Is Google Shopping Worth the Investment?

Until recently, many marketers have considered pay per click (PPC) search advertising to be the most effective and cost efficient advertising solution available. However, times are changing, and those in the know are beginning to shift their focus towards Google Shopping. Yet this is no easy task, and the substantial amount of time and effort required has led many to ask, why use Google Shopping as opposed to text or display advertising? Is it really worth the investment? In order to answer these questions fully, I will begin with a brief history lesson.

The launch of Google AdWords in 2000 sparked a revolution in the way that businesses marketed their products and services. Where previously adverts were printed or broadcast in the hope that they might be acknowledged and acted upon, suddenly businesses were able to advertise exclusively to the people who were looking for what they were trying to sell. Best of all, they only had to pay up when a user actually clicked on the advert. The return on investment was nothing short of sensational, especially when compared with traditional marketing methods. As a result, PPC advertising became more and more popular, growing Google’s revenues from $66m in 2001 to $50.5bn in 2013 and, as the main source of its income, powering it to become one of the world’s largest companies. But here’s the paradox. As Google fills its ever-expanding pockets, businesses face a growing problem. While the popularity of PPC advertising has continued to grow, so too has demand, driving more and more clicks and higher and higher volumes, and increasing competition in turn. And with Google using an auction system to price its ads, bids have risen through the laws of supply and demand, increasing unit prices exponentially.

Where click costs used to be counted in pennies, they’re now counted in pounds. In competitive verticals and market sectors, it’s not uncommon to see PPC costs in excess of £100 per click. This has meant that many search auctions are only available to those with the strongest business models and the deepest pockets. Even in less competitive markets, advertisers must be prepared to pay out, or at least have an extremely robust conversion model. You might only be paying 50p per click, but if you are only achieving a conversion rate of 1%, each sale needs to generate £50 in profit just to cover the advertising cost. In many cases, this is just not possible. For many years, we have been encouraging bids on long-tail terms, i.e. highly specific, multi-word phrases that describe a very precise need. Terms like cash back credit cards no annual fee, white high gloss nest of tables and ceiling mounted motion sensor light switch are naturally less competitive than their short-tail counterparts, such as credit cards, light bulbs and tables. While this has generally achieved better ROI, the volume is often very limited. This has meant that, for many advertisers, PPC search advertising has not been realistic or viable in certain cases. Step forward, Google Shopping…

Launched in the UK this time last year, Google Shopping Ads (read more here) is the latest incarnation of Google’s product search service. Originally known as Froogle, this concept has been around since 2003, when Google first embarked on their mission to seek out the best ways to search for (and monetise the search for) products on the internet. Here’s how it works. When a user searches for a product, Google matches their query with a selection of products from its database. This database is made up of shopping feeds submitted by merchants, as well as suitable products that Google has ‘found’ by crawling merchants’ websites. Products are selected based on relevancy, quality score and the rich text that is used to describe them, as well as the ‘bid’ price that the advertiser is prepared to offer.

As with PPC (but probably more so), the success of advertising on Google Shopping depends greatly on how well the feed is optimised, and how the campaign is organised, structured and managed. Marketers must dedicate a significant amount of time and resource to these tasks in order to maximise the impact of their Google Shopping campaigns. Perhaps because of this, we have seen many advertisers who have spent heavily on Google Shopping to little avail. On the other hand, most of our clients have achieved sensational results on Shopping, with an ROI vastly exceeding the returns achieved through traditional PPC text advertising.

Many advertisers avoid Google Shopping altogether because they lack the confidence or requisite knowledge. Because of this, it’s far less competitive than traditional text advertising – for the time being. Savvy advertisers are jumping on this opportunity now, before others become aware of it and Google Shopping gets saturated in the same way that text advertising has. Thanks to relatively low levels of competition, advertisers now have the opportunity to participate in auctions with click prices that are generally much lower than text ad clicks. So if you have a product that is not well known but is well priced and attractive, or a range of not-so-well-known products in a large, generic sector, Google Shopping is the way to go. In other words, if you have previously avoided bidding on generic terms due to prohibitive click costs or limited range, now’s your chance. Another major benefit of Google Shopping is that when people find your product in a search, they’ll be presented with a whole host of information, including the product name, a link, an image and the price, together with a small amount of advertising text. As a result, they are likely to know straightaway whether the product is relevant to their needs, and if it isn’t, they’ll go elsewhere. This means a more focussed set of people will be viewing your products, potentially resulting in higher rates of conversion, lower bounce rates and a far better ROI overall.

If you’re considering incorporating Google Shopping into your online marketing strategy, I would strongly encourage you to go for it – and the sooner, the better. Just make sure that whoever you put in charge has the expertise (and patience) required to manage, organise and optimise the shopping feed to the nth degree, and I assure you, the results will speak for themselves.