Blog post
How to increase conversions from Performance Max
What is Performance Max?
Performance Max is an omnichannel campaign type that allows you to reach customers across the Microsoft Advertising Network and drive conversions. Using AI and automation, Performance Max enables users to input a set of assets, which is then assembled dynamically into search, native, and product ads that are delivered to your audiences wherever they are.
In short, you provide the assets and your goal, and Performance Max takes care of the rest, which also saves you time and energy. When layered on top of your existing advertising strategy, Performance Max can drive incremental conversions to your business and boost advertisers’ overall ROI. In fact, when combining Performance Max and search campaigns, advertisers are seeing a 32% decrease in cost per acquisition (CPA) and a 3x increase in return on ad spend (ROAS) on average, compared to running search campaigns alone.
Furthermore, small and medium sized businesses that adopt Performance Max campaigns see 3-4x higher conversion rate on average.1
How to optimize your Performance Max campaign
Performance Max is essential for advertisers in just about every industry. To enable AI to achieve your specific goals on your behalf, it’s important to provide AI with meaningful data, and strike a good balance between volume and value-based strategy, so it can deliver both quantity and quality.
Once you set up a Performance Max campaign, an initial learning period typically takes 2-4 weeks, or 2-3 conversion cycles (the amount of time it takes for a click to result in a conversion) if your business has longer customer decision journeys.
To help SMBs accelerate the learning period and maximize conversions over time with Performance Max, we’ve put together this guide of optimization strategies and best practices:
- Set up conversion tracking
- Create campaigns with unique goals
- Include a wide variety of assets that resonate with different audiences
- Tell us more about your target audience
- Choose the appropriate bid strategy
- Calibrate your conversion targets
- Adjust your budgeting approach
If you have any questions along the way, don’t hesitate to schedule a free consultation with a Microsoft Advertising expert or reach out to your account team. Let’s get started!
1. Set up conversion tracking
First, to enable Performance Max to maximize conversions, it’s fundamental to ensure it can track conversions. Conversion tracking enables campaigns to see beyond the ad click, and it has two components: what a conversion means to you (Conversion Goals) and how to know when a conversion has happened (Universal Event Tracking).
Universal Event Tracking
Universal Event Tracking (UET) is the first step to enabling conversion tracking. Within your Microsoft Advertising account, you’ll generate a unique piece of code that you then add to your website or tag manager. This tag will communicate what users do on your website with Microsoft Advertising.
Set up your UET manually in a few steps or set up UET tags using Google Tag Manager or another tag management system:
Step-by-step guide on how to set up UET with Google Tag Manager, provided by Microsoft Advertising.
Conversion goals
A conversion goal defines a user action on your website or app store that you want to count as a conversion. Depending on the size of your business, you might define multiple conversion goals.
Examples of conversion goals include: purchase, add to cart, begin checkout, subscribe, submit lead form, signup, page view, download, mobile app install, and many more. Review a full list of conversion goals across all categories.
Follow these step-by-step instructions to create a conversion goal.
2. Create campaigns with unique goals
Many businesses have multiple priorities: selling products, generating leads, booking services, setting up product demos to name a few. Luckily, you can create a Performance Max campaign to focus on achieving each of these priorities, in addition to your existing campaigns.
When running multiple Performance Max campaigns, to get the most out of your strategy, decide what conversions matter to your business and build a portfolio that covers the white space. Try asking yourself:
- What are call-to-action buttons on your website?
- What are the most valuable actions my customers can take?
Let’s say you are a furniture retailer. Your Performance Max campaigns might look like:
- Campaign #1: Furniture purchases
- Campaign #2: Interior design consultation leads
Within your Performance Max campaign, you also have the option of setting multiple goals. You can focus on your primary goal, like furniture purchases, or you can also add in secondary conversion goals like Add to cart or Begin checkout. These secondary goals help provide Performance Max with as much meaningful data as possible, so it can work towards delivering your goals, but are not required.
