Google’s CSS "20% Discount" Myth, Busted | Plus: The Hidden CPC Tax of PMax + Shopping

Episode Transcript

00:00:00 - 00:00:06
Mike: Welcome to another episode of Growing E-commerce. We’ve got a couple of exciting topics lined up for you today.

00:00:06 - 00:00:26
Mike: First off, we’re going to do some myth-busting about Google’s CSS program. And in case you’re not in Europe and you don’t care about CSS, don’t worry, we have something for you at the end. We’re going to explain how a specific thing we learned from the CSS program transfers to all of Google bidding. So stay tuned to hear more about that.

00:00:26 - 00:00:29
Mike: As always, I’m one of your hosts, Mike Ryan. And with me—

00:00:29 - 00:00:36
Chris: Chris. Should I do something? No, that’s for right now.

00:00:36 - 00:00:58
Chris: No, Mike. Great topics, as always.
Mike: Yeah. Chris, what are you wearing? Come on, man. I told you not to do it. Why are you dressed like that?
Chris: Look, I want to defend myself here. Hey, we have a summit today, yeah? That’s the reason why I showed up looking like 70s Miami Vice. Dude, I love it, actually.

00:00:59 - 00:01:17
Mike: No, you love it. You can pull it off. Is it distracting? I don’t know how it plays on the cameras. If it’s breaking the cameras right now, there’s like strobing and stuff, we’re probably ruining the life of our production team over here.

00:01:17 - 00:01:49
Chris: By the way, the colors are real, right? I’m just saying.
Mike: Yeah. Is that because— no, come on, let’s move on. All right, but I like it. And again, maybe it will be my new suit. Would you be up for it? You do you. I was in Google Dublin a couple of weeks ago and they were talking about wardrobe vibes and what options I have. They asked, “Can you bring more options?” I was like, “I don’t have a wardrobe. What do you mean with options?” It’s like I have option A and option A.

00:01:49 - 00:02:13
Mike: Yeah, like Steve Jobs—he was always wearing that black silk, right? I wear jeans and a t-shirt, and I have a very restricted color palette.

00:02:13 - 00:02:38
Chris: You’re the Steve Jobs of e-commerce influence.
Mike: Listen, I have other things to worry about.
Chris: Me too, but I still believe that my wardrobe gives me confidence.
Mike: Well, appearances do matter. And with that being said, let’s talk about—I have a segue here, Chris. Let’s talk about some false appearances.

00:02:38 - 00:03:06
Chris: Myth-busting the CSS. That’s why Google put me on the couch, ladies and gentlemen. It was so fun when we talked because, of course, there’s some prep going on. Mike sometimes gives me quite short notice on the topics he wants to talk about. I was shocked that in the year 2026, we are going to talk about CSS.

00:03:06 - 00:03:28
Mike: Yes. Well, there are a couple of reasons why—sort of three reasons. First off, the CSS program is back in the news because there are new rulings coming out. And actually, depending on when this episode airs, maybe they’re already out. The EU Commission is not done with this; they love that topic.

00:03:28 - 00:03:54
Chris: Yeah, exactly.
Mike: Because there’s this ongoing topic of the sufficiency of the CSS program and the measures that were taken back then. That’s definitely under fresh scrutiny and has been for a little while. So that’s one of them. Another thing is that there are 15 new shopping countries coming out across Europe, which is a lot.

00:03:54 - 00:04:15
Chris: I didn’t even know that there were that many markets left.
Mike: Well, I did a little math on that, and all 15 sum up to about the size of Poland—around number seven by GDP. But it does offer upside, of course.

00:04:15 - 00:04:42
Mike: How this connects to CSS is that to advertise on Google Shopping in Europe, you have to advertise through a CSS. By default, that CSS is Google’s comparison shopping service, which is known as Google Shopping Europe, or GSE. But of course, it’s highly recommended that you advertise through a third-party CSS. We are one, by the way, and I’m not going to sell us exactly, but why not?

