Automation & Black Boxes: Understanding the New Paid Media Landscape

There’s no denying that 2022 has been one of the most paradigm-shifting years in a long time for paid media. From the rise of responsive ads to the depreciation of the last-click attribution model, the platforms and ad formats that have been gold mines for brands and digital marketers have undergone a slew of new changes that have left many reeling.

The anxiety around losing many of the levers that brands are used to pulling to optimize the performance of their campaigns isn’t unwarranted — change is scary, after all! But what advertisers need to swallow is that automation is here to stay… and that it’s a good thing for brands and digital marketers alike. Let’s get into why.

How the Paradigm Has Shifted

In one of our recent blog posts, Coast Digital’s founder and head of growth marketing Scott Bauer dove deep into the new era of digital marketing we’re in today. I’d suggest giving it a read to understand the broader context behind the recent changes we’ve seen to Google’s and Meta’s ad platforms.

What’s critical to understand is that the restricted data flow brought on by the launch of iOS 14.5’s “Ask App Not To Track” feature in 2021 has pushed Google and Meta to get creative with how they serve ads to their users. I’m about to dive into the details of these changes, but one critical theme underpins them both: the granular controls advertisers have relied on in the past to optimize their campaigns have diminished in effectiveness, and are being replaced by strategies that lean further into automation. 

Google’s Performance Max

In April 2022, Google started to replace its Smart Shopping and Local campaigns with Performance Max. Though it features less granular controls, Performance Max is best viewed as a natural evolution of the already powerful Smart Shopping. It’s everything Smart Shopping was, but it now serves ads on all Google-owned and operated platforms and makes full use of the company’s wealth of real-time data on user intent and behavior to increase reach and convert bottom funnel users. The automated goal-based campaigns use machine learning to serve audiences a relevant ad (often combining top-performing assets) and an optimal bid to maximize campaign performance. 

To date, it has optimized performance, with many of Coast’s clients seeing increased ad effectiveness. Even brands with relatively small monthly budgets have seen success with Performance Max campaigns. The one key feature of the campaign is its expanded reach  — Performance Max runs on seven different ad networks, when Smart Shopping only ran on three.

Though Performance Max certainly poses new challenges (which I’ll get into in the next section), there is so much value to these automated campaigns.

Meta’s Advantage+

By contrast, Facebook’s response to iOS 14.5 has been much less successful. Because most users have opted out of tracking (it’s estimated that as many as 96% of US users have opted out of tracking), the data that once made the platform so powerful has been all but decimated. 

The launch of Advantage+ was meant to help marketers adapt to these changes, however, a significant proportion of the targeting options brands and advertisers were used to leveraging disappeared. The targeting options that remain are depleted at best — even if brands are able to supplement them by uploading their own first-party data. (This is likely because many brands don’t have sufficiently sized first-party audiences to make up for the loss in performance.)

Though the overall efficiency of advertising across Meta’s platforms has undeniably decreased, it’s too early for brands to write it off entirely when planning their marketing mix. Meta is still a very powerful platform — and by feeding it different combinations of optimized creative assets and going broad with targeting, brands can still see a strong return. Plus, the synergy between running concurrent campaigns across Meta and Google is still very much present, with performance increasing across both channels when they are leveraged at the same time. 

Getting Comfortable with Increased Automation & Decreased Data

At their core, these changes force brands to consider what they want most. Do they want more control? Or do they want more revenue? I think we all know what the answer to that question is.

So, to actually achieve that increase in revenue, teams need to get comfortable with releasing control. The most important thing that marketers and brands can do to respond to this new paradigm is to learn how to empower the machine learning engines behind these automated campaigns. 

Creative is King

Gone are the days of exporting performance data from platforms and throwing it in excel to change your bids. Instead, the last real factor brands have control over is the assets they use to fuel campaigns — and this is especially true for Facebook/Meta.

For example, with Google Smart Shopping campaigns, brands would simply connect their product feed to the campaign and let Google do the rest. But, with Performance Max, advertisers are able to upload 15 to 20 images and videos per asset group, empowering the campaign with creative that matches the targeted listing group. 

Because of this, it is more important than ever for brands to regularly invest a proportion of their marketing spend into creative. Continually refreshing asset libraries will allow teams to most effectively test and re-optimize campaigns — ultimately yielding better results and larger marketing budgets in the future. That said, not all creative is created equal. Often, in-house teams are not equipped with the knowledge they need to generate effective creative assets for performance marketing campaigns. This is why partnering with an agency that understands how to create effective ads — like we do at Coast Digital — is so important. 

Reframing KPIs

In addition to making strong creative assets more important than ever, leaning into automated campaigns comes with one other big change: decreased performance data.

One of the main criticisms leveled at Performance Max is that it is a bit of a black box when it comes to reporting. Currently, teams can only report on top-level campaign performance, including location performance and timing performance (hour-of-day, day-of-week, and day and hour combined). Though Google has announced it will be rolling out reporting additions to Google Max, it is a good indicator of where the industry is headed in general. 

As these platforms become more of a black box, focusing on ROAS above all else becomes misleading — if not downright impossible. Instead, it is better for teams to look at their marketing efficiency ratio (all of the revenue that a business has accumulated online/total spend across all digital platforms). Doing so acknowledges both the complexity of digital customer journeys, as well as the fact that running campaigns across multiple platforms has inherent value to brands. 

As part of getting comfortable with reduced control in favor of more efficient revenue generation, brands have to shift how they measure the success of their campaigns. 

Choosing the Right Agency Partner

In-house teams, with their limited access to data and best practices tested industry-wide, are at a particular disadvantage in the environment of today’s paid media landscape. Agencies, on the other hand, have access to a huge range of accounts that are potential sandboxes that they can use to generate learnings that can increase overall ad efficiency across all of the clients they work with. 

At Coast Digital, we’re ready to help brands adapt to the new rules of performance marketing so that they can thrive. 

We aren’t the typical performance marketing agency that launches campaigns and sends faceless weekly reports. We’re a holistic partner to our clients, and our mission is to empower e-commerce brands with the traffic, data, creative, and tailored recommendations they need in order to succeed in today’s increasingly competitive landscape. Our all-in-one combination of paid marketing, comprehensive growth strategy, and performance creative allows our partners to focus on what is most important — their brand, their product, and their customers.

Ready to learn more? Let’s talk.


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