3. How to Profit From Google Shopping
Aligning Your Goals with the Market
Nobody counts the number of ads you run; they just remember the impression you make.
William Bernbach, 1949 founder of international advertising agency Doyle Dane Bernbach
What is success for you on Google Shopping? Chances are it is making more revenue than ad spend, any agency fees, and expenses associated with fulfilling the orders. That is the most common goal I hear from clients.
You can profit by looking only at revenue reported in Google Ads, but to scale, you must look beyond last-click attribution where a customer clicks on an ad then immediately buys. Advertising success is more than that. Once someone sees a shopping ad, they can buy a day later through another channel. Furthermore, searches on Google vary in intent, customers have lifetime value beyond their first purchase, and competition influences what people expect from your brand.
So let’s dig into goals and intent. You’ll then finish the chapter by studying the competition. These give you a framework for advertising success.
How you define success determines how you approach account setup and management. Goals shape your activities such as setup, optimisation, and what you report on.
First of all, you need to work out your overarching goal, such as a specific return on investment (ROI). You can then work out what other key performance indicators you need to hit that goal. Before my team manages any new ad account, we must define a return on ad spend (ROAS) goal. ROAS is calculated from the revenue and spend reported in the ad account:
ROAS = Google Ads Revenue / Google Ads Spend
If the price of your products are similar to each other, define your cost-per-acquisition (CPA). The CPA defines how much you want to pay for a sale.
Also calculate your marketing efficiency ratio (MER) to figure out how to make growth safe. MER is an old marketing metric to measure the effectiveness of ad spend. Newspaper, TV, and billboard advertisers, who didn’t have scripts stalking users, depended on the metric to measure success. MER is calculated as follows:
MER = (Shopify Sales – Shopify Discounts) / Total Ad Spend
If spend goes up and revenue remains the same, you know advertising was a waste. As you spend, you’ll discover an MER that works for your business. Young businesses can afford to have a low MER while mature businesses with an established customer base should seek a higher MER.
Shopify Profit Calculator
Make a copy of our Profit Calculator Google sheet. In it is a sheet target ROAS and target CPA calculator.
A second sheet in the document is the profit analysis. This can become your Shopify profit calculator so go ahead and make a copy of the sheet.
Fill in each sheet within the template to know your profit. From there, calculate how much profit you’re prepared to sacrifice to achieve the sale. The lower your return on ad spend, the more volume you can drive and the greater your chance of succeeding on Google Shopping.
When you set smart goals that drive your Google Ads growth, you’ll be ahead of most businesses that aim for a crudely calculated objective.
Unexpected Secret Goals of Growth
In assessing your goal, also look long-term. Would you consider spending all profit on getting a sale if it could boost your returns over time? For low-cost products, you can afford to make no profit to gain a customer on the back-end of your marketing funnels. This strategy of spending more at the CPA-level or dropping your profit margins, not only acquires a customer—they can refer-a-friend, give a product review, or build another asset like video for social proof. I know it can be hard to willingly lose profit because profit is the purpose of most businesses.
The fastest growing stores I work with invest their profits back into the business, whether it is to increase stock levels so they stop running out of product or to scale advertising platforms. The customers you acquire can buy again via email marketing over the months and years.
The secret benefit in today’s digital marketing of acquiring customers is building your paid social pixel data. Once you hit 5,000 purchase events in Facebook or TikTok, the social platforms have an amazing ability from the dataset to get your ad in front of people like your customers without any targeting settings.
The good news with Google Shopping is you don’t have to lose a lot of money beyond the first month. You are able to make profit from the beginning with the right strategy. Please still consider the long-term benefits of creating regular, repeat, raving customers.
What does someone want when they search “Sony”? They may need product support for headphones, stock information, or the company’s history for a trivia night. I have no idea! Matching the buying intent with the right cost per click lets you pay more for people likely to buy and less for those unlikely to buy.
There are three levels of intent in search as they relate to someone’s willingness to buy:
The three levels give you a framework to discriminate bid amounts, mostly in search but also shopping. You can also change your ROAS target to expect higher performance from branded terms.
The people at the top of your sales funnel are in the awareness phase. They are rarely ready to buy until they better understand their problem. This usually leads to long-tail keyword searches with informational intent such as “why are my pores big” and “how can I reduce my pores?” The people behind these searches are gathering information. They have no apparent knowledge of cream that reduces pore size.
The “consideration” search shows more intent to buy. It can indicate criteria, intent to compare, and seek confirmation. Example searches include: “best skin products for pore reduction”, “(product a) versus (product b)”, and “(product a) reviews”.
Finally, the “Intention” search sits at the bottom of the conversion funnel. The searcher knows what product they are looking for, or the brand they want to buy. For example, “pore minimising toner”, “(website name) reduce pores”, and “buy (product a)”.
