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Google AI Max is A TRAP?! New Data on ROAS, Demand Gen & DSA Sunset

Growing Ecommerce – The Retail Growth Podcast

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Is Google's new AI Max for Search the future, or is it a hidden trap?

In this episode of Growing E-commerce, Mike Ryan and Chris dive into brand-new, independent test data on AI Max for Search and discuss the strategic role of Demand Gen and the future of Dynamic Search Ads (DSA).

The analysis of over 250 e-commerce campaigns reveals significant concerns:

  • AI Max delivers an average 35% lower Return on Ad Spend (ROAS) and a higher Cost Per Conversion (CPA) compared to traditional broad match campaigns in retail.
  • The conversions AI Max drives are often at a lower Average Order Value (AOV), raising questions about incrementality versus cannibalization.

Mike predicts that Dynamic Search Ads (DSA) is on its way to being fully sunset/upgraded to AI Max by early 2026. The shift signals Google’s move to consolidate broad automation into AI Max and the visual discovery into Demand Gen. The hosts also warn that many advertisers are creating unnecessary data fragmentation and overlap by running AI Max, DSA, and PMAX concurrently.

The key discussion focuses on the Demand Gen Strategy: Demand Gen is best used as a visual discovery engine to compete with Paid Social/Meta and is heavily driven by video ads across YouTube and Shorts. Learn how to use it strategically as a mid-funnel tool to feed Performance Max (PMAX).

What to do now: AI Max is here to stay. Mike and Chris offer advice on how to use AI Max's built-in controls (like negative keywords) to make the feature work smarter for your business.

About smec (Smarter Ecommerce):

At smec - Smarter Ecommerce, we specialize in transforming business goals into optimized ad campaigns. With over 16 years of experience in Google & Microsoft Ads, our intelligent software and expert services help retailers achieve superior results.

We're committed to giving you the tools and insights needed to stay ahead in the ever-evolving world of digital advertising.

Make sure to follow smec - Smarter Ecommerce for more performance marketing insights:

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Chapters

1. Intro / The AI Max Problem for E-commerce (00:00:00)

2. New Data: AI Max ROAS is 35% Lower than Broad Match (00:01:30)

3. The Hidden Cost: Higher CPA & Lower AOV Conversions (00:03:45)

4. The Redundancy Problem: Why you shouldn't run AI Max, DSA, and PMAX together (00:06:12)

5. The DSA Sunset Prediction: When will Dynamic Search Ads be replaced? (00:08:50)

6. Demand Gen Strategy: How to use the 'Visual Discovery Engine' effectively (00:11:15)

7. Using Demand Gen on YouTube & Shorts (00:13:50)

8. Final Recommendations: Making AI Max work with controls (Negative Keywords) (00:15:30)

80 episodes

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