00:04:42 - 00:05:14
Chris: Well, I think we will sell ourselves because we are about to be very truthful. We’re going to lift the veil. We’re the most straight-talking CSS partner that you’ll find.
Mike: There is that. But the other reason is just—I don’t know why, maybe it’s related to these—but I’ve just had this topic come up in multiple client conversations, and people in our team have been reaching out to me lately asking specifically about the CSS strategy, which we’ll explain.

00:05:14 - 00:05:41
Mike: And yeah, again, I have a very specific viewpoint here.
Chris: The most important question is the 20% discount claim. Is it real, and what’s behind the 20% discount statement? Let’s start there. First, because in case you’re right now googling our CSS, you’ll see on our website that we talk about the 20% discount, which annoys me, to be honest.

00:05:41 - 00:06:16
Chris: But I also understand from a marketing standpoint, because I have this conversation with our marketing department, and every single CSS on the market talks about the 20% discount—you more or less have to. I disagree, actually, but it is what it is. So no, the 20% discount is fake, or it doesn’t work like that. I think this is the better explanation because the CSS topic—it’s really fun and surprising that, again, in 2026 we still talk about this.

00:06:16 - 00:06:33
Chris: I remember the wild times when this whole CSS thing was in the news; it was insane.
Mike: Yeah, it was a crazy time.
Chris: We were one of the fastest players in Europe to adapt to it. We created massive chances and opportunities for our clients. It was a fun time.
Mike: Yes, because you had a chance of being a first mover.

00:06:33 - 00:06:54
Chris: Yeah, there was a huge first-mover advantage. It was a gold rush.
Mike: It was a gold rush.
Chris: This first-mover advantage has evaporated because it’s commoditized. However, there is still a claim out there that there is this 20%—let’s call it the 20% click advantage, because I think this would be the more correct framing.

00:06:54 - 00:07:26
Mike: Yes, let’s talk about that. Is it a discount? What is it, and is there an advantage at all? Let’s break this down because I think this might be one of the most interesting questions. Basically, what happened back then? Just as a reminder, it’s a long time ago, the European Commission ruled that Google Shopping is a comparison shopping service and that they were self-preferencing themselves through their organic results and advertising.

00:07:26 - 00:07:52
Mike: Because back then, I believe CSSs could not participate in Google Shopping; it was limited to Google Shopping. So there was a major self-preferencing accusation, and it was probably well-founded. Google Shopping Europe had to split off as its own entity, and they had to demonstrate—and they still have to do that—that they are independently profitable from Google.

00:07:52 - 00:08:16
Mike: As part of that, you can advertise through Google Shopping Europe if you just make a shopping campaign and you don’t have a third-party CSS partner—then Google is your CSS, exactly. And because they are required to be independently profitable, they have to deduct a margin, and it’s said to be 20%.

00:08:16 - 00:08:35
Chris: 20%, yeah. We don’t know, maybe that’s changed over time, but it is said to be 20%. By the way, what does that mean? We know what a margin is, of course, but what does that mean for real bids? If I have a product and I bid $0.70, what is the margin doing to my net bid?

00:08:35 - 00:09:00
Mike: Well, that’s part of it. But can we choose easier math, Chris? Because I can’t do 20% of 70 on the spot.
Chris: You’re looking at me like, “What’s 20% of 70?” It should be 56. I’ll double-check anyway. Seven times two is 14; 70 minus 14 is 56.

00:09:00 - 00:09:20
Mike: All right, so let’s roll with that. I’m not a mathematician, but what does the 20% margin do to my bid? If you enter via the Google default—let’s say you make a €1 bid—

00:09:20 - 00:09:46
Mike: 20% is deducted from your bid, so $0.80 actually enters the auction. Now, if you’re doing it via a third party, you enter that same €1 bid, there is no 20% deduction, and you enter with the real €1. So you can see that there was no 20% discount, but rather your bid is worth $0.20 more relative to those other items.

00:09:46 - 00:10:21
Mike: So it’s actually an increase in purchasing power; it’s not a discount. This is why I think, in general, the 20% click advantage—no one knows precisely if it’s 20%, 18%, or 21%—we did massive analysis on it, and it’s hard to pin down. But you have an advantage. The advantage is directed towards making more market because the net bid is 20% higher, but you’re not saving literal money.

