If you want to succeed as a retailer, it is imperative to create an organized Google Shopping campaign. We know that competing in Google Shopping is hard. 56% of the Google PPC budget is spent on Shopping.
It is now more important than ever for the retailers to create a well-thought-out Google Shopping strategy. Google Shopping campaigns are designed to offer companies another opportunity to engage with shoppers.
However, when it comes to the bidding plan, there is a lack of any formal strategies in bidding. If you don’t set up a strong biding strategy from the start, you will end up wasting a lot of money on Google Shopping ads.
Is there any way to solve the bidding problem? Yes, there is, but you need to start by clearly defined objectives and campaign structure. While bidding, it is important to stay competitive to ensure optimal Return on Advertising Spend (ROAS).
What factors affect Google Shopping Bids?
The factors that affect Google Shopping bids are as follows:
Conversion rate: There are certain products that will convert better than others. You need to invest more resources in products that convert better. Figure out the average conversion rates for the products and then bid accordingly.
Price of Products: ROAS is determined by the product price. A lot of e-commerce merchants make the mistake of not considering the product price. Don’t make the mistake of ignoring it.
Gross Margin: It is important to bid higher for the high-margin products and low for the low-margin products. Categorize the products according to their basic cost margin.
Once you get these numbers, the simple formula for maximum bid is
Maximum CPC = Product Price x Conversion Rate x Gross Margin
This needs to be the starting point. Why? The formula will tell your breakeven point. To make profits from your ad campaign, focus on:
- Setting up the initial bids 25-50% less than the Max CPC
- Improving the price
- Improving the conversion rates
Why should you opt for Google Shopping Bids?
- A lot of business organizations want to maximize clicks. If you are at the stage of building your brand, then the right Google Shopping bids can enhance the exposure.
- If you want a high number of conversions, bidding can help your business in building a base of paying customers. It is also a good option if you have high demand products in large margins.
- If you want to avail of optimal ROAS but your ad budget is limited, then this is a cost-effective way of making the most of it.
Pro tips to bid for Google Shopping campaigns
Bids are the biggest determining factor whether your product wins or not in the auction system. When you manage bids manually, you will have better control over your strategy.
- Create custom bids for best sellers. Break the product groups according to the item ID’s for attributing custom bids for the best sellers. For the items that are bringing in too low revenue, exclude them by the item ID.
- Raise the bids during a sale or promotion. The conversion rates get a boost on the products with sales or promotion. When you raise the bids during promotions, it will increase the volume which leads to a temporary drop in the cost per conversion. Google offers automated bidding strategies too.
- Keep a fixed CPC and make sure the items get promoted with a fixed CPC. In this way, you will be able to exclude certain products for managing the bid by yourself.
- Set a different target ROAS for different categories and products. The reason for doing this is, products with a low margin get a higher ROAS and the product with a high margin gets a lower ROAS.
- Do not promote all the products. It is important to exclude certain products. The reason is, products should only be promoted at a certain time span for a particular reason. It is a bad idea to promote old products repeatedly.
A few more details to bid on Google Shopping campaigns
The S-Curve is one of the most important aspects of bidding in Google Shopping. The S-Curve is the Shopping Efficiency curve where two fundamental variables determine the campaign success – budget and revenue. There are three stages in the context of bidding.
- Underbidding: Reduced bids that are ineffective in generating revenue.
- Bidding Bandwidth: At this point, the value of a bid starts to increase rapidly.
- Overbidding: This is the time when you start to see the diminishing returns on the bids.
The bids need to fall into the bidding bandwidth, the section where this curve shoots upwards. That’s the sweet spot. Your campaign structure will segment your traffic and offer you control over the bidding strategy. Every campaign should have a unique bidding strategy to match your goals.
SKU (Stock keeping unit) Level Bidding
SKU (aka product ID or item ID) level bidding is a great way to segment your bids. It gives you the power to segment your bids according to product level vs. generic product traits like brand, category, custom labels. The issue with this strategy is, it is time-consuming to manage a large inventory.
The best idea is to perform an 80/20 analysis of the product inventory depending on a combination of KPIs like revenue, conversion, and returns. After that, create a focused and manageable campaign based on the target characteristic.
You can create an SKU level campaign for categories like bestsellers, high-margin, and high ROAS. After that, place a separate bid for every SKU in your campaign. Use the SKU level bidding on a certain category of products to monitor which matters the most.
Product Attribute Level Bidding
For a limited time, you cannot use SKU level bidding; instead, you can opt for the product attribute level bidding. This is where you combine two product attribute segments like category & brand or category & product.
With a two-product attribute structure, it is easier to set up specific maximum bids for every category. Unlike Google Product Category attribute, you get to choose which value to include. Thus, it will help in creating your own product categorization system within the product feed.
The best idea is to use product types with multiple levels for deeper and much more logical segmentation. The custom labels offer endless possibilities by enabling you to set up your values for five custom label value categories. Mix and match them with other product attributes.
Remarketing Audience Level Bidding (RLSA)
To create repeat visits, you need remarketing. You can remarket repeat visitors on Google Shopping. The keyword here is Audiences. With the RLSA campaigns, you place higher bids within your campaigns to different audiences. In this way, you will have a higher chance of getting traffic from your likely buyers.
For instance, you might be willing to big higher to attract people that abandoned your shopping carts vs. the people who browsed your website a few hours ago. The bidding for RLSA is done under the audiences tab. This ensures that you are more competitive in bidding to attract people from these audiences.
Are you looking to create an effective bidding strategy for Google Shopping? Get in touch with the professionals of Skyram Technologies here.
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