3. Include a wide variety of assets that resonate with your audiences
Rich assets are foundational to an effective Performance Max campaign. To get started, you can easily import your Performance Max campaigns from Google Ads. Or with the power of Copilot in the Microsoft Advertising Platform, you’ll never have to build assets from scratch, you can rely on Generative AI to jumpstart your creativity:
Whichever method you choose to get started, you can customize your Performance Max campaign with one or multiple asset groups. An asset group is a collection of text assets, image assets, and audience targeting information. They also allow advertisers to organize assets that would resonate with different audience profiles, promotions, markets, etc.
For example, if you were a hotel, you could organize asset groups…
- By audience profile: Individual asset groups for couples vs. families vs. solo travelers.
- By promotion: Always-on evergreen vs. seasonal creative vs. limited time offers
- By market: Locals vs. out of state vs. out of country
- Ensure you include plenty of image and text assets per asset group for Performance Max to choose from. Then confirm that auto-generated assets and final URL expansion options are turned on, so that Performance Max can dynamically deliver combinations of assets alongside the most relevant URLs to your desired audiences. The more asset variety you provide, the more likely your ads will resonate with people.
4. Tell us more about your target audiences
To define your audience, you will provide details such as search themes, audience signals, languages, and locations. These enable the AI-powered Predictive Targeting capabilities of Performance Max reach your ideal audiences, but also audiences you might not have considered, wherever they are on the Microsoft Advertising Network.
Add audience signals
Audience signals allow you to describe your audience’s interests, demographics, and you can even select from your existing audience lists. The audience signals you can include are Interests (in-market audiences), remarketing lists, dynamic remarketing lists, custom audiences, similar audiences, customer match lists, and combined lists. The more audience signals you provide, the more information Performance Max can use to understand, find, and retarget your audience.
Add search themes
Allow advertisers to include specific words and phrases that their customers might use to search for products and services. These can enhance the effectiveness of Performance Max campaigns in targeting the right audience, as well as reduce Performance Max campaign learning period.
Search themes are related to an asset group. During asset group creation and/or editing, you can provide up to 25 search themes. Each search theme can be 80 characters or less.
Location targeting considerations
Your location targeting will also play a role in where your Performance Max campaigns show up and how many conversions you’ll drive. For example, even though your insurance firm offers earthquake, flood, home, and auto insurance, making Los Angeles residents your ideal multi-policy customers, you might open the aperture up to California or even United States to cast a wider net and increase volume.
- Los Angeles is your ideal location, but may be too restrictive
- California may offer a balance of specificity and volume
- United States may offer more volume but less efficient
See more about the options you have for your Performance Max campaign in this video:
5. Choose the appropriate bid strategy
With Performance Max, you can choose from various bid strategies: Max Clicks, Max Conversions, and Max Conversion Value.
Without setting up conversion tracking, you can still run a Performance Max campaign, but you are limited to using the Max Clicks bid strategy, which won’t enable you to optimize for conversions, because you haven’t defined what a conversion means or how its measured.
If you have invested the time to set up conversion tracking, you unlock conversion-based bid strategies: Max Conversion Value and Max Conversions. Which one is right for you? It depends.
Max Conversions prioritizes total number of conversions
If you have similarly valued conversions, then it matters less which item you sell. You just want the most conversions. In this situation, choose Max Conversions as your bid strategy.
For example, a Performance Max campaign for computer accessories using Max Conversions may have a $50 wireless mouse, a $60 stylus, and a $40 charger.
The way you scope your Performance Max campaigns with a Max Conversions bid strategy depends on your sensitivity to price margins.
Max Conversion Value prioritizes total value of conversions
If you are selling products or services with different price points or profit margins from a single Performance Max campaign, then you prefer to sell the combination of items resulting in the highest total value. Max Conversion Value helps you do that.
