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Google Shopping Recommendations: Promoting Your Items? Or Promoting Overspending?

Okay, Google — help me advertise my items in Google Shopping!

Everyone loves Google; we all know it’s the best way to find information on the internet. But when it comes to your Google AdWords Shopping Campaign, you shouldn’t treat Google as a friend.

With a Shopping Campaign, it’s tempting to listen to Google when they recommend increasing your product bids when you have the budget. Their representatives and help topics will often show you benchmarks and recommendations that promise large increases in traffic if you increase your product bids by $0.01, $0.05, $0.10, or more.

Some areas in paid search are forgiving when you overspend. However, Google Shopping is not one of the areas you want to overpay for your traffic. Shopping Campaigns in Google AdWords can (and will) take any extra money that you approve, but this extra spending may provide only very marginal gains.

Google Adwords Benchmarks and Recommendations

Google often shows benchmarks and recommendations when you are setting your product bids. Below is an example of the bid simulator that is displayed in AdWords when set your product bids for Shopping campaigns.

Bid Simulator

But once you’ve set your bids, you’ll probably receive a call from a Google AdWords “Strategist” who will have recommendations for increasing traffic to your campaign.  More often than not, they’ll recommend that you increase your bids to drive more traffic.

Or, you may have an “opportunity” posted in your AdWords account, which recommends spending more and increasing your bids (maximum CPC).

Adwords Opportunities

So you may be thinking that spending a little extra to bring more potential customers makes sense, right? Not necessarily! Let’s examine our case study:

Case Study – Google Shopping Recommendations Cause Overspending

Our case study involves Google Shopping campaigns which include products that were performing well at low bids of $0.01. Google recommended increasing the bids to $0.02, $0.05, or $0.10 to increase traffic and conversions.

To check the validity of these recommendations, we set up a case study during two of  the busiest weeks for e-commerce holiday shopping. For the week of November 27-December 3, 2016, we followed Google’s recommendations to double our bids.  For the week of December 4-10, 2016, we returned the bids to our original CPC. Our daily budget was set far beyond the threshold expected for bids at either price point (in other words, budget was not a constraint).

Case Study – Google Benchmarks Recommended Higher Bids

Benchmarks and “opportunities” in Google AdWords recommended increasing bids.  To control costs for our study, we increased bids from $0.01 to $0.02.  The bid increases were implemented on November 27, and the bids were returned back to the original bids on December 4. The following is a sample of the products with the highest number of clicks and totals for all products:

Bid Study Google Recommended

Bid Study Original Bids

Case Study – Results from Increased Bids

The results showed that Google’s recommendations provided a slight rise in clicks, but a high increase in both cost and cost-per-conversion. Across all of our case study products, the Google recommendations provided 424,403 clicks, for a total cost of $7,920, while the original bids provided 417,016 clicks, for a total cost of $5,150.

Bid Study Net Change

In the end, Google’s recommendations produced only 1.77% more traffic — but increased costs by 53.78%. Cost per conversion rose from $0.98 to $1.43 from the penny increase in the bids.

Note: consumer shopping patterns and competitors’ bids may have slightly changed across different weeks (week of Nov. 27 versus week of Dec. 4).  However, historical data shows that these holiday shopping weeks deliver similar results.

At the conclusion of our study, we discovered that simply increasing bids to drive additional traffic can result in overspending. The higher bids resulted in higher costs for ALL traffic – not just the incremental increase in traffic.

Watch Out for Overspending from Google Benchmarks

Google benchmarks show you a forecast of the traffic you can expect when you change your maximum CPC (also known as your “bid”). When you increase a bid by $0.01, you may think only the additional clicks will cost the extra $0.01. However, increasing your bid may forecast an increase of 10-15% for clicks, but the total cost may increase by 30-40%. Let’s revisit the Bid Simulator with the differences between $0.01 and $0.02:

Bid Study High Increases

Even more drastic is the increase in total cost when increasing the bid from $0.01 to $0.04. Increasing your bid to $0.04 may forecast an increase of 50% for clicks, but the total cost may increase by 200-250%. Here is the Bid Simulator with the differences between $0.01 and $0.04:

Bid Study High Increases Tripled

These results will change depending on the products in your Shopping Campaign.  However, it is important to check the large increases in total cost when you follow Google Benchmarks. Compare the “Costs” column in the bid simulator when you increase your bids. And after you increase bids, make sure to check (and re-check) your actual results on a daily basis, to ensure the total costs are providing an adequate return-on-investment (ROI).  Following Google Shopping benchmarks and recommendations without adequate tracking and optimization can quickly result in overspending!

 

PrestoSell Can Help You Avoid Overspending

Would you like help with promoting your items without overspending?  If you’d like to know more about how to optimize your Google Shopping campaign, and what costs are involved, please contact us for more information. We are here to help!

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