It’s true. We live in a world of more. And Google Shopping is no exception.
More impressions. More site traffic. More revenue. Who doesn’t want more in e-commerce? No one. (At least no one we’ve met.)
Many e-commerce marketers using Google Shopping PLAs have strong brands and expansive catalog selections. They might also be operating their campaigns at a level they consider to be efficient, but they want to know how to get to the next level.
In some cases, significant performance gains can be achieved by testing new approaches. That probably comes as no surprise — after all, one of the most basic marketing principles is “test everything.” It’s determining exactly what to test and how to run that test that’s difficult, but we’ve got a few tips.
Decide and Conquer
There’s always testing going on inside the four walls of Sidecar, and the one I’m pulling off the shelf today is a test we recently ran with a large health and beauty retailer. The takeaways, though, can apply to nearly any e-commerce brand looking to take its Google Shopping campaigns from black belt to full on Samurai.
In some cases, significant performance gains can be achieved by testing new approaches.
While there are many variables that drive Google Shopping success, price plays a big role in consumers’ purchasing behavior. It’s among the first thing searchers see when browsing Google Shopping ads, so a price test is usually a great way to determine how to accelerate already strong Google Shopping results.
This particular customer has an e-commerce site as well as brick-and-mortar stores. Its competitors carry many of the same brands and products, so price is naturally one of the biggest points of differentiation in its space.
I don’t have to tell you that pricing goods can be nerve-wracking; there’s always a fine line between cutting too deeply into margins and pricing yourself out of a possible sale. That’s where a price test comes into play.
For this test, we identified more than 500 products in the customer’s catalog that would benefit from a lower price. We looked for high-traffic items (measured by impressions and clicks) over the previous 90 days with low conversion rates and an average order value (AOV) higher than the mean of the campaign as a whole.
While there are many variables that drive Google Shopping success, price plays a big role in consumers’ purchasing behavior … so a price test is usually a great way to determine how to accelerate already strong Google Shopping results.
We decided with our customer to settle on roughly 100 of these products to test. Many were not priced competitively (several competitors were selling the same items for less), and the retailer had enough margin flexibility to reduce prices by 10-15% for most of them.
The retailer then lowered the prices of these items to match or beat the lowest price in Google Shopping, and Sidecar set up a new campaign specifically for these products to easily manage them and measure performance during the test.
Once the lower prices were passed through the customer’s data feed, we were off to the races. Sidecar bid everything in the new campaign up a little higher to maintain or increase traffic, and continued bidding more aggressively for the four weeks of the test.
Bring It All Together
The initial test proved that the retailer could meaningfully reduce prices, while still driving revenue within Google Shopping. Average daily revenue for the group of test products jumped by nearly 400% over the previous three months’ average. Return on Ad Spend (ROAS) improved by roughly 40%, conversion rate more than doubled, and CPA dropped by 35%.
It’s important to vigilantly watch over test campaigns — cost can spiral out of control if you’re not careful, and if conversions and revenue don’t favorably match price and spend, it may be time to abort the mission.
The results encouraged our collective team to expand the price test to additional products in the retailer’s catalog to see where else this success could be duplicated.
Though this customer’s test was successful, not every test of this kind will produce such strong outcomes. That’s why it’s important to vigilantly watch over test campaigns — cost can spiral out of control if you’re not careful, and if conversions and revenue don’t favorably match price and spend, it may be time to abort the mission.
What else should you keep in mind? Here are a few tips that will apply for every test campaign, whether you’re tweaking price or another variable:
1. Test when sales are flat. For this customer, we chose to run the test during a month that was well ahead of its busy season, with no historic spikes in traffic or revenue. Testing during a time like this can be advantageous because you can probably concentrate more fully and keep a closer eye on the results. A successful test can also provide a welcome shot in the arm during an otherwise slow month.
2. Choose products to reduce based on seasonality and permissions. A successful test starts with the right products. Look at product data over a flat period as a historical reference point. This will also provide a more accurate read of the test’s performance when it’s over.
From there, make sure the items get enough traffic today (or that they will get enough traffic with higher bids), and are actually allowed to have their prices reduced. If you’re already at MAP (minimum advertised pricing), then those items can’t go any lower on price without risking penalty from the manufacturer.
3. Keep it simple. Promo codes are popular and can be useful, but always consider that they might not actually be the best method for driving new customers and more revenue in Google Shopping. A lower price visible on the SERP (with no promo code or cart add required) can sometimes create more impact than making potential customers work for their discount.
4. One at a time. A Google Shopping test of any kind — price test or something else — needs a solid baseline against which results can be compared, and a clear view of performance while the test is underway. Running multiple tests simultaneously introduces too many variables and will cloud the waters, so stick to one at a time.
As the channel’s popularity has risen in recent years, many retailers are still learning how to best navigate through the Google Shopping terrain.
And while there are myriad methods for optimizing PLA campaigns, price tests are viable tools for e-commerce marketers who are confident in their performance to date and want to explore additional opportunities for conversion and revenue growth.