In December Google announced their plans for rolling out a new Google Shopping model that will be based upon Product Listing ads. This will mean an end to the free Google shopping listings that are currently in place. This has been trialled already in the USA. They plan to start introducing it across the UK and Europe, Brazil, Australia and Japan starting in February 2013 and finishing at the end of quarter 2 in 2013.
Google believe that by commercialising the shopping results it will lead to better shopping experience for the searcher. We think this could be true because merchants will have to pay as a result of being included in the shopping results. Merchants should want to make sure their adverts are as accurate and stand out as much as possible in order to maximise the revenue generated from the traffic they will have to pay for. However this it will depend on how merchants setup the Google Shopping product feeds and AdWords accounts.
Google also believe that by monetising the shopping results it will level the playing field by allowing smaller companies to bid for top positions normally taken up by established. However smaller companies often have tighter profit margins and more restrictive marketing budgets meaning that they could be priced out of the market.
How Will Google Shopping Work
Image of a Google results page.
Retailers will have to create a Google Merchant Center (Free to setup); this will enable them to create a product feed (Free to submit to Google Merchant Center) which is a file that contains details about the products they sell including images, product titles, descriptions, prices, colours, availability and so on.
Once the Merchant Center account and product feed has been created the Merchant Center will have to be linked to an active Google AdWords account. Google AdWords is Google’s Paid search advertising platform that allows people to create adverts in many formats to be displayed in Google search results, and websites opted into it AdSense and display network. Within Google AdWords account advertisers will be able to decide where their adverts will be shown including on what type of devices, locations, languages and even which sites they want their adverts to be shown on.
Advertisers will also be to control when adverts are shown and how much they are willing to pay per sale (known as CPA bidding) this will allow merchants to be able track and control their ROI.
How Much Will it Cost
Google will have two pricing structures for the Google Shopping Product Listings:
- Cost-per-click (CPC), this is where a maximum cost per click bid is set per ad group of products being targeted. The advertiser will pay each time a searcher clicks on their advert and no more than the maximum cost per click will be charge by Google each time the advert is clicked. A click through to the site does not guarantee a conversion or sale.
- Cost-per-acquisition (CPA) Percentage. You set a maximum percentage of the final sale value you are willing to pay. Once a customer clicks on a product listing advert, any purchase they make within 30 days of the click that can be attributed to the click then Google will charge you the percentage of the final sale value you have set.
Shopping product advert positions are determined by the Advert Rank of your product each time a relevant search is entered in to Google.
The Advert Rank is a score based on your maximum CPC or the CPA percentage of how much you are willing to pay Google and the quality score. The quality score is a measure of how relevant the search query is to the most relevant product in your entire Merchant Center product feed.
What to Do Now
- Evaluate your internal resources and decide whether you have the time, experiance ,profit margins and cash flow to be able to run an effective campaign
- Set up an AdWords account and Merchant Center and become familiar with setting up product listings
- Analyse your products and audiences and plan which products to market. Focus on the products with the highest profit margins
- Set up an optimised XML product feed that features all of the most profitable products
- Decide on a cost effective bidding strategy
- Take advantage of incentives offered by Google to increase the potential ROI of the advertising campaign. Currently Google are offering a 10% monthly credit for all newly created Google shopping Merchants
- Run your campaign, constantly analysing and optimising your product feed and bidding strategy to ensure a profitable return on investment is achieved