Google Shopping is an essential part of most e-tailers strategies. For a lot of companies in this industry, it is one of the biggest revenue-generating tools.

Recently, however, Google has made changes to how Shopping works. Many businesses have modified their strategy to take advantage of the changes, and as a result are seeing higher returns on investment (ROI). But many haven’t been successful in adapting to this new reality, and consequently their revenues from this channel have fallen sharply over the last couple of months.

Google Shopping in a nutshell

Google Shopping offers another opportunity for e-commerce businesses to sell their products through the world’s biggest search engine besides organic listings. For most of our clients, it has proved to be their single biggest paid-for marketing channel – and the most efficient.

Basically, when a consumer searches for products or product categories on Google (eg 'Nike Air Max trainers' or ‘trainers'), results relevant to this category are displayed in Google Shopping as sponsored links above or to the side of organic results.

Alternatively, adverts with more content are displayed when a user searches for products or product categories within Google Shopping. This section can be accessed from the top bar on Google search engine results pages (SERPs). These ads can be organised by a range of characteristics including price, brand and size.

How Google Shopping works 

Google Shopping and Product Listing Ads are generated from a retailer's Google Merchant Center feed and they are managed through the paid search advertising platform Google AdWords.

When a user lands on your website through a Product Listing Ad, you will be charged by Google on a pay-per-click (PPC) basis.

What's changed in the Google Shopping update?

In September 2014, Google altered how Shopping works.

A lot of things changed, but one of the most significant updates was that it meant businesses could be far more precise about how much they spent promoting individual products. Essentially this mean it’s now much easier for a business to be more effective and efficient when using Google Shopping. Granularity is key for PPC in eCommerce and this change offers us more control, delivering further efficiencies in what was already a highly effective channel.

Can I get more from Google Shopping now?

Using the updated AdWords platform, it's now possible to set individual bid amounts for specific products in Google Product Listing Ads (eg the 'Nike Air Max trainers' we mentioned earlier) or product categories (eg
'trainers') as opposed to the one-size-fits-all approach used previously. This will naturally deliver more control, allowing us to dial up the areas that work and dial down those that don't.

Businesses should be celebrating the introduction of this added granularity on AdWords, but many have found the transition difficult.How does this work in practice?

To give an example, one of our retail clients (let's call them Client A) has an average order value of approximately £80. After we helped them to take advantage of the Google Shopping changes, their cost per acquisition fell by 29 per cent to £12. If we assume that the retailer generates around 2,000 sales per month through this channel and it's saving £5 on every sale, this effectively means it's saving £10,000 per month.

The savings would obviously be even greater for retailers handling higher sales volumes.

In the retail world, a drop in cost per acquisition on this scale is huge. After all, spending less on attracting each new customer leaves companies with a much larger budget to invest in continued business growth.

What's the next step?

We’d advise retailers to log into their AdWords accounts and review their product listings straight away. Those that haven't added granularity will need to as a matter of urgency. Ideally, it’s a good idea to manually set prices for each individual product in the catalogue one at a time. Where this isn't possible – if, for example, they have a huge portfolio – they ought to be setting prices for each product type at the very least.

Admittedly, this can be a very time-consuming process. Many smaller retailers don't have the resources to introduce granularity, while equally there are many larger retailers that may not have the paid search expertise to do this themselves.

Google has been publishing blog posts and videos to educate retailers about what is changing, so these are useful for anyone looking to learn more. But to really get the most out of granularity, we'd recommend getting outside assistance. Specialist agencies will be able to recommend what changes need to be made and many will also implement the changes and run Google Shopping campaigns in a highly efficient manner.

 

By Oliver Lees, Digital Marketing Manager at Space 48.

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