How to Run a Performance Max Campaign That Actually Works in 2025
May 28, 2025Launching another Performance Max campaign without understanding how it works is one of the fastest ways to waste your Google Ads budget.
If you’re still relying on outdated advice—or blindly following Google’s recommendations—you’re not running ads, you’re losing money.
In this guide, we’ll break down how Performance Max campaigns actually function in 2025, based on real data from millions of dollars in ad spend. Whether you're managing eCommerce or lead generation campaigns, this article will help you avoid common pitfalls, eliminate guesswork, and build a PMAX strategy that drives measurable results.
Why Most Advertisers Struggle With Performance Max Campaigns
The number one reason most Google Ads accounts underperform is due to a poor Performance Max strategy.
After auditing hundreds of accounts, one pattern is clear: successful advertisers approach PMAX with structure and intent. Underperforming accounts? They usually launched a PMAX campaign just because it was “recommended.”
When asked why they’re using Performance Max, many advertisers respond with:
“My Google rep or agency suggested it.”
That is not a strategy. That is how budget gets burned.
Performance Max is not inherently flawed—it is a powerful tool. But it only works when used correctly. The only exceptions are for service or lead generation businesses in highly specialized, low-volume niches, where the cost of testing is too high to justify the return.
Understanding How Performance Max Works in 2025
Performance Max (PMAX) is not just a Smart Shopping upgrade. It’s a fully AI-driven campaign that spans across all Google advertising channels, including:
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Google Search
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YouTube
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Google Display Network
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Gmail
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Discover
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Google Maps
While PMAX offers extensive reach, it relies almost entirely on your conversion data to function properly.
👉Google Ads Major Updates .... Performance Max
PMAX Requires Conversion-Based Bidding
Performance Max campaigns only support:
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Maximize Conversions
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Maximize Conversion Value
Manual CPC and Max Clicks are not available. If your account lacks strong conversion data, PMAX will test every variable—audiences, placements, keywords, creative assets—at your expense.
Minimum Requirements for Launching a PMAX Campaign
To give Performance Max a chance to succeed, your account must meet these baseline criteria:
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At least 30 conversions in the past 30 days
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One or more campaigns already using a conversion-based bidding strategy
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A daily budget that supports a minimum of one conversion per day
Without this, PMAX will lack the signals it needs to optimize. You’ll end up spending money while Google’s algorithm blindly experiments.
For enterprise brands with large testing budgets, this might be acceptable. But for small and mid-sized businesses, it’s an expensive mistake.
How Performance Max Targets Users
Unlike traditional Google Ads campaigns that rely on keywords or product feeds, PMAX uses your conversion data to identify users who are most likely to convert.
What Are Signals in PMAX?
During campaign setup, advertisers can add signals such as:
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Interest-based audiences
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Search themes
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First-party data (e.g., customer lists or retargeting audiences)
These are recommendations, not targeting rules. Google will use them to guide its AI—but it will ultimately prioritize users it believes are most likely to convert, even outside the audiences you’ve suggested.
Why Campaign Structure Matters in PMAX
One of the most common Performance Max mistakes is poor campaign structure.
You need to think strategically about:
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How you structure PMAX campaigns internally
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How PMAX fits into your broader Google Ads account strategy
Internal Campaign Structure
Build asset groups around product categories or tightly themed keyword clusters—not audiences. Google does not respect audience targeting in the same way it does structure and content.
For example, asset groups built around “retargeting lists” or “homeowners” often underperform because Google doesn’t strictly honor those signals. Instead, structure around:
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Specific product types
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Service categories
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High-performing keyword themes
This allows the AI to scale conversions where performance is already strong, and gives you clearer reporting and optimization opportunities.
PMAX Within the Full Account Funnel
PMAX should complement—not conflict with—your other campaigns. Define where PMAX sits in your funnel. For instance, many advertisers use:
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Search and Shopping to discover what works
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Performance Max to scale those results
You should also exclude branded and bottom-of-funnel traffic from PMAX and target those users with dedicated Search campaigns instead.
Stay tuned for a full video guide on the Bottom-Up Funnel approach for PMAX campaign management.
Action Plan: How to Optimize Performance Max Campaigns
If you’re serious about scaling with Performance Max in 2025, here’s what you need to do next:
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Audit your conversion volume. You need 30+ per month before launching.
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Organize campaigns by product or service theme, not audience.
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Use conversion-focused landing pages and ad creatives to feed PMAX accurate signals.
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Exclude branded traffic from PMAX, handle those via Search.
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Use Search and Shopping as test beds, then scale proven segments with PMAX.