Profitable Google Shopping Campaigns

Best Practices for Profitable Google Shopping Campaigns

In our last Google Shopping post, we discussed how a process called campaign structure analysis can help you get more out of your shopping campaigns. This process is useful for evaluating campaign structure, product groups, budgets, bids, and negative keywords, then optimizing for the relevant business objectives. While this is a great starting point for taking over a new account or setting one up from scratch, keeping your campaigns productive requires a well thought-out account management strategy and having the right tools at your disposal.

With monthly fluctuations in ad spend budgets, promotional activity in other channels, seasonality of demand, intense competition, and routine changes to the environment by Google, consistently hitting a return on ad spend (ROAS) target at or under budget can be challenging – even for the pros. So how do you get the results you need from your Google Shopping campaigns on an ongoing basis? Although each application will differ based on client goals, budget, industry, and management strategy, the following list is a sample of our favorite tools and tactics to profitable Google Shopping Campaigns that deliver results.

Profitable Google Shopping Campaigns Begin with Great Campaign Structure

One of our first steps when setting up or acquiring a Google Shopping account is to build the account structure around client goals, and what we know to be effective for the type of client and their specific industry. Once enough performance data has been collected, we evaluate whether this structure is effective for a specific client, or whether structure maintenance or a change to the structure will allow us to achieve a higher ROAS with the same budget.

As an example of how structure maintenance can lead to improvements in performance, imagine a large retailer who carries many brands across a large catalog of products. One way to structure this account is to create campaigns by merchant category, and ad groups by brand:

Sample category: Women’s > Apparel > Tops > Tank Tops

Sample ad group: Women’s > Apparel > Tops > Tank Tops | Jane Doe Fashion

If this retailer frequently changes categorization, adds categories, or adds brands, the new or recently changed products would not appear in your campaign structure as intended, but would instead flow into the “all products” product group. This happens because their corresponding campaign or ad group does not exist when these products enter the feed. This means you have less bidding control over your products. You’re now forced to bid on the average performance of the catch all campaign and ad groups. Regularly analyzing this merchant’s data feed and building new campaigns and ad groups can lead to significant improvements in bid control and in turn campaign efficiency.

Another important consideration is whether modifying the structure design could lead to performance improvements. For example, it is often the case for brands that greater ad spend efficiency can be achieved by segmenting traffic between branded search queries and non-branded search queries. This is accomplished by creating duplicate campaigns around categories, and using negative keywords to segment the traffic. In this way, you have greater control over how much is bid for brand-specific search queries, and how much is bid for generic searches:

Sample campaign (brand): Brand | Shorts > Cargo Shorts > Men’s

Sample negative keyword: “men’s cargo shorts”

Sample campaign (non-brand): General | Shorts > Cargo Shorts > Men’s

Sample negative keyword: “XYZ Brand men’s cargo shorts” 

In our experience, we have found that this doesn’t always work for brands – some well-known brands simply cannot compete with the major retailers for generic keywords. In this case, it may be worth reallocating the entire ad spend budget to the branded campaigns and pausing the campaigns geared towards more general search terms. If the general campaigns just aren’t converting, this move could lead to more conversions and greater efficiency with the same budget.

Find the Right Bidding Strategy

When it comes to bidding, there isn’t one right answer that works for all shopping campaigns. Business and product types, catalog and budget size, industry, and competitive dynamics mean that each account must be treated differently. With this in mind, it is important to develop the right bidding strategy for your particular business by asking the right questions. A couple things to consider when developing your bidding strategy are:

How frequently does it make sense to bid?

Bidding frequency can impact performance by allowing you to react quickly to changes in performance trends when sufficient data exists. Using current revenue and return data rather than average campaign performance over a 24-hour period can lead to sustained performance improvements, and can be used as a budget pacing tool. For higher volume clients which accumulate significant performance data over the course of a few hours, we may use intraday bidding – bidding as often as 3-4 times each day. While this can be an impactful strategy, if your shopping campaigns don’t generate the volume of data necessary to satisfy this requirement, bidding at longer intervals when enough data is available (e.g., daily, every other day, weekly) is the best option.

