Google Shopping is a very quick and easy way for consumers to make a purchase online. Does this mean that Google Shopping is the correct route to market for suppliers and retailers? Is it relevant for low-cost or high-priced products? How easy is it to set-up and maintain? Will you see a return on advertising spend (ROAS) utilising Google Shopping or is it a “loss leader” promotion to get shoppers to your website to be upsold and remarketed to?
What is Google Shopping?
Google Shopping is the current name of the service that allows internet users and shoppers to search for products and compare prices. Previously the service has been called the uninspiring, but exact match keyword phrase “Google Product Search”, and was also once called “Froogle” which although a nice play on words of Google and frugal, may have given advertisers the impression that people who use the service were solely looking for cheap deals and was not the marketplace for quality products at reasonable prices.
Google Shopping displays images, brief details and review scores of relevant products to the search made by the potential customer. The images and advertisements are placed above the natural search results.
Some people may mistakingly believe that getting your products in the Shopping section of the results can be achieved through website optimisation (SEO). Although SEO will certainly help the website generally, and will definitely help products within the shopping section, Google Shopping is NOT part of the organic search results and to display your products in the shopping section requires paid advertising. Google Shopping is a “spin-off” or additional way to advertise through Google AdWords.
That said, do not be put off by having to spend money on promoting your products. As with all Google advertising, if set-up and managed correctly, Google Shopping can deliver a great return on investment and can be a very economical way of generating sales.
Since January 2017, merchants have enjoyed a 52% of click share for retailers marketing and the first time shopping clicks exceeded those of clicks from “text ads”. If you are a retailer – Google Shopping is delivering the volume.
Will Google Shopping Generate a Good Return on Advertising Spend (ROAS)?
Every savvy business owner knows that the success of a thriving business comes from getting sales at the lowest price possible. However, you drive awareness or promote products there is usually a cost involved. This can be the cost of printing and distributing a leaflet, through to creating an advertisement and buying TV ad slots. If you are retail premises, simply putting up a promotional poster involves a cost. All of these costs are called “advertising costs” and should be measured to determine the revenue or “return” generated from the spend.
Whilst measuring the return directly generated from a poster, radio or TV advertising can be a challenge, with Google Shopping you can measure the return on your advertising spend in minute detail allowing you to make sensible business decisions around budgets and the “return on advertising spend” (ROAS).
How To Correctly Measure The ROAS
How Google measures ROAS, may be different to your normal understanding of the term. It will certainly be different from the understanding your Finance Director or Accountant will have on ROAS. If you are setting goals or targets within your Shopping campaigns it is important to fully understand the difference in accepted measurements.
Firstly, let us understand exactly what ROAS means in Google AdWords. Return on Ad Spend is a term that Google has defined as “sales divided by ad spend”. So if you invest £1, and you get back £5, Google would measure that as a 500% return But in finance terminology, the return is widely understood to mean the profit returned in addition to the initial investment. So if you invest £1, and you get back £5, that is not a 500% return, it is a 400% return. You got your initial £1 back and £4 additional revenue, for a 400% return.
So Does Google Shopping Deliver a Good ROAS?
In simple terms of £1 spent and £X generated in revenue, the answer is “Yes”. If you add to this cross-sell opportunities and additional sales achieved through remarketing, the answer is a resounding “YES!”
At the start of 2017, Google released data on “Performance by Category” for the previous 12-months. Although this looks at the shopping market in the USA, there is no reason to doubt similar results cannot be achieved in the UK.
Across all of Google Shopping, we are seeing a ROAS (measured the way Google measure ROAS) percentage return from 226% (Home products) through to 993% (watches and jewellery) and an average across all categories of 542% ROAS.