Understanding the Fundamentals
Performance Max: The All-Encompassing Approach
Performance Max campaigns represent Google's most comprehensive automated solution, leveraging machine learning to optimise bids across all Google properties simultaneously. These campaigns use Target ROAS or Maximise Conversion Value bidding strategies, allowing Google's algorithms to adjust bids in real-time based on the likelihood of conversion.
The beauty of Performance Max lies in its holistic approach. Rather than siloing your efforts across Search, Shopping, Display, and YouTube, it creates a unified bidding strategy that considers cross-channel user behaviour and attribution.
Demand Gen: Precision Targeting Meets Smart Bidding
Demand Gen campaigns focus on reaching audiences across YouTube, Discover, and Gmail with visually rich, engaging creatives. These campaigns typically employ Target CPA (Cost Per Acquisition) or Maximise Conversions bidding strategies, making them particularly effective for businesses looking to drive awareness whilst maintaining cost efficiency.
What sets Demand Gen apart is its ability to target users earlier in the purchase journey, using lookalike audiences and in-market segments to find potential customers who haven't yet engaged with your brand.
Bidding Strategy Breakdown: Which Works Best for eCommerce?
For Established eCommerce Brands with Robust Data
Winner: Performance Max with Target ROAS
If your eCommerce business has been running Google Ads for several months and has accumulated substantial conversion data (ideally 30+ conversions per month), Performance Max with Target ROAS bidding often delivers superior results.
Why it works:
- Google's machine learning has sufficient data to make informed bidding decisions
- Cross-channel optimisation captures the full customer journey
- Automatic bid adjustments account for seasonal trends and shopping behaviour patterns
- Shopping campaigns integration maximises product visibility
Recommended setup: Start with a Target ROAS 10-20% lower than your current performance to allow the algorithm room to learn and scale.
For Growing eCommerce Businesses with Limited Data
Winner: Demand Gen with Target CPA
Newer eCommerce businesses or those with limited conversion history often find better success with Demand Gen campaigns using Target CPA bidding.
Why it works:
- Less reliant on extensive historical data
- Focuses on cost-efficient customer acquisition
- Builds brand awareness whilst driving conversions
- More predictable cost structure for budget planning
Recommended setup: Set your Target CPA at 80% of your average order value to maintain profitability whilst allowing for campaign learning.
For High-Value, Low-Volume Products
Winner: Performance Max with Maximise Conversion Value
Luxury goods, high-ticket items, and businesses with significant variations in product values benefit most from Performance Max using Maximise Conversion Value bidding.
Why it works:
- Optimises for revenue rather than conversion volume
- Accounts for product value differences in bidding decisions
- Captures high-intent customers across multiple touchpoints
- Maximises the value of limited conversion opportunities
Hybrid Approach: The Best of Both Worlds
Many successful eCommerce advertisers don't choose between Performance Max and Demand Gen—they run both strategically.
Performance Max handles bottom-funnel, high-intent traffic with Target ROAS bidding
Demand Gen manages top-funnel awareness and prospecting with Target CPA bidding
This approach allows you to capture demand at different stages of the customer journey whilst maintaining distinct bidding strategies optimised for each campaign's objectives.
Key Considerations for Implementation
Budget Allocation
- Allocate 60-70% of the budget to Performance Max for conversion-focused objectives
- Reserve 30-40% for Demand Gen to maintain a healthy pipeline of potential customers
Audience Exclusions
- Exclude existing customers from Demand Gen campaigns to avoid cannibalisation
- Use first-party data to create custom audiences for more precise targeting
Creative Strategy
- Performance Max requires diverse asset types to maximise reach
- Demand Gen campaigns perform best with video-first creative approaches
Making the Final Decision
The ideal bidding strategy for your eCommerce business ultimately depends on your specific circumstances:
- Data maturity: How long have you been collecting conversion data?
- Business objectives: Are you prioritising growth, profitability, or brand awareness?
- Product characteristics: High-volume/low-value vs. high-value/low-volume?
- Competition levels: How saturated is your market?
Conclusion
There's no one-size-fits-all answer to the Performance Max versus Demand Gen debate. The most successful eCommerce advertisers test both approaches, measure results rigorously, and adjust their strategies based on performance data rather than assumptions.
Start with the strategy that aligns with your current data availability and business objectives, but don't be afraid to experiment. Google's automated bidding strategies are powerful tools, but they're only as effective as the strategy behind them.
Remember that the best bidding strategy is the one that consistently delivers your target ROAS whilst scaling your business sustainably. Whether that's through Performance Max's comprehensive approach or Demand Gen's targeted precision, success lies in understanding your customers and optimising accordingly.