For example, in a Performance Max campaign for refrigerators containing a $2000 French door refrigerator and a $200 mini refrigerator, Max Conversion Value could sell 1 French door refrigerator or 10 mini refrigerators.
Note that to use this bid strategy, you’ll need to assign a value to each conversion, when you set up the conversion goal, unless you are using the values loaded in your Microsoft Merchant Center.
6. Calibrate your Cost per Acquisition or Return on Ad Spend targets
In addition to Max Conversions and Max Conversion Value, you can also layer in Target Return on Ad Spend (ROAS) or Target Cost Per Acquisition (CPA) to your bid strategy to help you fine-tune your return on investment. Setting a target isn’t required, but it can be a helpful baseline signal for your campaign.
It’s important to set targets that are healthy and attainable to be sure your campaign still delivers conversion volume. If your Target CPA is too low, or Target ROAS is too high, this may hold your campaign back from reaching its full potential. When you look at other campaign targets within your account, start with a goal that’s a little less restrictive than those targets and make gradual changes as the campaign ramps.
You can tell if your campaign is restricted in this way if you see Limited by auto-bidding target status in the Delivery column, on the Campaign tab. However, it’s not recommended to make too large or frequent of changes to your targets during the initial learning period.
Cost per Acquisition (CPA) is the price you’re willing to pay for one conversion
By combining Max Conversions + Target Cost per Acquisition, you’re directing Performance Max to maximize the volume of conversions within the average cost per acquisition that you set. If you are experiencing low conversion volume, then you have two ways to optimize your strategy:
- Increase your Target CPA. The target you’ve set might be too low.
- Remove it. Your type of conversion might be challenging to begin with, so adding a Target CPA may be too restrictive.
Return on Ad Spend (ROAS) is a % of your ad spend that you want to earn back
By combining Max Conversion Value + Target Return on Ad Spend, you’re directing Performance Max to maximize the value of your conversions while also aiming to deliver a certain ROAS.
If you are experiencing low conversions, then you have two ways to optimize your strategy:
- Decrease your Target ROAS. While you want to drive a positive ROAS (i.e., >100%), you may be setting a Target ROAS that is limitingly ambitious (10000%).
- Remove it. Lastly, if needed, you can remove this filter altogether to give more priority to conversion volume.
7. Adjust your budgeting approach
Even in the right vehicle, without enough fuel, you won’t reach your destination. The same holds true for Performance Max. If you are consistently maxing out your daily or monthly budget, not only are you leaving valuable conversions on the table, you’re also excluding valuable data used for optimization.
Choose an appropriate campaign budget
If your Performance Max campaign has maxed out on budget, then you’ll see Performance limited by budget status in the Delivery column on Campaign tab. The easiest way to reset this is to hover over the campaign’s auto-bidding status and select Apply the recommended campaign budget.
When you increase your Performance Max campaign budget, this is a good time to also layer in Target ROAS or Target CPA to maintain your existing spend efficiency.
While you may have implemented the best practices above, to truly let AI take the wheel, you need to provide your Performance Max campaign with enough budget to deliver ads, test assets, optimize campaigns, and generate conversions.
Check your account budget setting
If you’re still frequently exhausting your budget, then you should check your account-level budget setting. It’s probably time to increase your monthly budget cap for all your campaigns. In other words, instead of trying to fit a larger ship into your existing bottle, get a bigger bottle.
Learn more about setting your budget and bid amounts >
Get optimization help for free
Did you know Microsoft Advertising offers optimization consultations for free? This is our bonus optimization best practice. Our Microsoft Advertising experts are available to review your account and answer specific questions you might have. Get in touch with the team >
Also, Copilot in the Microsoft Advertising Platform is your AI companion for digital advertising, that is always available to offer guidance and answer questions.
Lastly, if you are new to Microsoft Advertising, take advantage of a free consultation with our team of experts to help you set up an account, or get started for free today.
[1] Microsoft internal data, SMB, existing accounts that adopted PMAX exclusively or new PMAX accounts, October 2024.
