach and machine learning-driven optimization.
With Google’s recent changes, you now have greater control in determining which campaign type serves your products by leveraging bids and ad rank.
The “best” choice isn’t one-size-fits-all. E-commerce advertisers should consider a testing methodology—trying out both PMAX and Shopping—while closely monitoring performance metrics.
Over time, this data-driven approach will reveal which combination delivers the highest ROI for your unique product catalog and audience.
When it comes to Google Ads, knowledge is power. Understanding how PMAX and Shopping campaigns differ, how they now compete, and how to adjust your strategies accordingly can put your business a step ahead in the never-ending quest for profitable growth online.
