For many years, Google has tried to convince advertisers to allocate budget to inventory other than search. And this hasn’t worked very well, particularly for small business advertisers, where budgets are precious and results (conversions) are paramount.

As such, the vast majority of spending continued to be on search ads followed far behind by display remarketing ads. Whether it was the Google Display Network (GDN) of third-party publishers, YouTube Ads, or the more recent Discovery Network (Gmail, Newsfeed, and YouTube), Google has had a tough time getting “top of funnel” buy in.

However, with the advent of Performance-Max, Google has started to chip away at smaller businesses placing more ads in the top to middle of funnel. Why? Well the answer is really for two reasons.

First, Performance-Max drives conversions and can often match the CPA or ROAS performance of search ads. This drives a lot of confidence in that campaign type. And second, the lack of transparency and control make advertisers oblivious to how much is being spent on “non-search” ads, how many conversions that other “stuff” is driving, and whether or not most of those search conversions are actually from branded queries.

More recently, Google has started to unlock P-Max, adding precise brand, device, and demographic controls, revealing search terms and channel reports (still in beta), and campaign specific exclusions. While this has alerted some advertisers to “wasted ad spend” the buy in is now pretty strong so it’s unlikely this is going to cause a mass “cancelling” of P-Max campaigns.

At my agency, we often use the combination of search, P-Max, and Display or Demand Gen remarketing for mid-sized lead gen accounts. But will we continue this way?

With the recent developments in Demand Gen and launch of AI Max, it’s starting to look more attractive to use search and Demand Gen and skip Performance-Max completely.

In this article I’ll look at the benefits and drawbacks to each combination and let you draw your own conclusions.

Search Ads with P-Max

This has been our “go-to” combination for lead-generation in mid-sized accounts for the past couple of years. In general, Search and P-Max campaigns play off of each other to drive great overall performance. Here are some specifics:

Search campaigns “inform” P-Max about effective keyword strategies
P-Max simplifies/optimizes an advertisers investment across the entire funnel (outside of remarketing)
P-Max top of funnel ads can improve performance in the search campaigns and drive better results elsewhere (organic search, social, etc.)
It’s easy to justify this combo because P-Max (apparently) drives a similar direct return to search ads

But there are, of course, downsides of P-max:

Lack of transparency, i.e. poor reporting on what channels are driving conversions, how much is being spent on individual display/video placements, what branded search is driving, etc.
An inability to directly adjust the investment into specific channels such as display or discovery or even how to split the investment into different funnel stages
An inability to target audiences directly, thus you can easily spend outside of your ideal target market – plus the prevents you from using P-Max for remarketing
A high probability for click fraud that’s hard to detect and even more difficult to address

Now, granted, we’re starting to get a lot more transparency recently, we still don’t have much control. It’s nice to see where Google is spending per channel and which channels are driving conversions. But that information isn’t so helpful when you can’t do anything about it.

Until recently, alternative combinations mostly involved running a combination of search, display, YouTube, Demand Gen (for discovery inventory). This offers a lot more transparency and control, but is a lot more complicated to manage and advertisers tend to complain a lot about that “brand awareness display” campaign spend with no apparent conversions generated. For serious marketers that’s not a real problem, but it’s a big impediment when you work with small business owners.

Fortunately, we now have another option.

Search Ads with Demand Gen

Google has rolled out quite a few updates to Demand Gen recently, allowing for more simplistic upper funnel advertising.

Importantly, they’ve added the ability to select what channels you want to advertise on… this includes the Discovery network as before, but also introduces the GDN (Google Display Network). This means we can now include all of Google’s inventory in a single campaign, and/or independently control those channels in individual campaigns.

So what are the benefits of using Search and Demand Gen as your go to full funnel marketing solution?

Full control of search spend directly in search only campaigns and display spend in display only campaigns
Ability to use search campaign DSA (Dynamic Search Ads) or the newer AI Max keywordless targeting, if you want to do that sort of thing to replace P-Max search ads
Many targeting options in Demand Gen including directly targeting audiences (including remarketing), using lookalikes, or using audience signals
Further to targeting options, it’s much easier create specific creatives for different audience segments and funnel stages
Much more specific reporting on upper, mid, and lower funnel investments

Seemingly, then, this combination offers much greater control over where you spend your money and provides more granular reporting. This is absolutely true.

However, there are a few drawbacks to this combination:

Demand Gen tends to generate a low number of conversions, except in the case of remarketing – this can cause small business advertisers to reduce their upper funnel investment or stop it completely
It takes a lot more expertise to build and optimize Demand Gen campaigns vs. P-Max – there is no automated channel optimization
It’s still very early days for AI Max – the P-Max keywordless search ads work extremely well, AI Max not so much right now – of course you can still use DSA for now

So What’s the Better Option?

My answer for right now is it depends. Smaller advertisers are probably better off sticking with search and P-Max for now. This combination is tried and true and continues to improve as Google rolls out better P-Max transparency and control. It’s much easier to implement and optimize, and the numbers will tend to make more sense for non-marketing types.

Larger advertisers may be better off migrating away from P-Max and towards Demand Gen. With much greater transparency and control, these advertisers can optimize spending and targeting exactly where they want it. While the lack of conversions through the upper funnel can be disconcerting for some, proficient marketers understand how this channel can boost performance through the bottom of the funnel. Furthermore, these advertisers will typically be willing to invest more time into PPC management, which will be necessary when going this route.

Summary

Over time the Search & P-Max combination has become a great option for many advertisers. And, with Google rolling out more controls and transparency for P-Max, this is going to be more true than ever as we move forward. That said, P-Max still doesn’t offer direct audience targeting or channel controls. With this in mind, more experienced/larger advertisers may want to opt for Search and Demand Gen.

Google has recently added many new Demand Gen features such as the ability to include GDN and select which specific channels to advertise on. Plus, Demand Gen excludes search inventory, audiences can be targeted precisely, and it includes remarketing options.

The good news is that either combination can work for most businesses.