Store owners can make the mistake of assuming “intent” searchers are going to buy without a Google ad so the owner refuses to bid on their own brand terms. This leaves competitors, or other sellers of your products, to steal such customers. Even when you bid on brand terms, conversion rates are never close to 100%.
You want your shopping ads to show for a lot of consideration and intention searches. Awareness searches can be as profitable as lower funnel searches if you pay less for their clicks. Awareness searches are generally better targeted with a search ad to a blog post or piece of content that answers their question. If your campaigns have a lot of awareness and consideration searches, but few intention searches, your ROAS and transaction volume through Google Ads will be low.
Chances are you know a number of competitors who sell the same, or similar, products as you. However, this list of competitors can look different to the competitors on Google Shopping.
Knowing your competitors and what they do on Google Shopping lets you gauge another force that affects the purchase choice of prospective customers. Even if your shopping or Performance Max campaign could be perfectly set up, not every searcher will click your ads. Clicks will always go to competitors.
Monitor competitor prices, the appearance of their ads, and the keywords they show for. What exactly are your competitors doing? Is there something you could do more of in your campaigns? Are they doing anything opposite to best practice that hints your campaigns could perform better? The answers to these questions let you eat at their competitive advantage.
You may find a competitor neglecting one of their product ranges. They may not promote it as well as they could or be avoiding ads for it altogether. You may have found there are a lot of searches for this product thanks to the keyword planner, giving you the opportunity to tap into more search volume by optimising relevant products.
The second benefit of monitoring competitors is knowing where you stand in price wars. Keep an eye on competitor pricing as you may be able to undercut, level off your pricing with them, or at least know who is undercutting you. (Later in the Google Shopping book, I’ll share with you some free reports to monitor competitor pricing overtime.) Stores in Google Shopping frequently undercut competitors to stay equal, or better, in the eyes of customers. Competitors new to the market can get more value from price competition to drive up reviews, rather than maximising profits, in the early stage of business.
With that said, let’s identify your competitors. There are some additional paid tools like Semrush not mentioned here, but at this stage of gauging competition, a deep competitor dive is excessive.
The good ole Google search is the quickest way to get a snapshot of the market. Use this to identify your competitors, what they are doing, and how well their products compare to yours. Doing this prior to setting up Google Shopping or Performance Max can help you look at the images used, product titles, descriptions and most importantly, pricing.
It’s also beneficial to look at the service provided by competitors. Can you provide something better such as next-day delivery, personalisation, or lower prices? These can be your unique selling propositions to stand out in the market.
Sometimes spotting your competition may not be as easy as searching your keywords in Google. If you already run ads, a Google search may bring up your products and inadvertently skew your ad data. Perhaps you want to eye-down competition in a different country, but you get served local ads. A competitor may bid more on mobile devices, such that sitting in your office on the laptop looking at search results causes you to miss their ads. To solve this, Google has a useful tool.
Ad Preview and Diagnosis Tool
The Ad Preview and Diagnosis Tool is within Google Ads. The tool is a version of the Google search engine results. It does not affect advertiser spend or stats. The big advantage is you can set the location and device, which is great for discovering competitors and their prices in other countries.
Within the tool, type a product name or other search query you want to target. Next, select your target location and language.
The ad preview and diagnosis tool can be used to see if your ads are eligible to show within your search criteria. This makes them good for figuring out deliverability issues. For now, the tool can provide inspiration through competitors.
Later we’ll cover ways to optimise your campaigns from competitor data. For now, use Google Search and the Ad Preview and Diagnosis Tool to gauge competition.
How to Think About Competition
The existence of competitors is not a bad thing. It can be helpful to have a number of companies marketing the same products you sell as people may discover the products then later buy from you. Furthermore, it may give you a business model to benchmark yourself against. Competitors are expected, especially when you can set up a business in one day using software like Shopify.
If there is no competitor, this may be a red flag many have fallen before you short of profit. An industry with no competitors can also mean you may have to spend a lot of money educating people because they are in the awareness stage.
Be mindful of the time you spend analysing competitors. Look at the market on a regular basis, but keep focused on serving your customers through your company’s vision. Your customers need to be the ones who ultimately shape your business; not competitors.
To apply goals, buyer intent, and competitor research to your Google Shopping campaigns, you first need a Google Ads and Merchant Center account. Let’s set up these tools you need for success. If you have a Google Ads and Merchant Center account already, you’ll discover other tools as part of the setup that will help grow your existing campaigns.
- 1. The Power of Google Shopping
- 2. How Does Google Shopping Work?
- 3. How to Profit From Google Shopping
- 4. How to Set Up Key Google Products for Ad Growth
- 5. Your Google Shopping Feed in Shopify
- 6. Google Shopping Campaign Structure
- 7. Performance Max Campaigns
- 8. Optimise Your Google Shopping Campaigns
- 9. Google Merchant Center Programs
- 10. Expand Beyond Google Shopping