Appendix 5: How to use and optimise Shopping ads

Shopping Ads

Shopping ads are for when you have a product feed.

Shopping ads are automatically created by Google using data in your Google merchant center feed. The ads usually include a product image, title and price, plus your shop or business name. More details are here.

You should also add details on promotions, delivery and returns. information on how to do this is below:

• sale price annotations
• shipping annotations
• return annotations

The quality of your ad is a function of the quality of your product data – the richer the data the better Google can match a product to the search term of the user.

Read Tips on optimising your feed.

 

How it works

Each Shopping campaign you create is connected to your Google merchant center product feed and will have one or more products associated with it.

Let’s use the sports shop Decathlon as an example. Its product feed will have thousands of products across a range of sports.

When a user searches for ‘mountain bikes’ then google will show a shopping ad for a mountain bike product populated using data from the feed.

 

 

When a user searches for ‘tennis racket’ then google will show a shopping ad for a tennis racket:

 

 

You set the Target ROAS for the campaign and Google decides what product to show and how much to bid for each search term entered by a user (as with all campaign types on Target ROAS, Google will bid more for high-converting terms/audiences and less for low converting terms/audiences – read how Google Ads bids).

We can’t add keywords to a campaign or ad group but we can add negative keywords to tell Google not to trigger a campaign or ad group.

 

How to structure Shopping campaigns

We want to structure our Shopping ads campaigns to:

• Show the highest CM3 generating products for generic searches such as ‘tennis racket’ (highest CM3 generating is a combination of ROAS and margin – i.e. high roas and high margin products).
• Match products to precise searches, so the search term ‘babolat racket pure drive 500 G’ shows that exact product.
• Has brand terms (such as decathlon and private label tennis brand ‘artengo’) in a separate campaign where we can optimise the ROAS.

To get the setup right we need to use campaign priority.

 

About Campaign Priority

Campaign priority has three options: high, medium and low (default).

Campaign priority dictates which campaign should take precedence if a product is in more than one campaign (in the same country).

It does not tell Google what campaign should take precedence based on the search term. So if you have half your tennis rackets in a campaign with a high campaign priority and the remaining tennis rackets in a separate low priority campaign then when a user types in the search term ‘tennis racket’ either campaign might fire – the campaign priority is irrelevant in this situation as there is no overlap of products.

Note – When the campaigns do have product overlap then the lower priority campaign will fire if the higher priority campaign has run out of budget or if the higher priority campaign is on track to run out of budget (as Google tries to spread budget across the day).

 

Shopping ads design for Decathlon (tennis rackets)

OK let’s design shopping campaigns for Decathlon tennis rackets.

Decathlon sells many third-party tennis racket brands such as Babolat; Wilson; Prince etc. as well as its private label brand: Artengo.

We want to design the campaigns such that:

• Decathlon has a very high ROAS for branded search terms that include Decathlon or Artengo, as users entering these terms want to come to the Decathlon site and it’s the only place to buy Artengo products.
• For generic searches such as ‘tennis rackets’ we want the highest CM3 products to show (which should be the highest ROAS/margin combination).
• For brand searches such as ‘Babolat’ we want the highest CM3 babolat racket to show.
• For specific product searches such as ‘Babolat Pure Drive 500 g’ we want that exact product to show.

From existing campaigns and site conversion data we know that Artengo rackets deliver the highest CM3 as the margin is high and they are very competitively priced so have good conversion.

Let’s split all the tennis rackets that Decathlon sells into two groups:

• Group 1: Highest CM3 rackets (the private label Artengo range)
• Group 2: All other rackets

Example campaign structure

Campaign 1:

• Aim: Show the highest CM3 products (Artengo) for generic search terms (such as ‘tennis racket’ – search term includes no brand terms such as ‘artengo’, ‘babolat’ or ‘decathlon’).
• Products: Group 1 (All Artengo products).
• Campaign priority: High.
• Negative keywords: ‘decathlon’ and ‘artengo’ plus all third-party brand items (‘babolat’; ‘evo drive lite’ etc.)
• Bidding Strategy: Target ROAS

Campaign 2:

