Google Shopping structure – How does it work?

The first thing you should know about Google Shopping is that it’s primarily great for attracting new customers. Returning users will find you in completely different ways – through newsletters, brand searches on Google, or your direct website or webshop.

The possibilities with Google Shopping ads are multiple, and requires wise targeting, multiple campaigns as well as an updated product feed in Google Merchant Center. This is how Google Shopping works!

Google Shopping is best for new users

This aspect is particularly important to understand, since even though new users are always more expensive to attract with Google Ads – you usually accept a lower return if you get valuable customers that will keep returning. If you, through Google Shopping, acquire one single new customer – that will return up to 5-6 times that very same year – this is when you’ll make your real money!

To have better control over which users see your ads, it’s also important to add audience lists that divide your customers into different groups. Analyze the value of your new customers and compare this to your returning ones to know where you should put the most resources. This way, you’ll get the best return from Google – and ultimately better revenue.

Set your target wisely

When using Google Shopping as well as Google Ads, setting your target right is probably the most important thing. Many marketers set their targets too broad and conservatively. If you’re a furniture company, you might sell a new sofa or kitchen table to the same person every 10 years, but if you have a beauty product on your web store, you might easily get 12 purchases from the same user per year. Paying heavily for these customers the first time will soon pay off – and it’s important to see the connection from Google Shopping to lifetime value and your returning, loyal customers.

Find out more about how to leverage customer lifetime value from our webinar!

Multi-brand stores will have to keep an extra eye on their different brands and products, and learn what brand leads to more customer loyalty over time. Customer retention is much better for profits than customer acquisition, since increasing retention rates by as little as 5% can boost profits by 25-95%, according to Bain & Company.

Multiple campaigns are important for the margins

A key mistake that many marketers do when it comes to setting up your Google Shopping is that they tend to have too few campaigns running at the same time. If you have one general budget for all your products, and put them all into the same brand – your revenue will suffer. You might have 5 different margin groups in your products – but if you don’t have the same differentiation in your campaigns, you might have just one targeting option. If you’re a multi-brand retail ecommerce, you must structure your Google Shopping products into multiple campaigns to maintain granularity and get substantial revenue.

Find your negative keywords

Another common mistake is to not use negative keywords in your Google Shopping campaign. Automatically, Google tries to expand where to show your Shopping ads. Which is why you might end up of paying for lots of irrelevant searches and clicks. By using negative keywords, you can exclude these irrelevant hits.

Checklist for setting up a Google Shopping campaign

1. Divide your products into different margin groups

If you have different margins on your products – make sure your campaign matches these. Divide into groups 10-20%, 20-30%, and so on, and set the highest bid on your highest margin.

2. Consider your budget and focus it where it will bring revenue

If you have a limited budget, focus the campaign on your absolutely largest margin group. Start in your key markets, key genders, most profitable age groups, and so forth. What ROI do you actually need to get? Align your goal with the Google Ads setup.

3. Optimize your feed

If you are planning on setting up Google Shopping campaigns – start by optimizing your product feed. Make sure to have the right product, brand, size, model number and/or color in every title, and make other adjustments necessary in the product database Google Merchant Center.

4. Exclude all low performing products

Google Shopping, as Google Ads, is PPC advertising, where you pay per click. If you need at least 50 clicks to sell something, you need to pay the matching amount, for example 50 SEK. If the item in question only is worth 60 SEK – you’ll never get a sufficient ROI on these ads and belonging keywords. Therefore, make sure your campaign contains only the products of value for these keywords.