00:10:21 - 00:10:41
Mike: No. And you have to remember back in the days of the first mover, the gold rush times, you had 20% more purchasing power. There was a lot of manual bidding going on back then, and everything was different. In principle, it could push you into a higher position within a given auction.

00:10:41 - 00:11:02
Mike: It could also push you into different kinds of auctions and search terms than you were in before, so you would make market because your net bid is higher.
Chris: Exactly. You have to bid 20% less to get the same bid.
Mike: Well, on Google Shopping Europe, you’d have to bid 20% more.

00:11:02 - 00:11:32
Chris: Yeah, exactly. So you have, by default, more purchasing power using a third-party CSS. Is the claim correct that, as an online retailer selling products, you should have at least one third-party CSS in your setup strategy?
Mike: Well, now I’m going to take issue with the phrase “at least” in there, but okay.

00:11:32 - 00:11:50
Chris: You need to use one.
Mike: Yeah, we can say that you need to use a third-party CSS because there is this click advantage—or CPC advantage. Even now, we have to think about it a bit differently because it is the year 2026 and everyone is using a third-party CSS. The adoption rates here must be around 85% to 90%.

00:11:50 - 00:12:08
Chris: It must be so high.
Mike: It must be so high. That could be different now in these 15 new markets because there needs to be a whole cycle there. We’ll get into that.

00:12:08 - 00:12:29
Mike: So it’s the year 2026 now, and instead of a first-mover advantage, it’s a last-mover penalty because this is all commoditized. Everyone is using this, so everyone has that same kind of basis. Rather, if you’re only advertising through Google Shopping Europe, you’re at a disadvantage relative to everyone else.

00:12:29 - 00:12:56
Mike: Since bidding by now is way more automated by Google, this is just the baseline. It’s really moved from a first-mover advantage to a late-mover penalty.
Chris: I cosign that; I love that. The statement stands: you should have at least one third-party CSS because it makes sure you’re not at a disadvantage with your CPC entering the auction.

00:12:56 - 00:13:10
Mike: Yes, if you’re advertising purely through Google, you’re at a disadvantage. There could be tactical applications or reasons to use Google, but yeah.
Chris: May I come up with the second question?

00:13:10 - 00:13:46
Mike: Okay.
Chris: Because I was in the trenches with you in those early gold rush days, and of course, there were a lot of strategies floating around. One strategy was to go for as many CSSs as possible to drive market share presence on the SERP. I remember we always said, “Guys, you should have a CSS running because this gives you an advantage, but don’t be too granular because there are a lot of disadvantages coming with it.”

00:13:46 - 00:14:10
Chris: What is your take on the multi-CSS strategy of having more than one third-party CSS? Is this still a strategy to go with?
Mike: Well, I hope there’s someone working at a CSS right now shaking their fist at me because then I’ve probably done a good job.

00:14:10 - 00:14:34
Chris: I see it in your eyes; you like to provoke people sometimes.
Mike: I’m just going to lift the veil here. Here’s what happened with the multi-CSS strategy: at the beginning, there was a very material advantage because that 20% purchasing power boost was extremely tangible at that time.

00:14:34 - 00:14:57
Mike: And in the earliest days, do you remember this? Google was giving cash-back incentives to advertisers because they needed to drive CSS adoption to satisfy the European Commission.
Chris: It was the craziest stuff back in the days. The reason why we adopted CSS so powerfully is because we were literally giving the click advantage 100% back to the client.

00:14:57 - 00:15:19
Chris: I remember there were some shady offers out in the market. There was price skimming; it was a material advantage. CSSs could charge a lot of money and often did charge exorbitant amounts.
Mike: Yes, our commercials were different at the start than they are now, but we had technical reasons because our product was able to manage multi-CSS setups.

00:15:19 - 00:15:41
Chris: Exactly. Other providers were just taking a big part of the share anyway.
Mike: Yeah, we had bid mirroring and a lot of tech that we built around that spectrum. But pretty quickly, the whole market collapsed.

