15 April 2025

Rethinking budget allocations in the age of AI-driven media

In summary

• With Google’s evolving ad products like Pmax and Demand Gen, tracking and managing ad spend across channels is becoming more complex.
• There are many different MMM tools available, understanding the pros and cons of each helps businesses select the one that fits their needs.
• Advertisers must adjust to the evolving landscape by using accurate data and choosing the right tools to optimise media spend and maximise ROI.

Managing Google Ads budgets: navigating search, performance, and display channels

As Google’s advertising ecosystem keeps changing, managing ad budgets has become more challenging.

With recent products such as Pmax and Demand Gen, it’s getting harder to keep track of exactly where ad spend is actually going.

This issue is made worse by the possible targeting of seemingly low quality websites. For businesses, this creates a challenge where it’s harder than ever to make sure that the ad spend is being used efficiently.

Where is my budget actually being spent?

One of the big questions advertisers face is how much of their budget is actually being spent on Google Search compared to other channels within Google Ads.

Typically, you allocate a large portion of your budget to a “SEARCH” line item. But when you look at the spend data, it’s not uncommon to see that Performance Max (Pmax) is eating up the majority of the budget.

Pmax is not just search

Pmax advertises in everything, such as Display, YouTube, Discovery Ads, and other Google inventory. Therefore, it’s not just Search.

If the budget is being spent majority on Pmax, can we really call it “Search” spend? No.

What you’re actually seeing is a mix of performance-driven ads across several Google owned inventory, which dilutes the focus on Search.

The issue here is the lack of control over how the budget is distributed within Pmax. This makes it tough to track and optimise the performance of individual channels like Google Search.

In the end, advertisers might just need to accept that there won’t always be a clear-cut split of budgets by Google inventory if they want to advertise in product like Pmax and Demand Gen. You can apply some level of control provided by Google, but it’s not 100% perfect.

Rethinking budget line items: are we measuring the right things?

Are we allocating budgets based on the right metrics and business objectives?

Maximising ROI

If the goal is efficiency and maximising ROI, advertiser need to make sure they are properly allocating budget based on performance, while also understanding the concept of diminishing returns. For example, continuing to fund a channel that isn’t delivering proportional results leads to wasted spend. This is especially true when you can’t isolate or control how that channel is spending.

Traditional Media Mix Modeling (MMM)

MMM is a valuable tool for optimising your media spend across broader channels. But for it to really work, it needs accurate, detailed input data.

MMM and Pmax

Google doesn’t provide breakdowns of Pmax performance by its components. This makes it a big challenge for anyone relying on traditional MMM.

Some third-party tools and online resources provide scripts that can break down Pmax performance. This could serve as a workaround for those using traditional MMM to get a clearer picture of how the components are performing.

Even with these breakdowns, there’s still no way to control how the budget is spent between Search, Display, YouTube, and other channels within Pmax. Unlike Demand Gen, which recently introduced more control over inventory targeting, Pmax doesn’t offer that level of control. This lack of control can lead to inaccurate data and throw off the effectiveness of media mix strategy.

If Pmax is part of your strategy and you’re using traditional MMM, consider switching to a different MMM model.

Managing search vs performance budgets

With new marketing mix modelling (MMM) tools like Meridian and Robyn, advertisers now have more options to evaluate and optimise ad spend.

So, how do we accurately separate Search, Performance Max, Demand Gen, and other platforms like DV360, Meta and more? As some performance metrics get blended across channels, it is harder to see the true performance of each individual platform.

Let’s compare Meridian and Robyn.

• Meridian: Since Meridian is native to Google, it is assumed that Search, Performance Max, and Demand Gen data are being measured together more effectively to optimise media spend. Meridian can include Pmax and Demand Gen within its data feed taxonomy, making it especially beneficial for businesses that need to understand how these components interact in a unified model.
• Robyn: Robyn is great for integrating performance data across platforms like Meta, but it doesn’t offer the same level of integration when it comes to Google Ads channels, especially Demand Gen and Performance Max.

Meridian for Google products
For businesses that need a comprehensive solution for Google products, Meridian is the way to go. By including both Demand Gen and Performance Max data in one model, it helps you optimise your ad spend across different channels. On the flip side, Robyn is better suited for businesses that are heavily focused on platforms like Meta, but it might need additional tools to fully track and optimise Google Ads campaigns.

Louder’s recommendation

In today’s complicated digital advertising landscape, having accurate data and controlling budget allocation is more important than ever.

• Meridian offers a good solution for Google Ads budgets
  As Google Ad products like Performance Max, and Demand Gen present reporting challenges, businesses need to adapt. Tracking and optimising individual channels within Pmax is difficult, but Meridian offers a more integrated solution. It includes both Demand Gen and Performance Max data, giving you a clearer picture of how your budget is being spent and how effective it is.
• Robyn is good for Meta but requires more effort to track Google Ads
  While Robyn is a powerful tool for platforms like Meta, it’s better suited for advertisers who focus more on Meta ads than Google. It does face challenges when managing the cross-channel complexities of Google Ads. If you’re using Robyn for Google Ads, you’ll need to put in extra effort to isolate and track performance across each channel, as it doesn’t integrate Demand Gen and Performance Max as seamlessly as Meridian does.
• Businesses need to adapt to the changing nature of Google Ads
  As we look ahead to FY26 and beyond, businesses need to adapt to the changing nature of Google Ads. By using the right tools, ensuring accurate data inputs, and optimising the media mix, you can maximise your ROI. Understanding the strengths and weaknesses of tools like Meridian and Robyn will help advertisers make smarter, more informed decisions about their budget allocation across channels.

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