How Goal-Based Product Groups For Smart Shopping Doubled The Revenue Of Our Client’s Contact Lens Online Store

Navneet Singh, Founder

Case Studies

Google Shopping Ads need nearly 85% of clicks on Google Ads and drive 76.4% of the entire retail search ad spend. E-Commerce companies must achieve a higher value to promote their products using Shopping Ads than text ads.

It is also moving millions of dollars in advertising budgets not needed for Search into Shopping. Shopping Ads are a great boon for several companies, but they may be hard to use. It is a manual, time-consuming process to set up Shopping campaigns.

What’s the Problem?

It is undoubtedly hard to use Shopping Ads. For this purpose, Google introduced Smart Shopping campaigns which lower the complexity of automating:

  • Bidding.
  • Targeting.
  • Placements. 

Smart Shopping Ads give you a faster and highly user-friendly experience, and they require the advertisers to lose control of the way the campaigns get optimized. Instead, they must rely on Google’s algorithm. 

Smart Shopping Ads Need to Access the Entire Product Inventory by Default

Suppose you have 1 00 000 products in your inventory. As you create a campaign, you can accept Google’s recommendation for product promotion in every campaign. Google has its way of showing how products get demonstrated to potential customers. You must know which of the 100K products gets shown to the potential customers. As you come up with the correct details, you understand why these products showed and not the rest.

Example

A campaign that gives you a 5X return on Ad spend will be great. However, you cannot just stop at this. Rather, you must progress to the next level. You need to set up the campaign for the same. You do not only need to break down the product level but also understand that just a few products in the campaign are bringing you revenue. The remaining ones are only wasting your money.

If you stop using non-converting products, ROAS can be 50x or more. However, you do not have any product-level control in a Smart Shopping campaign on the Google Ads interface. This is only one situation, but there are various ways in which Google’s algorithm can harm the campaign’s performance.

Industry Best Practice

There are so many businesses, right from agencies to a few of the largest e-commerce companies working at all times due to a lack of control in Smart Shopping. They will divide their products into separate product groups and campaigns based on specific goals, which lets them evaluate performance straightforwardly. 

It is a time-taking and arduous process whereby you must create and organize so many product groups depending on your goals, especially when you have minimal product information displayed on Google’s interface. Advertisers will only influence custom labels and different product parameters by manually changing the feed using the Google Merchant Centre (GMC). Again, this will prove hard and increases your dependence on feed providers as you use them.

How to Carry Out Shopping Segmentation in Smart Shopping

Title Optimizations and Google Merchant Centre’s improved product approval rate are highly effective ways to enhance Google Shopping performance by scaling up the Shopping Structure. Using intentional and strategic segmentation matching the client’s goals helps the advertiser to:

  • Highlight hero product groups
  • Ensure Shopping is a profitable channel compared to both tROAS and final ROI.
  • Bid accurately on the Top Products as well as the Bottom / Low-Performing Products

You need to segment the Shopping structure, which is essential for strategy brainstorming, which should not be exhaustive.

Considerations

Client KPIs / Nature of Business

The primary consideration when determining Shopping segmentation is aligning your strategy with core performance indicators; the overall nature of your business will make or break your success in this channel. This determination should be informed by decisions that are higher level than Shopping Segmentation as a topic, but two guiding principles: (A) is our goal focused on Scalability or Return? (B) does the business lend itself towards several distinct product groups, or is the product load concentrated within a niche where users typically search along the same lines?

Data Aggregation alongside Spend / Return Control

This is a primary consideration for structure planning. You need to find a proper balance due to several reasons:

  • Smart Shopping gives you a more robust performance in almost all cases where it has pulled more data as you make bid decisions. Also, Google won’t recommend running a Smart campaign that gives you less than 30 conversions a month.
  • Standard Shopping is based on either ROAS automated bidding relying on the same conversion volume rules as Smart Shopping. Also, traditional CPC bids are among the most helpful product groups. If higher information is accessible in the base bid adjustments, there are higher chances for bid adjustments to be accurate.
  • Too much consolidation leads to easily missed opportunities which could give an additional revenue in performance.  

Feed Quality

Also, you cannot overlook exploring the various Shopping approaches. There are so many limiting factors in your data feed, leading to strategies that can prove helpful. Margin Breakouts is an example of this- Several businesses cannot generate margins at an SKU level. This prevents the feed manager from margin-based product grouping. 

Product Categories: The Best Shot for Shopping Segmentation

Product Type / Categories include a segmentation strategy that is likely to be a top-notch flexible approach for Shopping. You can use it to drive efficiency, product launches, and overall growth. This strategy is the best for Growth KPIs – due to a more spreading out of the structure. You can efficiently and evenly allocate a higher spend for a more significant portion of the feed. It leads to clear visibility into the ever-increasing number of product categories, telling you about the product areas you can load to make a higher investment.

Ways to break the products into Category campaigns. You get the exact balances that are referenced for the Data Aggregation and Spend Control section to:

(1) Find out the comfort level between conversion volume and visibility in results. 

(2) Split products into the correct category groups to strike the balance you need.

Profitability: ROI is King

Return on Investment for revenue channels has a great significance in various businesses. Optimize for highest channel profitability to segmenting based on Product Margin.

The client should send an additional field at the Child SKU level, which provides for the margin field on a product-by-product basis. Now, you can proceed with campaign segmentation for loading the products into the margin groups in a Custom Label.

Typically, one can break out into three campaigns for:

  • Highest Margin.
  • Average / Profitable Margin.
  • Low Margin.

The loss Margin campaign is still relevant, but it would only make sense if you block Loss Margin products from the campaigns. Also, you must assume that you have an adequate volume and things are okay if you are running more than three campaigns.

Use this approach to go for Smart Shopping. You can also use it with Standard Shopping. It is better to go for tROAS bidding while using Standard Shopping.

Historical Performance=Profitability + Aggregation for Limited & Complex Feeds

When you have some form of Profitability using a collective approach aligning with the right goals, you have limited feed information. You can segment Shopping efforts by Historical Performance. Use this approach with Smart Shopping to naturally optimize for the 80/20 principle in retail.

One can group such segmentations effectively using:

  • Revenue
  • Average Order Value
  • Conversion Rate (requiring the use of 6 months of data, minimum)
  • CPC (similar to Conversion Rate)

You can do groupings at both the ID or Brand levels. However, it is highly effective and more worthwhile to use ID if you have an adequate conversion volume.

Go For Smart Shopping This Season!

When you have such recommendations in mind, it helps you leverage high-performing and fast-growing Smart Shopping solutions. Keep in mind that Smart Shopping or Performance Max structures optimization is a process with a lot of scope for improvement as you go for one category and product grouping at a time.

Presently, Google is leading the industry by using automation algorithms in ad platforms to evolve further and identify the right customers for your business in a better way. You need to test for the best performing product structures, which you can also leverage for the other platforms. 

At Visibility Gurus, we continuously go for ongoing testing for 

Smart Shopping

Performance Max

And automation. 

You’ll indeed be seeing more of our findings and test results soon. Reach out to us to ask any questions you have on your mind about granular Smart Shopping and Performance Max campaigns. Feel free to contact us to understand the best approach for your Google Max Campaigns.