00:15:41 - 00:16:01
Mike: It became a race to the bottom on the CSS side. It wasn’t long before someone offered a €100 a month flat rate, then €30, €70, or €50.
Chris: Yeah, I think now the going rate is probably a €30 or €35 per month flat rate, depending on the service level.

00:16:01 - 00:16:21
Mike: Exactly. Then what they try to do is upsell you into feed management services and stuff like that. It went from a pricing strategy to a thin-wedge strategy. I told you I’m going to unveil things. The other thing that happened is this multi-CSS narrative emerged.

00:16:21 - 00:16:43
Mike: The idea was that you could get more visibility by advertising through multiple CSSs. In principle, if the CSSs are very engaged with managing your campaigns—we were an outlier for doing that—they could have different bidding strategies, so there could be some truth to that. You could apply different tactics or advantages.

00:16:43 - 00:17:16
Mike: But in reality, these CSSs just started making partnerships and referring each other. This was just a revenue expansion strategy among the CSSs, in my opinion. The most prevalent claim is that advertising through multiple CSSs will enable or massively increase your ability to double-serve. We need to define that term, but basically, it means a single search term could show your product appearing from CSS A, CSS B, and so forth.

00:17:16 - 00:17:51
Mike: That was the main argument. I know for a fact Google got way better at it because these were the talks of the town back in the days. What Google basically claimed was that there might be a double presence, but very importantly, it will never be the exact same product.
Chris: I remember the early days where there were some loopholes and Google was not really bulletproof.

00:17:51 - 00:18:12
Chris: There were loopholes where you could force Google to show the identical product for the same search query, but Google got better at it. This double-serving in terms of pushing the exact same product for the same search query is not possible anymore. It’s a rumor.

00:18:12 - 00:18:35
Mike: Exactly. On a technical basis, Google has always tried to prevent the exact same offer or product from double-serving. If you appear on the same search term, it’s because you might have multiple different products or offers that are eligible for that search term—like different models of Nike shoes or product lines. But the exact same shoe should never serve.

00:18:35 - 00:19:01
Mike: Google’s technology wasn’t as bulletproof back then, so maybe you could end up with this. Now they’ve gotten a lot better. If you try to circumvent the system using tactics in your feed, you are just begging to get a disapproval. This is against Google policy, and you will get disapproved.
Chris: Yeah, you can be shown with a different or similar product.

00:19:01 - 00:19:26
Chris: But our stance is that visibility isn’t massively increased just by having multiple third-party CSSs.
Mike: I’m here to tell you that you can absolutely have different products appearing for one query. You can potentially dominate the entire board—we saw this with Temu because they were so aggressive on their bidding.

00:19:26 - 00:19:54
Mike: But foundationally, that has nothing to do with whether you’re using one CSS or multiple CSSs, or which one you’re using. It is just about your bid and your budget.
Chris: So the bottom line is that one third-party CSS makes sense on top of Google Shopping Europe because there is this click advantage—or let’s make sure you’re not at a click disadvantage. That’s our recommendation. But these multi-CSS strategies with third-party CSS A, B, C, D—that’s not recommended for one major reason: you are splitting your data set.

00:19:54 - 00:20:17
Mike: It’s a neutral-at-best strategy. There are very few cases where it’s genuinely advantageous; it’s neutral at best and potentially a disadvantage because you’re splitting your data. We’re in the year 2026—you must not split your data, or at least you shouldn’t split it to a level where it’s a disadvantage.

00:20:17 - 00:20:48
Mike: Every time you split your data, there needs to be a clear reason why, and I don’t think multi-CSS is that reason.
Chris: All right, we were quite clear on that. But there’s another thing—sorry, I won’t let you go to the next topic yet, though I think it’s a great segue.

00:20:48 - 00:21:10
Mike: Yeah.
Chris: It arises out of this: because CSSs like to pursue the multi-CSS strategy, there was another myth or concern in the market. Will I, if I’m advertising through multiple CSSs, bid against myself?

