In order to drive incremental growth on Google Ads, retailers must navigate stiff competition. They need to have an intimate understanding of how their products and ads stack up against other retailers in their vertical. Sidecar sheds light on vertical performance in our extensive 2019 Benchmarks Report: Google Ads in Retail. After analyzing millions of data points from hundreds of retailers, some key trends emerged across the verticals we serve.
In this article, we’ll dive into the biggest trends shaping the apparel vertical in 2019. The Benchmarks Report uncovers increased competition, rising costs, and new pockets of opportunity for apparel retailers. Learn how your business compares to the industry average below.
Look for more vertical specific trends, including an analysis of House & Home retailers, in the coming days.
Amazon Impression Share Spikes in the Apparel Vertical
Google Ads is a saturated marketing channel. Pressure has pressure only increased in the last year with the expansion of marketplaces like Amazon. The retail giant continues to increase its spend on Google Ads, capturing a larger share of the SERP. In order to remain competitive, many retailers are forced to increase their ad spend and become even more targeted with keywords and audiences.
Among the 14 vertical analyzed on Google Shopping, apparel retailers saw the greatest increase in Amazon impression share on Google Shopping. Sidecar analyzed Amazon’s impression share for select apparel retailers. Our data reveals Amazon’s impression share nearly tripled in the last two years in Google Shopping, from 10% in Q1 2017 to 29% in Q4 2018.
Amazon grew its impression share more gradually in paid search, but it captures a larger share of impressions in paid search compared to Google Shopping. In the first quarter of 2017, Amazon earned 25% of paid search impressions within the apparel vertical. By the end of 2018, Amazon doubled its impression share to 47%.
The majority of Amazon’s impression share growth across both ad formats occurred in Q4 2018, indicating Amazon’s dominance during the all important holiday season.
ROAS Is Flat for Apparel Retailers
In 2018, ROAS remained flat (-1% YoY) for apparel retailers on Google Shopping. While revenue and conversions increased, the rapid expansion of Amazon and other competitors in the channel outpaced this growth. The increased competition drove up costs in the vertical 38% YoY.
Apparel retailers saw a slight gain in paid search ROAS (+3%) in 2018. Amazon has had a presence in paid search longer than in Google Shopping. Retailers are finding pockets of opportunity with longtail and branded keywords where they are able to capture sales at a greater ROAS. Non-brand terms tend to be more competitive on paid search and capture lower conversions. Retailers interested in driving greater efficiency and ROI should target high-performing terms that incorporate their branded and trademark terms.
Contrasting Device Performance on Search & Shopping
Apparel retailers experienced opposing device performance for Google search and shopping ads. On Google Shopping, mobile was the clear winner for apparel retailers. ROAS increased 4% YoY, while revenue grew 56% YoY. Mobile’s rapid expansion in Google Shopping suggests that there is still untapped opportunity in this channel. In fact, mobile drove the majority of revenue growth on Google Shopping.
Conversely, Google Shopping ROAS declined 3% on desktop YoY. Costs increased 28% and conversions declined 7% YoY, contributing to this trend. Greater saturation of the channel may contribute to lower desktop performance.
On paid search, desktop drove ROAS gains for apparel retailers. ROAS increased 8% YoY, while conversion rates grew 20%. Mobile ROAS on paid search declined 2%, driven by a 36% increase in costs. There are fewer paid search ad spots above the fold on mobile screens, making competition even tighter for retailers trying to gain consumer attention.
Despite lower performance, paid search mobile ads are growing. According the the 2019 Benchmarks Report, mobile ads captured 44% of all conversions on paid search in Q4 2018. By 2019, Sidecar predicts mobile ads will capture 49% of all conversions and over 50% of ad revenue on paid search.
How Apparel Retailers Can Adapt
These trends show no signs of slowing down in 2019. Apparel retailers will need to invest in more sophisticated strategies to stay ahead of the competition and uncover new revenue opportunities. There are a variety of ways to improve the health of your campaigns and succeed in an increasingly competitive environment. Here are just a few ways to ensure your ads are at peak performance:
Move Up the Funnel: The majority of competition on Google Ads is at the bottom of the funnel. Retailers are battling for that last click prior to a purchase, bidding up branded or high-intent keywords. Retailers should start looking up funnel for new opportunities. There are fewer apparel retailers trying to reach consumers during the research stage. Ad formats like Showcase Shopping can help retailers effectively target general queries and capture consumer attention earlier in the purchase cycle.
Find New Pockets of Opportunity With Demographic Targeting: Apparel retailers can target ads to their most valuable audiences using demographic data. Targeting Google Ads by age, location, gender, or household income prevents wasted spend. For example, a high-end women’s clothing retailer should use demographic targeting to deliver ads to women with a household income above $100,000. In that way, spend only goes towards consumers who are more likely to make a purchase.
Leverage Google Merchant Promotions: As the Benchmarks data indicates, the SERP is more crowded and competitive than ever before. In order to outperform competition, retailers need to stand out. That means highlighting promotions in shopping and search ads. Google Merchant Promotions allows retailers to call out sales, free shipping, or return policies in their search and shopping ads and drive greater engagement.
Master RLSAs for Every Stage of the Funnel: It’s critical for apparel retailers to re-engage site visitors, cart abandoners, and past customers using Remarketing Lists for Search Ads (RLSAs). Using a specific tag on their websites, apparel retailers can group together audiences based on the pages they’ve accessed. If they’ve filled a shopping cart but haven’t purchased, RLSAs can track that, allowing them to develop marketing messages or bids specific to this group. For example, retailers can remind cart abandoners to purchase a specific item in a paid search ad, effectively personalizing ad copy.
Take Advantage of Physical Stores: Apparel retailers with physical stores can use that to their advantage with Local Inventory Ads (LIAs). If a person is searching on mobile for an item an apparel retailer sells, and the shopper is close to the retailer’s store, LIAs can target that individual and drive additional foot traffic. The closer the shopper is, the higher a retailer can bid by setting bid adjustments based on mile radius. Having a physical presence is a unique differentiator in a competitive online environment and can ensure retailers’ ads stand out.
Stay on Top of Search Query Reports: With continued investments and growth from large competitors like Amazon and Walmart in Google Ads, query performance can change relatively quickly. Apparel retailers must quickly identify and block queries that waste spend and identify queries that increasingly drive traffic. Retailers should visit the Dimensions tab in Google Ads to understand what search terms are surfacing their ads.