Performance Max is very good at finding conversions. It is indifferent to whether those conversions are profitable, and that distinction is where most ecommerce accounts lose money without noticing.

Cheapest is not the same as best

Left to its own devices, Performance Max gravitates toward the products that convert most easily — typically low-priced, high-volume lines with thin margins. Return on ad spend can look respectable while contribution margin quietly erodes, because revenue and profit are not the same thing and the platform only sees one of them.

The account is not misbehaving. It is optimising precisely against the objective it was given.

Segment the feed by margin

The most effective lever in Performance Max is not a setting — it is the feed. Splitting products into asset groups or separate campaigns by margin band gives you budget control the interface otherwise withholds. High-margin lines get their own budget and a more aggressive target; low-margin lines are capped or excluded.

Custom labels in the merchant feed are the mechanism. They take an afternoon to set up and change what the campaign is allowed to prioritise.

Separate brand from everything else

Brand traffic converts cheaply and inflates blended performance. If brand searches sit inside the same campaign as prospecting, they subsidise weak performance elsewhere and make it impossible to see what new-customer acquisition actually costs.

Excluding brand terms from Performance Max and running them in a dedicated search campaign is one of the few changes that reliably improves clarity without reducing revenue.

Feed the right signal

Where possible, optimise toward new customer acquisition or profit rather than raw revenue. Google supports new-customer value rules; comparatively few accounts use them. Doing so shifts spend toward growth rather than toward buying back existing customers.