00:21:10 - 00:21:35
Mike: I don’t know what happened behind the scenes here—I wasn’t one of the CSSs lobbying—but I believe that CSSs lobbied Google to make some very clear statements about that because they liked the multi-CSS strategy.
Chris: You’re making enemies.
Mike: I know.

00:21:35 - 00:21:59
Chris: I will protect you. You look very dangerous with that shirt. It’s not just a shirt; it’s a feeling.
Mike: I will do my best to protect you from some mad CSS CEOs or Googlers. Who knows? I speak truth to power.

00:21:59 - 00:22:28
Mike: Google explicitly made a statement. They have a support page for CSS where they address this. They even have a video on YouTube where the Google person looks like they’re being held at gunpoint saying, “No, you don’t have to worry.” What they say is factual, but it really looks like a hostage video. Anyhow, the point is no, there is no bidding disadvantage in doing multi-CSS. You don’t have to worry about that.

00:22:28 - 00:22:58
Mike: Google specifies that you will not second-price yourself. The way the Google auction works, just real quick if you’re not familiar with it—should we do weird math, Chris, or normal people math?
Chris: I did the weird part with the 70. You asked me 20% of 70! I didn’t want to shock you. I use AI to think now; I can’t do math. You have it in front of you, you could have used it.

00:22:58 - 00:23:12
Mike: Let’s use €1.

00:23:12 - 00:23:54
Mike: Imagine that you have the highest two bids in a shopping auction from two different setups—CSS A bids a euro, and CSS B bids $0.75. The next competitor is at $0.50. The concern would be that CSS A would pay one cent more than CSS B, so they would pay $0.76, creating an artificially high bid when the nearest external bid was $0.50. That won’t happen. You’ll only pay $0.51. You’ll pay just more than the next external competitor, assuming your accounts are marked equivalent.

00:23:54 - 00:24:19
Chris: So there’s this one-cent incremental rule, which makes sense and is factually true. There’s no threat of bidding against each other by having a multiple CSS strategy. Now I want to switch gears and apply this somewhere else for everyone who’s not in Europe and didn’t care about anything we just said.

00:24:19 - 00:24:58
Chris: I still believe that the ad rank system is the single biggest reason why Google has become the most dominant online advertising company in the world. Ad rank made sure that it’s not just the CPC that decides whether you are ranked first, second, or third, because there was this additional layer of ad quality. This created a win-win-win: the searcher gets a good result, the company is forced to create good ad content but can win even with less budget, and Google has the greatest product of all.

00:24:58 - 00:25:20
Chris: There is now a new framing around it, and maybe you can elaborate on it, because it seems like the ad rank as we knew it is more centered around the CPC than ever.

00:25:21 - 00:25:52
Mike: It is correct to say yes and no; it depends on the exact context. Where that is very much the case is when we talk about cross-campaign competition. The problem is that Google is creating multiple technologies that do very similar work, offering multiple paths into the same auctions from multiple campaign types. Nowhere is this clearer or more present than Performance Max and Standard Shopping.

00:25:52 - 00:26:16
Mike: A large majority of your PMax clicks and costs are going to be shopping-based. To date, there is very little difference between a shopping ad served via PMax and a shopping ad served by Standard Shopping. That will change a bit, but that’s a topic for another time.

00:26:16 - 00:26:38
Mike: We got a confirmation about this from Ginny Marvin a ways back because the question was, “What are the ad quality factors if you have a shopping ad from PMax and Standard Shopping targeting the same product, same landing page, and same feed assets?” The product title will be the same, and the ad will be the same. What on earth is supposed to determine the ad rank besides the bid?

00:26:38 - 00:27:05
Mike: Google confirmed that the bid is the differentiating factor here. This is a big statement because it leads somewhere. They immediately follow up and say, “But you will never self-compete against yourself.” It’s true you will not second-price yourself, but what I was always trying to get at is: what does that actually mean?

00:27:05 - 00:27:23
Mike: We found this documentation confirming you will not second-price yourself, which is the statement I needed to understand what they’re talking about. But I still don’t think that prevents bid escalations, because it’s a systemic issue.

