Bidding is where the magic happens in any Google shopping campaign. Your bids are one of the most important factors – they can really make or break your product visibility and your ROAS.
Just like with the campaign architecture, Google makes it easy to set your paid search bids, but make no mistake deciding what are the optimal bids for your products is not a breeze. Here’s how to optimize your feed, improve your Google shopping rankings and get your ads maximum exposure:
Bid Management 101: Set your initial bids
There is no such thing as a perfect keyword bid in Adwords.
That’s because every time someone makes a search query, there is an auction to determine which ads will show up, and conversion rates depend on lots of factors such as user location and device, day of the week, time of day, seasonality etc.
There are hundreds of factors that can influence if a certain user will buy or not, so when deciding which bid to use it’s important to keep in mind that things change, so you should be constantly updating your bids.
Even though bidding on shopping ads is a moving target, here are what factors to consider when setting your initial bids:
- The CPC of your niche – use Google’s Keyword Planner to determine what is the CPC in your niche. Set a competitive bid at first and then when you have enough stats for your products decrease or increase the bid based on your ROAS;
- Your profit margin and your website metrics– consider your margin, conversion rate and average selling price to determine what is maximum bid you can consider in order to break even. This is the formula you can use:
Max CPC = Average Selling Price * Gross Margin * Conversion rate
Pro Tip: Keep it simple and calculate your Gross Margin only by taking into account your Cost of Goods Sold.
Bidding optimizations for product groups
While setting your initial bids is a good first step, you shouldn’t stop there. The Shopping landscape is very competitive and your results will constantly change. That’s why it’s important to set clear ROAS goals and constantly update your bids to meet those goals.
It’s easy to get overwhelmed by all the factors that can go into bidding, and if you don’t have some sort of automation in place it’s best to follow some basic bidding rules. To avoid costly mistakes, you want to make sure that you’re consistent with your bidding. Here are 2 bid changes you should be running at least once per week:
1. High performers – increase bids on products that have at least one conversion and meet your smallest ROAS target.
2. Low performers – decrease bids on products that have no conversions or that have an under target ROAS.
You can opt to select a look back period of 7 days, 14 days or 30 days whenever you are doing this exercise.
When determining the actual bids to set for your product groups you have two options:
- Increment bids – you increase or decrease your bids by a certain percent. For example, you can boost your “high performers” Max CPC by 10% and you can decrease the “low performers” by 10%. For this to work you should have set a good bid to start with and you should frequently adjust your bids up or down.
- Recalculate bids – you set a completely new bid based on your target ROAS. The formula for this is:
For example, let’s say that one of your products had 100 clicks in the past 30 days and it generated a revenue of 500. You ROAS target is 5, so in this case, your Max CPC should be $1.
After you’ve calculated your bids the easiest way is to set them in bulk. You can do this both from Adwords Editor and from the web interface. You should create a filter in your Product groups view to only show you the biddable product groups.
Then you can either set your bids one by one or apply a percentage change by selecting multiple product groups.
Setting your bid adjustments the smart way
Your bidding strategy is what will determine your overall sales volume and profitability with Google Shopping.
Adwords allows you to customize your bid based on several parameters:
- User device
- User location
- Day of the week and hour of the day
- Audience – if the user has visited your website or if he is part of your email list
Although having all these options is great for marketers, they are not so easy to get right.
To understand what happens when you set a bid adjustment let’s take an example situation:
Someone is searching for “converse sneakers” on Google. They are located in Charleston, SC and they are searching from their mobile phone. You have Converse sneakers in your shopping campaigns and you have the following bid adjustments set:
- Mobile: -30%
- Location: Charleston: +5%
Assuming you bid $1 for the Converse sneakers product group, then the bid for the scenario above is going to be calculated this way:
Resulting bid for mobile searches: $1 * ($1 * 5%) * ($1 * -30%) = $0.74
You can always skip the math and use the bid adjustment calculator in the Adwords interface.
Device bid adjustments
When it comes to devices, e-commerce conversion rates are notoriously lower on mobile than they are on desktop.
That’s why it’s important that you set different bids based on the ROAS for each device. The easy way of doing this is to set an adjustment for each device type at the campaign level.
Audience bid adjustments
Google Shopping Campaigns Remarketing (RLSA) and customer list
It’s a fact that returning customers convert at a better rate than new users. That’s why a user that’s been to your website before is worth more.
With RLSA (Remarketing Lists for Search Ads) bid adjustments you can customize your bids for users that already visited your site as they are making a search in Google.
For example, let’s say that someone visited your store from a social media link and viewed your “running shoes” category page. They noticed your offering, but they were not quite sure what to buy yet. Later that day they made a search on Google for “Converse sneakers”.
In your campaign, you’ve set the bid adjustment for site visitors to 30%. Since the user was tagged with the remarketing pixel when they visited your site, Adwords will automatically increase your bid for that search by 30%, making it more likely for the user to see your product offering.
Similar Audiences for Search and Shopping campaigns
In a recent announcement, Google introduced Similar Audiences for Search and Shopping campaigns. This will give you the ability to bid more for users that performed similar searches to your customers for example.
Similar audiences and in-market audiences will help you hone in on your audience of your shopping campaigns even further.