• Aim: Show an ad for search terms that include ‘decathlon’ or ‘artengo’. Because users want to come to Decathlon we should be able to run this campaign at a very high ROAS. All the other campaigns have ‘decathlon’ and ‘artengo’ as negative keywords so this is the only campaign that should trigger for those search terms.
• Products: All products (groups 1 and 2)
• Campaign priority: Low
• Negative Keywords: None
• Bidding Strategy: Target ROAS

Campaign 3:

• Aim: Force Google to show ads from campaign 1 for generic search terms – the very low CPC means campaign 1 should win the bidding on generic search terms. The third-party brand term negative keywords mean this campaign can’t bid on third-party brand terms such as ‘babolat’
• Products: Group 2 (all other products)
• Campaign priority: High
• Negative keywords: ‘decathlon’ and ‘artengo’ plus all third-party brand items (‘babolat’; ‘evo drive lite’ etc.)
• Bidding strategy: Manual CPC with Max CPC of £0.01
• Note: Make sure doesn’t run out of budget!

Campaign 4:

• Aim: Show ads for third-party products when the search term includes a third-party brand name in the search term (unless the search term also includes ‘decathlon’ or ‘artengo’ in which case campaign 2 should trigger).
• Products: Group 2: (all other products)
• Campaign priority: Medium
• Negative keywords: ‘decathlon’ and ‘artengo‘
• Bidding strategy: Target ROAS

 

Here’s how search terms will trigger different campaigns:

 

 

 

Using negative keywords to manage what search terms ads bid on

You can use negative keywords to restrict the generic search terms for which Google can show an ad – for example add ‘real tennis’ as a negative keyword to all campaigns so that no ad is triggered for this search term.

We think it’s best to let Google decide what to bid on to start with. If after launching the campaigns and reviewing the performance of specific search terms it is clear that certain terms are a drag on the performance of the campaign then you can add those terms as negative keywords (see this article for how negative keywords work).

 

Add audience segments

Similarly, we have not restricted the audience to which Google can show ads.

Make sure you add observational audiences to your campaigns. If certain campaigns are not viable with all audiences or some audiences consistently can’t hit the required ROAS then you can exclude poor audiences or target just specific audiences.

 

Repeats

If you see repeat customers (via an observational audience) have a higher CPC than new customers and have a higher ROAS then it makes sense to duplicate the campaign structure with a separate campaign for repeats (and exclude repeats on existing campaigns). Read is a new customer worth more than a repeat?

 

Shopping campaigns across multiple product categories

The Decathlon example above is just for tennis rackets. Decathlon has many more products within tennis itself (balls, nets, shoes etc) as well as 90 other sports categories.

We think creating an ad group for each own-brand sub-category (such as tennis balls) makes sense. Smaller sports can be rolled together to try and limit the number of total campaigns initially.

Over time we want to group products that have similar CM2% and similar ROAS – so move away from a categorisation based on sport to one based on CM2% and ROAS.

So keep reviewing the ad groups within a campaign and move any outliers in a campaign to the campaign that has a Target ROAS similar to how that campaign is performing.

If you need to see spend by product category then you can use mapflo to join together the ad group spend into category spend.

 

What if you sell all own-brand or all third-party brand products

You still want to separate your top-selling products from the rest and run these on a higher ROAS. You want your best sellers to show for generic searches as they will have the best chance of converting.

 

How to group products

Based on your product data feed you can choose to group products by category, brand, Item ID, Condition, product type, Channel, Channel exclusivity or custom label.

You can decide that custom label 0 is the margin and then tag every product as high, medium, or low margin for example. Read more about custom labels.

Within product groups in an ad group, you can then exclude particular groups (depending on how you have segmented them) or individual products if they just don’t convert.

 

Push products on promotion

If you rotate products through promotions then you can use custom labels to group your products by your promotion groups and exclude and include the groups that are on sale at that given time.

You might find that you generate more revenue and CM2 by only showing ads of products that are on promotion (as long as the products on promotion are good sellers rather than genuine clearance products that are discounted because they don’t sell).