00:27:23 - 00:27:49
Chris: I agree. I’m not as technically involved as you are, but let’s look at Standard Shopping and PMax because this is the perfect example. I’m talking about the shopping part of PMax, which is very similar in what it does. If I have these two campaign types running in parallel—by the way, there were times Google was pushing this hybrid setup massively, though that has changed a bit—I have my budget goals and my ROAS goals.

00:27:49 - 00:28:08
Chris: What these two campaign types are doing is trying to fulfill my ROAS and budget aims. If one campaign is eating into the other campaign—which is factually true because it’s mostly either-or—what will the other campaign try to do? It will still try to achieve the goals I set, especially the budget goal, so it will do something to get that exposure.

00:28:08 - 00:28:37
Chris: This has to lead to some CPC inflation because the CPC is the only lever to tell the Google system, “Hey, I’m the campaign that should be served.” Is that too simple of a view?

00:28:37 - 00:29:00
Mike: No. I think particularly if you follow some of the best practices that Google outlines, like having looser return on ad spend targets, it can happen. They’re building whole new technology around broad match exploration and making sure you’re not limited by budget. They’re focusing on these themes a lot right now because there are big changes coming in both of those areas. The looser the constraints, the more problematic this is.

00:29:00 - 00:29:51
Mike: In a scenario where your shopping campaign and your PMax campaign are the first and second bids, you’re not going to second-price yourself. That’s fair and great, but how often does that actually happen? The reality is, imagine your PMax campaign is coming in first and your shopping campaign is coming in third or fourth—it doesn’t matter. Your PMax campaign, or whichever one has a higher bid, is going to win.

00:29:51 - 00:30:28
Mike: You can argue that’s a good thing because you’re gaining a top position or a stronger position more often, and that’s positive. But for shopping, I’ve never been a believer that being in the first position is particularly vital. We read from left to right, but I don’t think people perceive shopping ad units strictly that way. I think it’s great to be in the third or fourth position because you’re in the middle of the screen in a very central spot.

00:30:28 - 00:30:56
Mike: I have some data showing that although you might not literally compete against yourself, at an account level you’re going to be escalating your bid because your higher bids will always be preferred.
Chris: Can we pull up that chart? I have two things here to show, Mike. In the meantime, while you’re looking up the chart, maybe it’s a stupid question, but I’ll ask it anyway.

00:30:56 - 00:31:17
Chris: You’re not second-pricing yourself or bidding against yourself, meaning that even if my Standard Shopping campaign has a bid of €1 and my PMax campaign has a bid of $0.50, and I’m in first and second place, this means I’m only bidding $0.51 on the Standard Shopping campaign.

00:31:17 - 00:31:43
Chris: What if, for whatever reason, the campaign with the lower bid wants to be in first place? I can’t easily force my campaign to always go for second, third, or fourth. Then the new benchmark CPC is $0.51. Could this lead to a situation where my campaign pushes to be in first place because the ROAS or budget dictates it, moving it to $0.52?

00:31:44 - 00:32:13
Chris: It’s not a complete escalation, but a slight incremental upwards trend. Since I have no control over whether it lands in the second, third, or fourth place, couldn’t even this perfect world scenario lead to a slight incremental CPC increase?

00:32:14 - 00:32:37
Mike: It’s complicated, and I’m not a Google engineer, so we don’t get perfectly clear answers here. But I think it is possible because the algorithm is always learning based on performance. If you have campaigns that are constantly competing against or cannibalizing each other, that could change what the algorithm learns.

00:32:37 - 00:33:02
Mike: Google’s smart bidding is very good at finding the right value per click, but it becomes a question of: it identified a valuable click, but was it necessary to bid that much for it, or could I have bid less and still had a shot at it? And that evaluation has to include your own second shopping campaign.

00:33:02 - 00:33:40
Mike: This is where transparency is missing because the bid is the sole discriminator. I think we all know that it’s worst practice to advertise the exact same products in PMax and Standard Shopping if you have similar targets. If you highly differentiate the targets or the budgets, then it could possibly make sense. But with similar targets, you get an ambiguous situation where you might have paid more for what you could have gotten cheaper.