How should performance and budget factor into bid adjustments?

Return on Ad Spend (ROAS) performance provides good directional information for setting bids, but a key question to ask is the degree of change you should make to the current bid. In general, the further away the campaign is from target ROAS, the larger the change can be. For example, a sizable bid increase to a product group with a well-above-target ROAS will result in both a large increase in sales and a large (but acceptable) loss in efficiency. On the other hand, a small bid increase to a product group with a just above target ROAS will result in both a small increase in sales and a small decrease in efficiency.

Additionally, the monthly ad spend budget should help inform bidding choices. If you are pacing to exceed your monthly ad spend budget, it would be wise to aggressively target efficiency and be less aggressive by bidding up well performing product groups.

While these are not the only questions that you should ask when developing your bidding strategy, they should serve as a starting point for integrating account performance, budget pacing, and the volume of data into your campaign strategy for Google Shopping.

Manage the Data Feed with Business Objectives in Mind

Another way to potentially increase efficiency is to control what goes into your data feed. For merchants whose strategic priority is to maintain as much visibility as possible on the channel, removing products from the feed would be detrimental to their business objective. If that is the case, account structure and bid management are the two main levers we have to reach efficiency targets for the client.

On the other hand, if the ultimate business objective is to maximize sales at or above the target ROAS, it may be worthwhile to exclude products from your data feed that are hurting campaign performance. For example:

  1. Performance exclusions: if there are products that fail to convert at or above target ROAS, it may be worth considering excluding them from the feed. If bidding to test different traffic levels still has not led to productivity from the product, it may be best to exclude that product from the feed temporarily. Developing a strategy for managing when to exclude products from the feed that aren’t performing and when to reintroduce them can help you achieve improved efficiency.
  1. Strategic exclusions: analyzing your performance data against item pricing can also potentially boost performance. If there are products in your feed with a low sale price, a high Cost Per Click (CPC), and average click-through and conversion rates, it may be mathematically impossible for these items to perform at or above target ROAS. Excluding items with a sale price too low for the average CPC to each target ROAS can help improve campaign performance.

For example, if an item sells for $10, has an average CPC of $0.50, an average Click-Through Rate (CTR) of 2%, and an average conversion rate of 5%; there is no possibility this item will ever reach the target ROAS. Excluding this item may help improve campaign performance.

While these tactics may help boost performance, it is important to consider your business objectives and overall account performance. We used these tactics with a major retailer and saw an immediate lift in performance when the budget from the low revenue products was reallocated to other products in their feed. However, if your campaigns are already performing above target, exclusions may further improve efficiency but leave ad spend budget on the table (and the marginal increase in revenue associated with it).

Don’t Forget to Look for New Opportunities

Google is constantly adding new features and functionality to how ads are structured and delivered, and experimenting with various ad formats and features. It’s a good idea to be on the lookout for new opportunities that can help you find some areas where your shopping campaigns can excel.

For example, we now use Google local inventory ads to supplement shopping campaigns for some clients with brick and mortar stores who have the capability to support this feature. These ads are designed to make inventory in local stores visible to people shopping online. For clients using local inventory ads, this has been a great way to drive traffic to their local stores from online product searches.

Another example is using Google dynamic product ads for retargeting. Conversion rates and ROAS are higher for this ad type, and this has been a very successful supplement to the Google shopping campaigns for several of our clients.

Testing these new ad formats and features can help you find new ways to increase sales profitably, but it is important to understand that they won’t work well for every business. Knowing how your particular customers find and buy your products can help inform which opportunities make the most sense in your business context.

Review, Refine, Repeat!

Even after your account has been audited and set up according to best practices and relevant business goals, it is important to regularly analyze performance and refine as necessary. Improvements in overall sales and efficiency are often the result of structural maintenance or modification, bidding strategy improvements, actively managing the data feed, and testing new opportunities to advertise your products and stores. Using a platform such as CommerceHub’s DemandStream solution to help manage your Google Shopping campaigns can help simplify this process by providing easier access to performance reporting, tools for bulk account structure changes, and filtering capabilities to manage your data feed.

To learn how DemandStream can help you get more out of your shopping campaigns, contact us today.