Why is Performance Max losing me money?

Performance Max is not broken. It is doing exactly what you told it to do. The problem is that most accounts feed it gross conversion value with no margin signal, no brand exclusion, and no SKU role logic: then act surprised when it scales the cheapest-to-convert inventory regardless of margin.

The four common failure modes: first, it eats brand search traffic that would have converted organically: revenue stays flat, spend goes up. Second, it skews mix to low-AOV, low-margin SKUs because they convert at the lowest CPA. Third, it pushes out-of-stock or low-stock SKUs unless stock data is in the feed. Fourth, it has no way to know that a sale at full price is more valuable than a sale at 30% off, unless margin is in the value signal.

A worked example: a beauty brand running PMax with gross-revenue conversion value scaled to a 4.8× ROAS over three months. Underneath, 62% of the new revenue was from a single £18 introductory SKU at 18% margin, and 28% was brand search PMax was claiming credit for. Contribution profit was down 6% YoY despite the headline ROAS being flattering.

The fix is in three layers: brand exclusion (or a dedicated brand campaign PMax is excluded from), margin-weighted conversion value, and asset group structure that does not dilute signal across mismatched SKUs.