00:33:40 - 00:34:14
Mike: What I did here was look at accounts that have shopping-only, hybrid with PMax, or PMax-only setups, and analyzed what happens to the CPCs in those contexts. When looking at shopping-only, the interquartile CPC range is between $0.15 and $0.40. As soon as those shopping campaigns are in a hybrid environment with PMax, the floor doesn’t change much, but the ceiling jumps from $0.40 to $0.60. That merits investigation.

00:34:14 - 00:34:58
Mike: When we look at PMax-only, it has a range that is just higher than shopping, which makes sense because there are other things going on in PMax. But shopping CPCs, when they are in a setting with PMax, start to look more like PMax CPCs. Interestingly, PMax CPCs in a hybrid setup get a touch better than PMax-only, but they’re still higher than shopping-only. The next question is why PMax CPCs are higher in the first place.

00:34:58 - 00:35:24
Mike: I wanted to disentangle this a bit, so I looked at another data point: shopping CPCs, PMax CPCs, and then shopping inside of PMax. I don’t know the exact reason, but it could be that standard shopping has a low anchor because a lot of people use manual bids or max CPC caps that drag it down.

00:35:24 - 00:35:53
Mike: But shopping inside of PMax is indeed more expensive than standard shopping by itself. This could also be because people systemically set different ROAS targets for shopping than PMax, but for whatever reason, shopping inside of PMax tends to cost more. My concern is that in hybrid environments, you do in fact see increased CPCs.

00:35:53 - 00:36:21
Chris: Theoretically, even if you don’t second-price yourself, it makes perfect sense because the discriminator is the CPC. I assume each campaign on its own acts to get the click. In the worst case, when you run literally the same product catalog in both PMax and Standard Shopping, you create a competitive situation.

00:36:21 - 00:36:50
Mike: Although Google will never say out loud that this is happening, I think they have tacitly admitted it through two things. First off, they were pushing hybrid setups for a while, but from what I understand, they are backing away from recommending hybrid PMax and shopping setups now. That strategy was useful for them for a period of time, and coincidentally, we saw CPCs go up at a market level during that period.

00:36:50 - 00:37:23
Mike: There is also a new insight coming. In the channel performance report for PMax, which lets you see your network reporting, they are going to be adding something new called “channel diagnostics.” It is going to specifically help you understand your product overlap between PMax and shopping. Why would that have diagnostic value if there wasn’t a problem?

00:37:23 - 00:38:07
Mike: Obviously, there’s a problem, and the data proves it: different CPCs mean the campaign types just cannibalize each other. The cannibalization wouldn’t even be a problem if the CPCs were equal, because it’s still a standard shopping ad on the SERP, but it seems the CPCs are not equal. Ginny Marvin told us that’s not what’s supposed to happen, but the explanation for why CPC inflation isn’t happening is missing.

00:38:07 - 00:38:32
Mike: I understand her point and the available documentation stating you won’t compete head-to-head against yourself in that sense. But I still believe, and the data supports, that you increase the temperature at the account level. You’re turning up the heat, and even if it’s just incrementally, depending on the volume you manage, it makes a difference.

00:38:32 - 00:39:00
Chris: My final point is that we’ve been talking about hybrid setups long before Google explicitly noted that you have to be careful and have a strategy. We have always advocated for a separation of church and state—having different products or very different strategies. We’re open to talking with anyone who wants to challenge us on that, but it’s an interesting topic we’ll definitely keep an eye on.

00:39:00 - 00:39:20
Chris: We’ll for sure have more talks, probably with Google. We don’t want to be shitting on Google by any means, it’s just not logical why there shouldn’t be this increased temperature.
Mike: To quote you—and it’s not the first time you’ve quoted me, Chris, but thanks.

00:39:20 - 00:41:16
Chris: True, man. Do you quote me sometimes?
Mike: Yeah, definitely.
Chris: Then I’m fine with it. I enjoyed it, man, as always.
Mike: Likewise. Thank you, Chris.
Chris: Thank you, sir. Thanks, everyone, for listening. This has been another episode of Growing E-commerce.