Other bid adjustments
- Location bid adjustments – customize your bid based on the searcher’s location (by country, region, city or by household income level)
- Schedule bid adjustment – customize your bid based on hour of the day or day of the week
- Gender and age bid adjustments – only available in search and display campaigns for now 🙁
Use Negative Keywords Lists to Avoid Any Wasted Spend
Unlike search campaigns where keywords are inclusive, in Google Shopping campaigns we have to use keywords to exclude products for listings. These are called negative keywords and they help ensure your products only appear on the searches that matter. Let’s use an example. Perhaps you sell toasters. A person searches for the phrase “toaster ovens.” When Google matches the search to your products, it may display your toasters to the user who is searching for toaster ovens.
While toasters and toaster ovens are similar, the user has entered a fairly specific search term, so we know he isn’t likely to buy a regular toaster – he wants a small oven. In this case, it would be wasteful if your product was shown and the user clicked it.
To keep your products out of listings like this, you would add “ovens” to your negative keywords. When a search comes in with that word, Google will exclude you from the search results, even if you otherwise match.
Set negative keywords
Set negative keywords to your shopping campaigns so you don’t pay for clicks that are not related to your budget. For example, irrelevant search queries could have an extremely low CTR and lots of impressions – so set negative keywords for them.
An optimization that is commonly overlooked on many Ecommerce Google Adwords accounts is adding negative keywords from your historical search term data.
Just like with search campaigns, there are certain terms which are either not relevant to your products or they simply don’t convert. This is even truer as Google chooses the keywords for you in Shopping campaigns.
This is why you have to analyze your search term reports and regularly add negative keywords in order to avoid showing ads for those terms. This will get you cost savings and improve your ROAS.
When to add negative keywords
As with bidding, you have to be consistent with your negative keywords optimization.
You shouldn’t exclude a term that only got one click because there isn’t enough data to draw a reliable conclusion yet. On the other hand, you might have dozens of search queries terms in your report that didn’t get any sales and spent very little individually, but collectively those costs add up and can destroy your campaign’s ROAS.
At the most basic level you should keep it simple and set some thresholds in terms of clicks and ROAS for each query. Pick a lookback window – you can even do “all time” to get all the data available. After that picking a threshold stick to it and exclude anything that doesn’t meet your criteria.
Negative keyword optimization can save lots of money from your ad budget, but if not done right it can kill your campaign. That’s why we recommend having a granular structure that targets only one product per Ad group.
Ad group vs Campaign level negatives
Ad group level negatives help you “sculpt” the traffic between your ad groups.
Say for example your campaign promoting Converse sneakers has different ad groups targeting different product colors, like “Navy Converse sneakers”, “Red Converse sneakers”. To prevent searches for navy showing up in the ad groups promoting other colors, you would add “navy” as a phrase match negative keyword to all the other color ad groups.
Another example is when you want to drive non-specific brand queries to a certain product. Let’s say you have a search for “speedo trunks” and you have 20 ad groups, each containing a different model of speedo trunks. You also know that one of the models is selling much better than others. In this situation, you’d add “speedo trunks” as an exact match negative to all the ad groups, except the one promoting the best selling product. This way you force Adwords to show the best selling product before others.
Campaign level negative keywords are useful when you have terms you want to block for an entire campaign. These terms can be unrelated queries, items you don’t sell, informative words like “photos”, “videos” etc.
If you run many campaigns for which you’d like to block those searches from, consider using a shared negative keyword list, which is easier to maintain. Any edits you make to this list will automatically be reflected in all the campaigns that the list is added to.
Adwords also share more on how to use negative keywords.
Brand vs non brand query segmentation
If you sell products from well-known brand names, then there’s a higher chance that when somebody makes a search for that brand that they will convert better, compared to someone searching for a generic product.
This is of course not to say that generic terms don’t convert at all, but you might want to pay less for a click from a generic term vs a click from branded search. That’s because the people searching for the brand are lower in the conversion funnel and are closer to the buying decision.
With regular text ads, you can make sure that you’re only targeting search queries with a certain word by using exact, phrase or modified broad match. Unfortunately, with Shopping campaigns, you don’t have that control. The keywords are automatically selected by Google based on your product titles and descriptions.
So, the only option to control the search terms is through 3rd party software automation. This involves creating a more complex campaign structure and using automation to add negative keywords to block any query that is not brand related from a campaign. Using this system, the generic terms will flow into the non-branded campaign, which will have lower bids, allowing you to pay less for this traffic.
There you have it – how to optimize your bid strategy for improved results.
Think of your Google Shopping products like extensions of your ecommerce. Put the same time & care into your product listings as you would into the product pages on your shop. If you build a quality data feed and bid smart, you’ll create a whole new revenue stream for your business.
>>>Done with bid strategy optimization? Keep reading the next chapter on Product feed management optimization!
>>>You can also go back to chapter I, to refresh your memory on how to structure campaigns.
Author: Bogdan Chertes
Bogdan has helped dozens of ecommerce businesses grow sales and acquire more customers by using data driven PPC marketing strategies.
At Adfix, he leads a team of top class PPC and Social Media experts that help clients maximize ROI from their campaigns.