 

Other tips on launching Shopping ads campaigns

If you have thousands of products but a small marketing spend, and especially if you are in an industry where a single search term such as ‘women’s clothing’ could show thousands of products, it’s probably worth initially including in your shopping ads only your top sellers so that Google has fewer products to optimise to. Over time you can start adding in other products that might respond to more specific/long-tail terms.

You can also try only including one size for each product in the feed, so Google is not having to optimise to lots of different product sizes (i.e. XXS; XS, S, M, L XL, etc.).

You might have to have a low Target ROAS initially to give Google the licence to test products and audiences.

 

How to Create a Shopping ad campaign

Add New campaign > Sales > select conversion action > Shopping > select appropriate merchant center account > Standard Shopping campaign

Add campaign name > Select bidding strategy (Target ROAS) and budget

Give campaign priority (high/medium/low)

Initially exclude google search network. Select your target location. Give an ad group name.

Campaign priority: which campaign should take precedence if products are available in multiple campaigns in the same country. Remember campaign priority is only important if you have multiple Shopping campaigns that promote the same product.

Campaign priorities determine bids using these rules:

• The highest priority campaign will bid. If one campaign has a higher priority than the others, then the campaign with the higher priority will bid. For example, imagine that two campaigns share a product. One campaign has a High priority, and the other has a Medium priority. The bid from the High priority campaign will be used, even if the bid in the Medium priority campaign is set to a larger amount.
• If the highest priority campaign runs out of budget, the lower priority campaign bids. If the campaign with the highest priority runs out of budget, then the next lower-priority campaign will place the bid. Continuing with the previous example, when the budget for the High priority campaign is used up, the bid from the Medium priority campaign will be used.
• Note about ad delivery: Your budget will be spread throughout the day. So to reserve funds for later in the day, a High priority campaign might not participate in an auction even if the budget is not yet exhausted. Instead, a lower-priority campaign that is not reserving funds might participate in the auction. Learn more about ad delivery.
• When multiple campaigns have the same priority, then the highest bid is used. If multiple campaigns all have the same priority, the campaign with the highest bid for that product will participate in the auction. For example, if three campaigns share the same product and have a Low priority, then the highest bid from any of the three campaigns will be used.

 

>>> Read the next article: Appendix 6: How do I name campaigns and ad groups

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>> Purchase an ANALYSIS OF YOUR GOOGLE ADS ACCOUNT

The interactive video below highlights some of the analyses we cover:

 

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Please be really careful making changes to your Google Ads account

• Google doesn’t always respond how you (or we) think it will. The way we think about Google Ads may not be the best set-up for your account.
• Only change one thing at a time.
• If possible, always use an experiment to test a change – particularly for significant changes such as moving bidding strategy to Maximize conversion value (Target ROAS).
• Protect your financial downside by testing with limited spend in the experiment/change. Note that moving to a smart bidding strategy requires a learning phase where Google may not be efficient.
• Be careful if adding/removing primary conversion actions – changing what Google is converting to can radically change what and who Google targets and how much it’s willing to spend.
• Remember, all changes to your account are at your own risk. Mapflo shall not be liable for any damages; losses; lost revenue or lost profit.
  

 

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Glossary of Terms

AOV = Average Order Value

CM1 = Contribution Margin 1 = revenue minus COGS (cost of goods sold) in an order.

CM2 = Contribution Margin 2 = margin on an order after all costs directly attributable to that order such as COGS, shipping, payment fees, customer service etc. (except for marketing).

CM3 = Contribution Margin 3 = CM2 less marketing spend. An ‘Estimated CM3’ value uses an assumed CM2 %.

CPA = Cost Per Action. In this report taken to mean cost per conversion or cost per order.

Keywords = words or phrases (assigned to an ad group) that match a user’s search term and trigger Google to bid to show an ad.

Lifetime CM3 = CM3 from all orders (or subscription payments) for a customer.

Profit = CM3 less all fixed overheads (such as salaries and office rent). Hence Optimising CM3 also optimises profit at the same cost base

ROAS = ‘Return On Ad Spend’ = conversion value divided by cost. A ROAS of 400% means you get four pounds of revenue back for every pound of ad spend.

Search term = the word or phrase that a user searches for on Google.

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