Bidding Strategies on Shopping
If you want to succeed online, Google shopping is going to be pivotal to your success. Google Shopping is a great way of advertising products on Google, whether you have 10 or 1000 products. It’s the number one marketing channel to reach customers who are at the point of purchase. Shopping allows you to quickly present your key information to users at the exact moment they’re searching, so getting the bidding strategy right is essential to stop you wasting budget on higher CPCs than you need.
Whilst Google shopping is a gold mine for the more experienced Google Ads user, it can easily become a money-pit.
Last week, we talked about the bidding strategies available to you when using Search campaigns. Today, let’s take a look at the bidding options available to you when using Google Shopping.
Manual cost-per-click allows you to set a maximum bid for a click through to your product page. A bid can be placed on a whole ad group initially, or on specific products.
Manual CPC allows you to keep close control of your bids, though does tend to require more people power. If you feel that a particular ad group would benefit from a higher bid, this is something you’ll need to identify and amend manually.
Our CEO, Jamison, explained why he prefers manual CPC. “Google recommends that you use automation. It’s great for them,” he told me, “but we find that you have more control over your account by controlling your bids manually.”
Enhanced-cost-per-click is a combination of automated and manual bidding. It’s sometimes referred to as ‘soft automation’, allowing you to try out automation before you commit to a fully automated bidding strategy.
Google uses algorithms to identify searches which it believes will lead to a sale. So, if Google thinks a user is likely to buy your product, based on previous data, it can increase the bids on this ad. There’s no cap on how much it can raise your bids, so you have less control over your budget.
For this bidding strategy to work, you will need to have conversion tracking in place. Google recommends that you have at least 15 conversions per month before you use this type of strategy. As with all automated bidding strategies, Google’s algorithms use previous performance data as a basis for their bidding decisions. The more data you’ve gathered, the more accurate these decisions can be.
Target CPA, or cost-per-acquisition, is another automated bidding strategy, where you can set a bid on how much you’d like to pay to acquire a customer. In Shopping, an ‘acquisition’ is counted when someone buys from your website.
Google adjusts their cost-per-click using algorithms, and bases its decision on how likely a user is to convert. It will attempt to produce a cost-per-acquisition that’s as close to your target CPA as possible.
For a low value product, you might set a target CPA of $0.50. You retail your product at $5, and purchase it from your supplier for $3. This allows you to make $1.50 profit on each sale, or 30% of the retail value. If you’re considering CPA bidding, you’ll need to consider your profit margins, and how much of this you can dedicate to Shopping ads.
Return-on-ad-spend is the income you’d like to generate in return for your ad spend. A 700% ROAS would mean that for every $1 spent, you’ve generated $7 in revenue.
You can set a target ROAS, and Google will use your budget to try and achieve this. Take a look at the conv. value/cost of your best performing campaigns and use this figure as guidance. A conv. value/cost of 5.4, for example, is the equivalent of a 540% ROAS. Your target ROAS should be near to this figure – if you set an unrealistically high target, Google will struggle to achieve this.
ROAS is a little like training a child to ride a bike – there are no easy shortcuts. ROAS is highly dependant on external factors, such as seasonal demand and the weather. At the start of a season, you often have to manage bids manually to get the desired ROI before switching to ROAS when AI ‘training’ has taken place. When sales to start to slow, often due to a seasonal fall in demand, advertisers often have to switch back to manual bidding.
With this bidding strategy, Google will try to generate as many clicks as possible to your product landing page. There is, however, a risk that this will generate high volumes of clicks, but few conversions. With Shopping ads, this is slightly less problematic than it is with Search. When your ad appears, the customer can immediately see an image, price, store name and, if added, a star rating. So, when a user clicks on your ad, they’re armed with several pieces of information already.
This should ensure that click-throughs are high quality, but unfortunately, poor-quality traffic can still appear. To ensure that these clicks are from high-intent users, negative keywords should be used to exclude traffic. Maximize clicks is an automated strategy and takes away some of the work required with manual CPC. This bidding strategy doesn’t do all the work for you, though – you will need to monitor your search terms and add negative keywords accordingly.
I asked Fraser, one of our account managers, what he thinks of this bidding strategy. He had some reservations, explaining “I find that Maximize Clicks isn’t the best optimized strategy for achieving a consistent, healthy ROI.”
This is another bidding strategy which uses automation. Using data collected from your account previously, Google allocates your budget in the way it feels will bring the most conversions. This bidding strategy is fully automated, giving Google a large amount of control.
If you’re considering this strategy, make sure you’ve got accurate conversion tracking in place. Again, you’ll need a significant number of previous conversions so that Google’s algorithms can make informed decisions. This strategy will try to maximize conversions within your daily budget, but remember that it doesn’t consider profitability.
In Shopping campaigns, you’re not able to use the experiment feature. This means that when you try a new bidding strategy, you will have to fully commit to it – a daunting prospect for longstanding, successful campaigns. Manual CPC allows you to retain control over your bids, whereas automated strategies can help you out by lessening your workload. If you are considering an automated strategy, you’ll need to have amassed a significant amount of previous data for Google’s algorithms to learn from.
Would you benefit from the advice of our expert team? Contact us below for a free review of your Google Ads account.